East Coast Gas Market, Queensland’s coal seam gas development, and the National Electricity Market – don’t take gas for granted

Abstract

Queensland’s early coal seam gas (CSG) development was primarily focused on supplying domestic demand as conventional field production from the Bowen and Surat basins declined. However, with increasing appraisal, it became apparent that the demand outlook and the long-run <A$4 domestic gas price would be limiting factors for development. Substantial reserves growth through the 2000s triggered multiple rounds of consolidation leading to four large joint ventures of Australian and international companies. The CSG fields reached peak production of ~4 petajoules (PJ) per day from 2017, following investment of ~A$60 billion in wells and facilities in the upstream and pipelines to liquefaction capacity on Curtis Island (Gladstone). Today, there are over 14,000 CSG wells in the Bowen and Surat basins, and over 12,500 PJ of gas has been delivered to Curtis Island as liquefied natural gas feedstock, as well as over 2200 PJ of gas delivered to the domestic market. Phenomenal growth occurred from 1 January 2015 to mid-2024, despite the contemporaneous, widely held belief that the CSG plays could never be commercialised. CSG from Queensland will play an increasingly important role in the National Electricity Market as gas supply in the southern states continues to decline and gas-powered-generation demand peaks increase in volume due to coal-plant retirements and increased electrification. To maintain CSG production (i.e. offset natural decline) requires investment of ~A$3.5–4 billion per annum; any government intervention that inadvertently threatens this investment could ultimately increase the risk of gas shortfalls in the medium- to long-term, with accelerated field decline.