The Australian government is awarding new permits for offshore gas exploration and carbon capture and storage (CCS) exploration.
Gas is needed to back up renewable energy and support the economy as Australia makes the transition to net zero emissions, according to a news release from the Ministers for the Department of Industry, Science and Resources.
Minister for Resources and Northern Australia Madeleine King will finalize permits for Esso and Beach Energy in the Otway and Sorrell Basins, with any discovered gas to support the domestic east coast market.
Exploration permits will also be finalized for Chevron, INPEX, Melbana, and Woodside Energy on Australia’s west coast, supporting energy security in Western Australia.
Further, 10 permits will be finalized for CCS exploration, according to the release.
As Australia’s economy transitions to clean energy, gas is required to back up renewables, the agency said in the release, adding that since the current administration came to office, there has been a 25 percent increase in renewable energy generation in the National Electricity Market, “driving both its total emissions and emissions intensity to record lows”.
A recent Australian Competition and Consumer Commission (ACCC) Gas Inquiry Interim Report predicts that the domestic east coast market could experience gas supply shortfalls as early as 2027. Supply challenges could persist into the mid-2030s unless new sources of gas supply are developed, according to the release.
“As ageing coal generation comes offline in coming years, gas will continue to be needed to firm renewable energy generation and as a backup during peak energy use periods,” King said. “Gas is critical for the transition. But it will be a diminishing proportion of our energy mix to 2050 as other storage technologies come online”.
The first principle of the government’s Future Gas Strategy is Australia needs to reach net zero emissions by 2050. Gas demand will decline sharply during the transition to clean energy, but “steps to secure supply will still be necessary to ensure domestic demand can be met,” according to the release.
The agency noted that the finalization of offshore exploration permits does not automatically allow new offshore gas production to occur, as separate safety and environmental approvals are required through Australia’s independent National Offshore Petroleum Safety and Environmental Management Authority. More community consultation will also be required before any offshore exploration work can commence.
Further, there will be no new seismic surveying permitted to occur as part of the approved work program for each permit. Companies will instead be required to license or reprocess existing seismic data, according to the release.
According to the report from the ACCC, “Long-term solutions to gas market shortfalls will require a range of policy and market responses. Amongst these, there is an urgent need to develop new sources of gas production and supply”.
Last month, the Institute for Energy Economics and Financial Analysis (IEEFA) said that Australian liquefied natural gas (LNG) producers are potentially facing a couple of challenges in the global market: an oil supply glut and a global LNG oversupply.
The oversupply could lead to a price drop for oil, the IEEFA said, noting that Australia’s LNG sector is “heavily exposed to oil prices due to the majority of its existing LNG contracts having pricing directly linked to oil prices.”
Source: www.rigzone.com
