2013 gsoo-stakeholder-briefing-oct-7-2013-(public)
DESCRIPTION
2013 July Gas Statement of Opportunities Stakeholder PresentationTRANSCRIPT
Joachim Tan
Senior Analyst, System Capacity
7 October 2013
2013 July Gas Statement of Opportunities – Stakeholder Briefing
Agenda
• WA’s Gas Market Characteristics
• Domestic Gas Demand Characteristics
• Domestic Gas Supply Characteristics
• Domestic Gas Demand Projections 2013 to 2022
• WA’s LNG Markets
• Domestic Gas Supply Projections 2013 to 2022
Why are we here ?The GSOO is a periodic statement the primary purpose of which is to include gas information and assessments relating to medium and long term natural gas supply and demand and natural transmission and storage capacity in the State.
IMO assigned GISP role in June 2012, GSOO published July 2013. To promote the long term interests of consumers of natural gas in relation to:
Supplythe security, reliability and availability of gas supply
Efficiencyefficient operation and use of natural gas services
Investmentthe efficient investment in natural gas services in the State
Competitionthe facilitation of competition in the use of natural gas services
What do we forecast for the GSOO ?
• Domestic Gas Demand (excluding oil and gas processing use, domestic demand FID only, reported in TJ/day)
• Total Gas Demand (Domestic Gas Demand – FID only that includes gas consumption relating to oil and gas processing by applying assumptions, reported in PJ/annum)
• Potential Gas Supply available to the domestic gas consuming market (reported in TJ/day)
• Gas Supply Processing Capacity (reported in TJ/day)
• Reserves (reported in number of years remaining)
WA Gas Market Characteristics
Source: ERA (2010)
Western Australia’s Consumption of Energy by Fuel Source, 2003-2004 to 2010-2011
Source: BREE (2012), Australian Energy Statistics Update 2012, Table C
53% 54% 54% 54% 54% 56% 57% 55%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
Pro
po
rtio
n
Financial year
Coal Petroleum Products Natural Gas Others
Australia’s Gas Market (Domestic Gas and LNG) 2003-2004 to 2010-2012
Source: BREE (2012-2013), Energy in Australia, Table 21, Australia’s gas production, by state.
811936 975
1130 1143 12351371 1439 1458
59.4%62.0% 60.9%
69.4%66.5%
70.7%68.7% 68.8%
62.0%
0%
15%
30%
45%
60%
75%
0
500
1,000
1,500
2,000
2,500
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Sh
are
Gas
pro
du
cti
on
(P
J)
Financial year
WA SA VIC NSW NT QLD WA's Share of Total
Total Gas Production, 1984 – 2012
Source: BREE (2012), Australian Energy Statistics Update 2012, Table C
0
200
400
600
800
1,000
1,200
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
PJ
Year
Domestic Gas Sales LNG Exports
40%
13%
8%
52%
7%
25%
21% 31%51%
31%
10%
31%
53%
12%
26%
47%
60%
85%
2%
8%
36%
14%
1%
1%
3% 5%
13%8%
1%1%
5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
WA SA VIC NSW NT QLD TAS
Pro
po
rtio
n
State
Mining Manufacturing Electricity Residential Others
Gas Demand, Australian States 2010-11
Source: BREE (2012), Australian Energy Statistics Update 2012, Table F
Western Australian Average Natural Gas Prices, 1990 – 2012
Source: DMP (2011) and DMP (2013d).
0
2
4
6
8
10
12
14
16
0
2
4
6
8
10
12
14
16
Pri
ce (
US
$/G
J)
Pri
ce (
A$/G
J)
Year
WA domestic gas price (left axis) Contracts (left axis) WA domestic gas price (right axis)
Domestic Gas Demand
Characteristics
Source: DMP (1983-2012), calculated using domestic gas sales, 1983-2011.
1984-1990 1991-2000 2001-2010 2007-2012
Annual compounded
growth15.71% 5.84% 1.24% 0.69%
1984-1990 1991-2000 2001-2010 2007-2012
Annual compounded
growth15.71% 5.84% 1.24% 0.69%
1984-
1990
1991-
2000
2001-
2010
2007-
2012
Annual
compounded
growth 15.71% 5.84% 1.24% 0.69%
Annual domestic gas consumption growth, 1984-2011
Estimated Proportions of Gas Demand in WA (PJ), 2011
Source: SKM-MMA (2011).
71.0%
29.0%
SWIS Outside of SWIS
Energy Generation by Fuel Type (SWIS), 2007 – 2012
Source: IMO
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2007 2008 2009 2010 2011 2012
En
erg
y (G
Wh
)
Year
Coal
Gas
Gas/Coal
Renewable
Gas/Diesel
Diesel
Gas Demand for Electricity Generation in WA (GWh), 2008-2009 to 2010-2011
Source: DMP (2012), Average domestic gas prices and domestic gas sales (by volume).
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000
2008-2009
2009-2010
2010-2011
Electricty produced by gas (GWh)
Fin
an
cia
l yea
r
SWIS Non-SWIS
Estimated Market Shares of Major Domestic Demand (excluding LNG industry)
Source: Allen Consulting (2009) and EISC (2010)
Gas Purchaser/Consumer Estimated Market Share
Alcoa ~25%
BHP Billiton and its JVs ~15%
Verve Energy ~20%
Yara Pilbara (formerly Burrup Fertilisers) ~10%
Alinta Energy ~13%
Newcrest Mining ~1 to 5%
Rio Tinto and its JVs Unreported
Wesfarmers (including subsidiaries) ~1 to 5%
Total ~90%
Comparison of Domestic Gas Demand against Average Domestic Gas Prices, 1990 – 2012
Source: DMP (2012), Average domestic gas prices and domestic gas sales (by volume)
0
50
100
150
200
250
300
350
400
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
PJ/a
nn
um
Pri
ce (
A$/G
J)
Year
WA average domestic gas price Gas Sales
Domestic Gas Supply
Characteristics
Western Australia Domestic Gas Sales by Operator, 1990 – 2012
Source: APPEA Quarterly Production Data (1990-2012).
0
50
100
150
200
250
300
350
400
Pro
du
cti
on
(P
J)
Year
Chevron - Carnarvon Basin BHP Billiton - Carnarvon Basin AWE/ARC Energy - Perth Basin
Origin Energy - Perth Basin Apache Energy - Carnarvon Basin Woodside - Carnarvon Basin
Proportion of Domestic Gas Sales (by Operator), 2012
Source: APPEA 2012 Quarterly Production data, http://appea.com.au/oil-a-gas-in-australia/statistics.html
1.7%
55.5%
42.8%
Origin/AWE Woodside Apache
Gas Demand
Projections
NIEIR’s Gas Forecasting Methodology
Source: IMO’s GSOO
SWIS / non-SWIS Gas Demand Modelling
SWIS / non-SWIS Economic Projections
WA State Economic Projection
National Economic Environment Projection
Gas Demand Projection Methodology
Source: IMO’s GSOO
Estimated Domestic
Consumption
Economic Growth in SWIS and non-SWIS
Residential
Commercial
Small industry
SWIS Electricity Demand Growth
Major Industrial Loads
Individual Gas Loads
Pipelines
Projects
Power Stations
Mines
Commodity Prices and Production Outlook
Gold
Iron Ore
Copper
Nickel
SWIS Electricity Energy Forecasts 2007-2008 to 2023-2024
Source: NIEIR Forecasts 2013-2022
16,000
18,000
20,000
22,000
24,000
26,000
28,000
Actu
al/fo
rec
as
t en
erg
y (
GW
h)
Year
Actual High Expected Low
Comparison of Forecasts of Constrained Gas Demand against other Demand Forecasts, 2014 – 2023
Source: NIEIR Forecasts 2013-2022
900
950
1000
1050
1100
1150
1200
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Qu
an
tity
(T
J/d
ay)
Year
Low Scenario Base Scenario High Scenario
Low Scenario (Constrained) Base Scenario (Constrained) High Scenario (Constrained)
Demand suppression due to Forecast Prices on SWIS and non-SWIS Demand 2013 – 2022
Source: NIEIR Forecasts 2013-2022
$-
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
0
2
4
6
8
10
12
14
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Pri
ce
Qu
an
tity
(P
J/a
nn
um
)
Year
Impact of Prices on Forecast non-SWIS Demand Impact of Prices on Forecast SWIS Demand
Forecast Domestic Gas Prices
Forecasted Total Gas Demand (Domestic and LNG), 2013-2022
Source: NIEIR Forecasts 2013-2022
LNG Markets
Committed and Speculative LNG Capacity in WA, 2013 – 2022
Source: DSD, BREE (2013) and public announcements
0
10
20
30
40
50
60
70
80
90
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Mtp
a
Year
Abadi
PTTEP Cash Maple FLNG
Bonaparte FLNG
Sunrise
Scarborough
Browse
Prelude FLNG
Wheatstone
Gorgon
Pluto Train 1
North West Shelf
Committed Capacity - WA
Estimates of WA LNG Exports by Country, 2012
Source: IMO Estimates
76%
2%
16%
1%
5%
Japan Korea China Malaysia Spot Sales
Gas
Supply
Projections
Estimated Gas Processing Capacity of the WA Domestic Gas Market, 2013 – 2022
Source: IMO and respective corporate websites
0
500
1000
1500
2000
2500
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Ca
pa
cit
y (T
J/d
ay)
Year
North West Shelf
Varanus Island
Devil Creek
Macedon
Gorgon
Wheatstone
Dongara
Beharra Springs
Empire Oil and Gas
Gas Supply Price Modelling
Oil Prices • Forecasted Oil Prices
LNG Prices
• An estimated relationship between oil and LNG prices
LNG Netback
• LNG less cost of liquefaction and shipping
WA Domestic
Price
• Weighted average that trades between LNG netback and estimated production cost
Gas Supply Modelling
Figure 4.7: Schematic of state-wide supply forecasting process
International demand conditions for LNG and Western Australian supply
capacity
Western Australian LNG demand and capacity utilisation (WA)
Metres drilled Estimated
remaining reserves
Exchange rate
Discovery rate State wide supply
estimate
Price of international
crude oil
Identified remaining reserves
Demand Response
including lagged response to
previous new contracts and
adjustment factor to target domestic
gas price
LNG net back
price
New contract
price on domestic gas
Forecast Gas Prices for Domestic Market, 2013 – 2022
0
2
4
6
8
10
12
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Pri
ce (
$/G
J)
Year
Low Supply Scenario Base Supply Scenario High Supply Scenario
Source: NIEIR’s Forecasts 2013-2022.
Potential Domestic Supply Forecasts, 2013 – 2022
Source: NIEIR’s Forecasts 2013-2022.
0
500
1000
1500
2000
2500
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Qu
an
tity
(T
J/d
ay)
Year
Low Supply Scenario Base Supply Scenario High Supply Scenario Processing Capacity
Estimated Remaining Years based on Production for Western Australia, 2012 and 2022
Source: IMO Estimates.
Reserves McKelvey’s
Economic
and Sub-
Economic
Reserves +
EIA (2013)
Shale
Reserves
(PJ)
2011-2012
Production
(PJ)
Remaining
Years
beyond
2012
(based on
2012
production
)
Forecasted
2022 Total
Gas Demand
(PJ)
Remaining
Years
beyond
2022 (based
on 2022
Forecasts)
443,080* 1,458 304 3,395 131
Gas Supply and Demand Assessment
Comparison of Forecast Base Demand and Base Supply Scenarios, 2013 – 2022
Source: NIEIR’s Forecasts 2013-2022.
800
1000
1200
1400
1600
1800
2000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Qu
an
tity
(T
J/d
ay)
Year
Base Demand Scenario - Constrained Base Demand Scenario - Unconstrained Base Supply Scenario
What next ?
• Canvassing views/improvements from stakeholders for 2nd GSOO
• Revising of GDP/GSP forecasts for the 2014-2023 – underway
• IMO requesting gas flow data from pipeline companies and GBB for modelling early October
• 1st pass forecasts early November – checked/reviewed
• Publication of GSOO – 31 December 2013
Questions ?