The dominant change in the gas sector identified both in the Audit and by sector analysts is the development of the LNG export industry on the east coast. The first LNG export shipment from Gladstone departed on 6 January 2015.248 Opening the east coast market to global markets is expected to lead to an increase in domestic gas prices. Additional transmission infrastructure to support the export industry is nearing completion. Gas has been exported from WA and NT for some years.
The main impact of this change on infrastructure will be felt in Queensland, where LNG pipelines will deliver more DEC in 2031 than was delivered by the entire Australian gas transmission pipeline sector in 2011. Rising prices for gas, driven both by demand from LNG projects and costs of production as more marginal fields are developed, is expected to reduce gas demand from domestic markets. This will not reduce demand for new investment in transmission and distribution pipelines, as the sources of supply change over time. Development of LNG projects in Queensland will continue to require significant investment in pipeline capacity if projects are further developed and expanded. However, global energy prices will be a key driver here, and recent price falls may reduce the need for additional capacity.
Further issues to be considered include:
■ whether the supply of gas to the east coast market may need augmentation;
■ reservation policies, whereby gas supply is reserved for the domestic market, have previously been implemented by governments to protect domestic gas customers from international prices. Pressure for such a policy may increase as the east coast market opens up to export, and domestic prices consequently rise to international levels; and
■ with reference to coal seam gas (CSG), there are community concerns about the efficacy of the assessment of environmental risk and the scale of potential damage from unforeseen events. The COAG Energy Council249 recognised the need to improve the availability of information to ensure communities are engaged and trust the regulatory approach to gas exploration.
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248. Australian Petroleum Production and Exploration Association (2015)
249. Council of Australian Governments Energy Council (2014)