Australia is a major exporter of liquefied natural gas (LNG), with considerable potential for further development based on its abundant resources of natural gas. Australia is the third largest LNG exporter in the Asia-Pacific region and the fourth largest LNG exporter in the world, exporting 18.9 million tonnes in 2011 with a value of around $11.1 billion. The LNG industry is attracting significant new project investment providing major benefits in the form of long-term employment, economic benefits and government revenue.
The Department plays a pivotal role in the development of Australia's LNG industry primarily through its role in regulating offshore petroleum development. As the LNG market has matured, the Department's primary focus is on ensuring that LNG development proposals are: consistent with good oilfield practice; safe; meet stringent environmental standards; benefit the Australian economy and community; and that regulatory approvals are carried out in an efficient and consistent manner.
What is LNG?
LNG is natural gas, primarily methane, which has been cooled to minus 161°C to reach its liquid state. Liquefying natural gas reduces the volume it occupies by more than 600 times, making it a practical size for storage and transportation in specifically designed and built tankers. LNG is widely recognised as a clean, safe and convenient form of energy, which can be readily supplied to distant markets. It is transported to dedicated LNG receiving terminals, which have the capacity to store and re-gasify the LNG for supply to markets. LNG, in its liquid state, is not flammable or explosive.
Australia's Natural gas resources
Methane gas feedstock for LNG production can be sourced from either conventional natural gas fields or from coal seam gas (CSG) associated with coal deposits. Abundant conventional natural gas resources have been identified offshore of North and Western Australia in the:
- North West Shelf Project area;
- Gorgon Project fields;
- Browse Project fields;
- Bayu-Undan fields;
- Greater Sunrise Project fields;
- Scarborough fields;
- Pluto project fields; and
- more recently the Wheatstone, Ichthys and Prelude fields.
In Eastern Australia, large CSG resources have been discovered onshore in Queensland and to a lesser extent in New South Wales.
Australia's LNG plants
Currently, there are three operating LNG processing plants in Australia, the North West Shelf (NWS) LNG Project in Western Australia, the Darwin LNG plant and recently the Pluto project. The NWS Project has five LNG production trains with a total production capacity of 16.3 million tonnes per annum (mtpa). The Darwin LNG plant's single production train has a capacity of 3.6 mtpa, and the Pluto project has a single production train with a capacity of 4.3 mtpa.
There are several other Australian conventional LNG projects at various stages of development with the massive Gorgon Project (initial 3-train, 15 mtpa production capacity) under construction and due for startup in 2014-2015. More recently, final investment decisions have been taken for the Wheatstone project (2-train, 8.9 mtpa production capacity), due to be operational in 2016 and the Ichthys project (2-train, production capacity 8.4 mtpa), due to be operational in 2017.
The Prelude project (production capacity 3.5 mtpa), which will use Floating LNG technology, has obtained a final investment decision and is to be operational by 2016-2017. This technology involves the production of LNG via a large, barge-like floating LNG production facility and is suitable for smaller offshore gas fields that are distant from either land or existing infrastructure.
Other potential LNG projects that are yet to receive a final investment decision are the Browse LNG project, Equus LNG, Pluto trains two and three, Sunrise LNG, Bonaparte LNG, Scarborough, and Cash-Maple Floating LNG.
As yet, there are no operational CSG-LNG projects in the world. However, the Queensland Curtis LNG, Gladstone LNG and Australia-Pacific LNG projects are currently under construction in Gladstone, Queensland. There are also several other proposals for CSG-LNG plants under consideration for Gladstone.
Australia' LNG exports
Australia has sales contracts in place to supply LNG to Japan, China, and South Korea, and has made spot market sales to numerous other countries. During 2010, the vast majority (69%) of Australia's LNG exports were to Japan as shown in Table 1 below.
Table 1 - Destination of Australia's LNG Exports (2010)
Japan | 13.28 |
China | 3.92 |
South Korea | 1.03 |
Taiwan | 0.82 |
Other | 0.06 |
Source: Facts Global Energy, Global LNG Supply and Demand in 2010.
Australia-China Natural Gas Technology Partnership Fund
At the time the North West Shelf (Australia) - Guangdong (China) LNG sales agreement was struck in 2002, the Australian Government, the Government of Western Australia and the partners in the North West Shelf Venture agreed to establish the Australia-China Natural Gas Technology Partnership Fund that provides opportunities for training, research and knowledge transfer between the people of China and Australia in the natural gas and LNG industries.