Goodbye to Bass Strait gas

It's time to reduce gas demand. Expanding gas production in Australia mostly now means unconventional gas, from fracking or horizontal drilling. This photo shows coal seam gas wells in Queensland, where producers talk about eventually drilling 40,000 such wells, with detrimental effects on water and emissions. Image: Lock the Gate Alliance
After 55 years, Bass Strait gas output is running down. Are you ready, asks Tim Forcey?

Are you thinking of buying a new gas heater? Or, are you future-proofing your home by moving off gas? If it’s the latter, that’s a good move, because signing up to fossil gas is signing up to an uncertain future.

Here’s something you might not have heard. In eastern Australia in 2025—just five years from now—we have no idea where up to half of our wintertime gas will come from. If you haven’t heard about this, it’s because few people are talking about it.

Is this yet another energy and climate crisis on our near horizon? Is this another case of Australia being unprepared for the inevitable? This somewhat hidden news comes from the Australian Energy Market Operator (AEMO), a regulatory body responsible for planning aspects of our gas and electricity systems. And it’s certainly big news! But who’s talking about it?

AEMO hasn’t had good information

In years past, AEMO has been criticised for failing to collect good information from gas suppliers. The eastern Australia gas industry (or gas ’cartel’ as it’s often called) treats gas reserve and production information as a tightly held corporate secret. They are allowed to do this, even though minerals beneath the ground are owned by the Crown and should be used for the benefit of the Australian people. Despite AEMO having the legal power to obtain this critical data, they’ve been reluctant to do so.

Finally in 2019, Exxon Mobil and BHP, the controllers of Bass Strait oil and gas production, had to let the cat out of the bag. Their ability to produce gas at the high volume we’ve been accustomed to for over 50 years is coming to an end. AEMO broke the news in their 2019 Gas Statement of Opportunities (GSOO) by publishing two charts: one representing 2018 and the ‘good old days’ of high rates of gas production and a second showing 2025, the date that a number of formerly prolific Bass Strait gas fields become ‘used up’.

2018: the way we were

Figure 1 shows how Australia’s network of gas supplies comfortably met demand in the southern states (Victoria, New South Wales, South Australia, Tasmania and the Australian Capital Territory) in 2018.

The top dark jagged line shows the daily ups and downs of eastern Australian domestic gas demand. Throughout the year there is a nearly constant base gas demand for electricity generation, industry and cooking and water heating in homes. On top of that base, gas demand also has a broad peak across the colder months of May through October, as people switch on their gas-fired space heaters.

The dominant red area in Figure 1 represents how gas has traditionally been supplied from the Bass Strait, the Moomba gas field in central Australia and other smaller conventional oil and gas fields. The yellow area shows some Queensland coal seam gas (CSG) being supplied to the southern states via interstate gas pipelines. (You can see this supply network represented in Figure 3.)

The orange area shows some gas that is topping up wintertime supply by being withdrawn from seasonal storage, such as from the underground gas storage facility near Port Campbell, Victoria.

Because Queensland usage is not included in Figure 1, the massive liquefied natural gas (LNG) exports from the port of Gladstone in that state are not shown. (You can see this dramatically illustrated in Figure 4: with those exports starting in 2015, the amount of gas exported is now around three times larger than the amount of gas used domestically in eastern Australia.)

In 2025, where did all the gas go?

Let’s now compare how gas was supplied to the southern states in 2018, to AEMO’s assessment of what will happen in 2025, based on data received from the gas producers. AEMO does not assume much change in the historical level of gas demand, but, in the 2025 data represented in Figure 2, we suddenly see the traditional gas supplies dramatically shrinking, to just one-third of what they were a few years before.

To partly cover for this loss of traditional gas supplies, AEMO models maximum flow of Queensland coal seam gas down the interstate pipelines (the yellow area in Figure 2). Gas drawn from storage (the orange area) hardly makes any impact.

After those ways of supplying gas are ‘maxed out’, what remains is a big gap of uncertain supply, nearly half of winter gas demand in 2025. This is gas that people in the colder regions of eastern Australia traditionally relied on to heat their water and living spaces and to cook their food.

So where has all the gas gone? Why has the red area in those charts shrunk to one-third of what it was? Well, no one said the prolific Bass Strait gas fields would last forever: only 55 years or so.

Figure 1. Actual 2018: AEMO's actual 2018 gas supply and demand for the southern states. Southern production largely meets demand, with top up from southern storage and northern (Queensland) production in winter.
Figure 2. Predicted 2025: AEMO's predicted 2025 gas supply and demand for the southern states. Southern production is dramatically reduced and southern demand exceeds supply. Source: aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo

The decline of Bass Strait gas

Gas began to flow from Bass Strait in the early 1970s. Back then, gas was a cheap and generally unwanted byproduct of crude oil extraction. So that it didn’t get in the way of producing the more valuable oil, gas was disposed of in all ways legally allowed.

First, in the oil and gas processing facilities themselves, gas was conveniently if inefficiently used for heating. Next, industries were established to burn cheap gas without much thought to energy efficiency or climate impacts. Further, electricity was generated by burning gas in simple inefficient boilers. Lastly, we heated our houses and water with cheap gas. At one stage we even thought it was normal to launch great balls of flaming gas skyward outside of casinos.

It took 55 years, but eventually we burned through the ‘sweet’ (uncontaminated) Barracouta gas field, as well as the Bream, Marlin, Tuna, Flounder and Whiting fields, and then even the massive Snapper field.

By 2025, we will be left only with the dregs of the lot, the Kipper and Turrum gas fields. Unfortunately, these fields are not sweet but ‘sour’. This means they are naturally contaminated with high levels of carbon dioxide. Before gas from Kipper and Turrum can come down the pipeline to your home, nearly one million tonnes per year of contaminating carbon dioxide is removed and released directly into our atmosphere.

This is done with the new so-called gas conditioning plant at the Longford gas processing site in Gippsland, Victoria, started up in 2017 at a cost to Exxon and BHP of billions of dollars. However, this plant can only process gas at one-third the rate at which ‘sweet’ gas could formerly move through Longford. The result of this bottleneck is the reduced red area we see in Figure 2 for 2025.

Comparing Figures 1 and 2 paints an interesting picture, but it’s not the whole story. AEMO has published charts for 2018 and 2025, but not for the years in between. Is 2025 the start of the supply/demand gap or will it happen sooner? And what occurs after 2025? How fast does production from those last remaining gas fields decline? When does production from Bass Strait finally dwindle to nearly nothing? What does the picture look like specifically for people who live in the biggest gas burning state, Victoria?

Figure 3. A snapshot of eastern Australia gas production (in terajoules) and connecting pipelines as at 15 March 2020. Source: aemo.com.au/energy-systems/gas/gas-bulletin-board-gbb/interactive-map-gbb

Exxon and BHP say goodbye to Bass Strait

Before I leave the topic of Bass Strait, you might ask: why didn’t Exxon and BHP go find more gas?

The answer to that is: they’ve looked. They’ve been looking for years. Kipper and Turrum, the last remaining large gas fields, were discovered in 1966 and 1986 respectively. As recently as 2019, Exxon had a last look with an offshore exploration drilling program that came up empty. So that’s the end of the game for Exxon in the Bass Strait and possibly for BHP too. They’ve announced they wish to sell their 50/50 stakes in what was a very lucrative venture. When Exxon and BHP sell this declining asset, it will be passed down to the next tier of fossil fuel producers such as Santos or Beach Petroleum.

Why aren’t people talking about this dramatic change in our energy supplies?

Lots of things seem to go under the mainstream media radar these days. But the idea that a gas-dependent state like Victoria, and jurisdictions beyond, have no idea how homes will be heated in winter 2025—isn’t this newsworthy? Why aren’t more people talking about this?

There are two theories. First, parts of the gas industry don’t really want to get this point across. They’re still selling gas heaters to unsuspecting homeowners and talking about how cheap and green and reliable gas is. It wouldn’t be a good look to say they don’t know how, in five years’ time, they will actually get their hands on the product they claim they have to sell.

Second, environmental, farming and conservation groups don’t want to talk about a gas shortage either, because they know what’ll happen next. In fact, it has already happened. From the prime minister to the resources minister and then across all the oil and gas industry lobby groups, they all have a ready answer: “drill, baby, drill”, especially by unconventional methods. (For more on these methods see Renew 144, ‘Greenhouse Gas Footprint—What we do and don’t know about gas’.) This means more money for fossil fuel exploration and more government-supported access to farm and forest lands for coal seam dewatering and hydraulic fracking. Their solution is a pin cushion of wells, vents and flares across the countryside followed by a network of roads, pipelines, water/waste disposal ponds and gas compressor stations.

Is sending gas on a merry-go-round to Queensland and back by sea the answer?

In 2020 nationally, Australia will ship 81% of the gas produced here to overseas customers and become the world’s largest gas exporter. And yet for 2025, AEMO forecasts a supply shortfall for Australia’s largest population centres. This is as crazy as it sounds. So sure enough, some investors are proposing what then becomes obvious. If gas buyers are willing to pay, fill the shortfall in domestic gas supply with gas that has just been exported!

A consortium including Andrew (Twiggy) Forrest and Japan’s JERA and Marubeni Corporation plan an LNG import terminal for Port Kembla in New South Wales. The Australian company AGL proposes a floating LNG import, revaporisation and compression terminal to be moored in the environmentally sensitive Western Port Bay, south of Melbourne, with a pipeline then being run onshore from Hastings to Dandenong—an issue both for the bay and the people that live there. Even more gas import facilities are proposed for Newcastle and Adelaide.

Figure 4. AEMO's 2019 past/predicted gas usage by sector. GPG is gas-powered electricity generation. LNG is LNG exports. From 2015 on, gas exports far exceed domestic consumption. Note that this 2019 prediction for future total gas usage is down from that in 2018 (indicated by the top black line). Source: aemo.com.au/en/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo

Struggling to provide a fuel that just keeps getting dirtier

As an alternative to gas import terminals, gas pipeline companies propose that pipeline capacity be expanded to transport more Queensland coal seam gas down thousands of kilometres to the southern states. Others suggest that, despite our climate emergency, fossil gas pipelines should be laid right across the country to send fossil gas on a 5000-kilometre ride from north-west Western Australia down to Melbourne.

Even expensive hydrogen has been proposed as a future fuel that could be used to top up gas supplies. However, as described in ‘Hydrogen: Help or Hype?’ in Renew 148, and by CSIRO, hydrogen can’t economically compete with heat pumps for water and space heating.

These schemes are driven by the management of fossil fuel companies anxious to defend their businesses in the face of energy efficiency and renewable alternatives. Unfortunately, these last-ditch efforts are especially damaging to our environment and climate. As we see in the examples of coal seam gas, trans-continental gas pipelines and the tapping of contaminated gas fields, greenhouse gas emissions get worse with each new attempt to maintain the fossil fuel status quo.

Too expensive to burn

These days, fossil fuel investments produce poor returns. So how will the above ideas fare? The reason these projects can be contemplated is because, thanks to the gas industry’s export drive, retail gas in eastern Australia is now nearly the most expensive in the world.

Back in the days when gas was an unavoidable byproduct of crude oil extraction, gas users in eastern Australia enjoyed some of the cheapest gas in the developed world. But that all changed in 2015 when we started exporting up to three times as much gas from eastern Australia as was used domestically (Figure 4). As this gas export industry took off and wholesale gas prices quadrupled, gas sellers successfully forced local consumers to buy gas at prices even higher than paid by overseas gas importing countries.

Will some of the proposed fossil gas supply infrastructure projects be built? They certainly will—if we see no strategies to dramatically and quickly reduce wintertime gas demand and if gas consumers remain ignorant about how they can save money by switching off gas.

Alternatives: energy efficiency and renewable heat

Fossil gas frackers, pipeliners and importers see the decline of the Bass Strait as an opportunity to expand fossil gas production and infrastructure. But is there another way?

I see Bass Strait depletion as an opportunity for industry, businesses, building and facility managers and households to grasp the cost-saving opportunities of energy efficiency measures and fuel-switching to renewable heat. I covered this topic more fully in ‘Beyond Solar PV—Renewable heat and why we need it’ in Renew 142.

The volume of gas used domestically in eastern Australia peaked in 2012 and has declined since. This decline must accelerate if we are to stabilise our climate.

Today, for generating electricity, gas can’t compete with wind, solar and coal, because gas is too expensive to burn except during high electricity price market events.

In industry, the profitability of some eastern Australian manufacturers has been damaged by high gas prices. Some businesses have closed, so what can gas-consuming industries do? Beyond Zero Emissions (BZE) identified modernisation options in their 2018 report Electrifying Industry. In 2019, a report by Dr. Keith Lovegrove et al (Renewable energy options for industrial process heat) examined using renewable energy for industrial process heat. Funding has since been made available via ARENA (the Australian Renewable Energy Agency) for businesses wanting to investigate the feasibility of using renewable heat.

For homes, research I was involved in at the University of Melbourne and with Renew (see Renew 143, ‘Gas vs Electricity, Your Hip Pocket Guide’) identified how people can save thousands of dollars on their energy bills: by setting up their homes as all-electric/gas-free when building new or renovating, by retrofitting heat pumps to existing homes, or by doing something as simple as next winter finding the heat button on your reverse-cycle air conditioner.

One clear money saver is paying for a connection to the electricity grid only, rather than having to pay fees for both electricity and gas. Although many people talk about leaving the electricity grid, the better deal is leaving the gas grid.

In eastern Australia, the amount of gas used in buildings per person has fallen, but unfortunately many gas-dependent homes are still being built, fitted out with gas ducted heating and evaporative cooling. Setting up homes in this way precludes using efficient reverse-cycle air conditioners (heat pumps) for summer cooling and winter space heating.

In Victoria, the government aspires that the state be carbon neutral by 2050, even while it spends over $40 million of taxpayer funds subsidising fossil fuel exploration. Because so many Victorian homes burn gas, if the 2050 goal is to be achieved, this could mean Victoria must decarbonise 350 homes every working day (on average) over the next 30 years. This sounds daunting, until we note that, across Australia, we’ve fitted more homes than that with solar PV panels every working day (on average) since 2010. The Victorian government’s decarbonisation goal won’t be reached until policies are in place that urgently get homes off fossil gas.

The Longford gas conditioning plant removes and releases into the atmosphere nearly one million tonnes per year of contaminating carbon dioxide from the 'sour' gas of the Kipper and Turrum Bass Strait gas fields to make it usable in our homes. Image: ExxonMobil Australia

Signs of hope: people getting their homes off gas

With such a large decarbonisation task ahead of us, where can we look for hopeful signs? Happily, the list of gas-free initiatives grows every day.

As a result of their research into the environmental and cost benefits of shifting homes away from gas, Renew has been promoting all-electric homes for several years. Renew has published The All-Electric Home e-book, a compilation of key articles and case studies, and there are many articles in Renew and Sanctuary magazines on the efficient electric technologies that can replace gas appliances (including the ‘Efficient Hot Water Buyers Guide’ in this issue; see p. 68). And many Renew members have opened their all-electric homes on Sustainable House Day. These days a home can hardly be considered sustainable unless there is a plan to move it off fossil gas.

In California, the City of Berkeley passed an ordinance that all new homes will be gas-free. The United Kingdom Committee on Climate Change recommends that by 2025, no new homes should be connected to the gas grid. The Netherlands, which is situated over one of the largest gas fields in the world (now depleted), recognises the need to decarbonise 1100 homes (on average) every working day from now until 2050.

In Victoria, Barwon Water has required that new homes in their Torquay Salt development will not be connected to the gas grid. Elsewhere, the volume builder Mirvac, to pick one example, is offering gas-free and net zero energy homes, at scale.

The major gas and electricity retailer AGL recently highlighted the work of Renew and its contributors by providing their customers with energy and money-saving tips in articles such as ‘How choosing electricity over gas can help you and the environment’ or ‘How switching to an all-electric household could save you money and help the environment’. This is a remarkable move for a business that began life as the Australian Gas Light Company!

In the Australian Capital Territory, where parts of the suburb of Ginninderry have been set up to be gas-free, the ACT government recently announced the next phase of its strategy towards zero net emissions as it looks to phase out gas. Recognising the renewable heat contribution of air-source heat pumps, rebates are offered when a gas heater is replaced with a reverse-cycle air conditioner.

Lastly, I’ll mention the Facebook group ‘My Efficient Electric Home’. Our group has over 12,000 members. Every day we help each other to move beyond burning fossil gas, LPG and even wood. New members welcome!

Author
Tim Forcey
Tim is a Melbourne-based independent energy advisor. He has worked with Exxon Mobil, BHP, Jemena and Melbourne University, and has volunteered with and advised organisations including Renew, the Bayside Climate Crisis Action Group and Beyond Zero Emissions.

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