EnergyQuest releases quarterly report on industry

EnergyQuest has released its November EnergyQuarterly report, which brings together all of the statistics on Australasian oil and gas reserves and production for the September Quarter 2015, together with analysis of the latest developments.

Some of the highlights are:

• On the east coast both QCLNG and GLNG are now operational. In total 78 cargoes of LNG have been shipped from Gladstone in the first eleven months of 2015, comprising 5.1 million tonnes. APLNG is expected to ship its first cargo by year end.

• Timing for start-up of the west coast LNG projects is slipping but we expect the first Gorgon shipment in Q1 2016 and the first shipments from Wheatstone and Ichthys in 2017.

• Although LNG construction is slowing, Australian oil and gas development spending continues at high levels. Total investment in Q3 was $10.9 billion, down from the peak of $16.5 billion in Q4 2013 but still substantial by historical standards.

• Australian LNG export revenue was initially impacted by the fall in oil prices but is now increasing quickly as volumes increase. Total LNG export revenue in Q3 was $4.2 billion and, despite the drop in oil prices, is likely to reach a record level in 2016.  Australian LNG export revenue has already overtaken thermal coal.

• Notwithstanding the looming global oversupply in LNG, we expect that Australian projects will take advantage of low marginal costs to maximise production and cash flow.

• The growth of LNG is changing the corporate landscape. BG was Australia's third largest gas producer and fourth largest petroleum producer in Q3.

• East coast domestic gas consumption increased 1.8% in Q3 2015 compared with Q3 2014. Consumption increased in all states except Queensland, where there was a massive (43%) fall in gas-use for power generation, largely offset by increased coal use. WA domestic gas consumption increased by 9.1% to a record 97.6 PJ.

• The announcement of new gas supply projects is closing the east coast gas supply gap. Projects that have already reached final investment decision or are likely to do so include the NEGI Pipeline, QGC's Wandoan (Charlie) development, GLNG's Roma expansion, the Senex Western Surat projectand Cooper Energy's Sole project. There are also many other projects in the wings.

• There have been some significant increases in east coast electricity prices, particularly in South Australia and Queensland. In South Australia the high levels of variable renewables, the highest in the world according to AEMO is forcing the exit of low cost thermal producers. In Queensland electricity demand for the LNG projects is the likely cause.

• Short-term gas prices on the east coast have generally increased compared with Q3 2014 when prices were low due to ramp gas but are still moderate, converging towards $4 per gigajoule.

• Australian petroleum production in Q3 was 8.6% higher than in Q3 2014 at 159.2 million barrels of oil equivalent. Quarterly natural gas productionincreased by 12.4% to 716.8 PJ due mainly to increased Surat-Bowen Basin production. Oil production increased by 1.3% to 21.3 million barrels.

Click here for more about the report.