LNG Tanker arriving in Gladstone harbour.
LNG Tanker arriving in Gladstone harbour. Mike Richards GLA091108LNGS

LNG industry hits back at warnings of 'partial shut down'

THE gas industry has hit back at claims a third of Curtis Island LNG production could be shutdown within the decade due to a gas supply shortage and diversions to the domestic market.

A new report from independent consultancy group EnergyQuest casts doubt on the size of Queensland gas reserves and whether the three Curtis Island LNG plants will ever reach full production.

Chief executive Graeme Bethune said capacity would be "as good as it gets" after the projects operated at 82 per cent capacity in 2018.

The report's findings are based on a year-long study, which warns Queensland's coal seam gas reserves are not as "good quality" as what was initially expected and by 2025 the industry would reach a shortfall.

Dr Bethune said of particular concern was Santos's GLNG plant, which operated at 52 per cent last year.

But Santos said it had a much more optimistic outlook for the next decade with plans of increased gas exploration.

A spokeswoman told The Observer it was on track to ramp up sales from GLNG to six million tonnes this year, fulfilling a target set in 2016.

"GLNG still has spare capacity and we are in discussions with our GLNG partners to access that capacity for Santos gas and other partners' gas," she said.

"There is plenty of gas for the east coast domestic market and for LNG exports."

The spokeswoman said what was needed was for governments to delivery "timely but very robust" environmental assessment and approval processes and to remove bans that are "holding gas development back".

In response to the industry warning gas lobby group APPEA said the companies behind the Curtis Island LNG projects were conscious of the need to bring reserves into production to fulfil domestic and export contracts.

Minister for Resources Matthew Canavan also played down a potential gas supply shortage.

"Gladstone was built on the back of the resources and power generation sectors and there should be no concern about the supply of gas to Gladstone's LNG facilities for export," he said.

"The Government strongly supports industry opening up new gas provinces for both domestic supply and for export. Our Australian Domestic Gas Security Mechanism, our re-signed Heads of Government Agreement and our investment in gas exploration and development are working to encourage more supply of gas into the domestic market.

"The sooner other states such as Victoria and New South Wales allow exploration for gas to occur, the sooner we can get on with trying to develop new deposits around the nation."

The full report is expected to be released next week and will also be discussed by Dr Bethune at a gas summit held in Sydney from March 4.