In 2011, Victorian gas transmission pipelines had an annual throughput of 310 petajoules (PJ). Gas distribution pipelines had an annual throughput of 162 PJ.
The DEC from gas pipelines in Victoria in 2011 was estimated at $627 million, made up of $144 million from transmission and $483 million from distribution.
The Audit projects a 10 per cent increase in the DEC of gas pipeline infrastructure in Victoria of $63 million to $690 million in 2031. The rise is made up of $14 million from transmission and $48 million from distribution. This is a relatively small increase, with the state's economy forecast to expand by 76 per cent over the same period.
AEMO identified a potential supply shortfall in Victoria in its 2013 Gas Statement of Opportunities. This may arise due to increasing demand, Liquefied Natural Gas (LNG) exports and slow development of coal seam gas reserves in Victoria. Any anticipated physical shortfalls are likely to be resolved by the interaction of market participants responding to the resultant price signals.
AEMO has forecast a modest decline in gas consumption in Victoria, from 213 PJ in 2014 to 196 PJ in 2031,337 despite the expected population increase.
As with electricity, there are several reasons for the inconsistency between the Audit's forecast rise in DEC in the gas sector, and AEMO's forecast of a fall in demand. In particular, the DEC analysis was finalised before the latest AEMO gas market forecasts were published. Those forecasts were the first to show a break in what had previously been a direct link between economic growth and rising energy consumption. Also, AEMO reports and forecasts gas consumption in petajoules, whereas DEC is a measure of the value-add provided by gas infrastructure, in dollars. The two are not necessarily perfectly correlated.
The Victorian gas market is connected with NSW, SA and (indirectly) Queensland via a number of gas pipelines. The main pipelines in Victoria are the Longford to Melbourne, South West Pipeline, the VIC-NSW Interconnect, and the Eastern Gas Pipeline. Victoria is the largest source of conventional gas reserves in eastern Australia, with gas fields in the Gippsland Basin, Bass Basin and Otway Basin. The Longford gas plant is one of the largest existing gas plants in Australia. Victoria has historically exported gas to NSW via the Eastern Gas Pipeline and the VIC-NSW Interconnect pipeline.
There are additional conventional and unconventional gas reserves, such as coal seam gas, that could be developed in Victoria.
Although domestic gas consumption is forecast to continue declining, new LNG plants on the east coast have opened the market to export. Value-add from gas infrastructure in future will come from both domestic usage (where demand may continue to fall), and from the export market. The impact of this will largely be in Queensland and the NT.
There is wide acknowledgement of an ongoing structural shift in the gas market as Australia significantly expands its ability to export gas. There is also uncertainty about whether existing gas market and regulatory frameworks are well suited to handle the shift. The AEMC recently conducted a gas market scoping study, which recommended Australia conduct a strategic review of the gas sector, including a review of future market developments over the next 10 to 15 years and a review of the short term trading market and the declared wholesale gas market.
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337. Australian Energy Market Operator (2014b)