20200907_gas_briefing.pdf (1.06 MB)

The gas-fired recovery - new supply v. fuel switching with reservation

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posted on 23.10.2020, 01:36 by MIKE SANDIFORD, DYLAN MCCONNELL
With traditional east coast gas reserves in decline, industry and government argue new gas supply from the likes of Narrabri or import terminals is essential for post-COVID industrial recovery. Lead-times on new production mean addressing allocation is likely to secure more supply in the short-term. As much is recognized in the federal government’s ADGSM, which delivers about ~200 TJ/day each year. Here we address the broader issue of allocation by asking to what extent can non-critical fuel switching - gas to electricity - help alleviate supply issues? Despite the ADGSM, LNG exports have seen a substantial diversion of Queensland CSG production away from domestic markets. We argue that fuel switching together with reservation of a small fraction of CSG production, in line with pre-2015 levels, can substantially alleviate critical industrial gas supply issues with significant additional benefits. We provide two policy prescriptions.

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