In recent years there have been significant oil discoveries in offshore Australia. These medium sized fields are quickly being monetised, making use of Australia's world class infrastructure and skills set. In 2006-07 a number of new oil projects such as Puffin (Bonaparte basin), Basker-Manta-Gummy (Bass Basin), Enfield (Carnarvon Basin), Cliff Head (offshore Perth Basin) and Stybarrow (Carnarvon Basin) came into production.
New conventional oil projects that are anticipated to come on stream in the near future include Vincent and Pyrenees (Carnarvon Basin), Swift/Skua and Montara (Bonaparte Basin).
Over the last 20 years, the natural gas industry has grown from a relatively small base to being Australia's third primary energy source after coal and oil, accounting for 19% of domestic energy demand. The gas industry has strong growth potential, particularly in the industrial, minerals processing and electricity generation sectors. Australia's exports of Liquefied Natural Gas (LNG) are expected to increase substantially in the next few years.
Global and domestic demand for natural gas is likely to continue to increase as a result of economic growth and the attractiveness of gas as an abundant and low emission transition fuel in a carbon constrained future.
Australia is in an excellent position to meet the projected strong future demand in Asia and North America for LNG. The Pluto Project is in construction with first LNG expected in 2010. Projects in the planning stage including Ichthys, Gorgon, Browse, Wheatstone, Prelude, Pilbara and Greater Sunrise have the potential to increase production to over 80 million tonnes per annum (mtpa) - almost four times current capacity. Major international companies are also moving to realise the potential of coal seam methane as a feedstock for LNG for export, with several projects under consideration in onshore Queensland. This would be a world first use of this source of gas for LNG export.
Australia has an outstanding record of successful development of gas projects and a reputation as a reliable LNG exporter. Australian LNG projects have a proven record of providing reliable supply, with over 2,300 incident free shipments being sent since 1989. In 2007-08, Australia exported 14.75 million tonnes of LNG worth around A$5.8 billion.
Utilising the large quantities of natural gas found on Australia's North West Shelf, Australia has developed a world class LNG export facility. The North West Shelf project currently supplies approximately 7% of world LNG trade and 11% of the Asian LNG trade. The North West Shelf Venture's fifth LNG train was commissioned in late 2008 to take the Venture's total LNG production capacity to 16.3 mtpa.
The majority of North West Shelf LNG is exported to Japan under long term contracts for use in power generation and for industrial, commercial and domestic heating. In 2006, the North West Shelf began supplying up to 3.9 mtpa of LNG to Guangdong in southern China under a 25 year contract. The North West Shelf also supplies 0.5 mtpa of LNG to South Korea.
The Bayu-Undan gas development, located in the Timor Sea Joint Petroleum Development Area supplies gas to Australia's second LNG plant, Darwin LNG. ConocoPhillips, operator of the Bayu-Undan project and Darwin LNG, began supplying Tokyo Electric Power and Tokyo Gas with 3 mtpa of LNG under a 17 year contract in early 2006.
Australia continues to add to its large reserves of natural gas, particularly off Australia's north western coast, where at least four major projects are seeking to take advantage of the growing world LNG demand. As a large user of natural gas, gas to liquids technology also offers Australia a potential opportunity to further commercialise its large gas reserves.
Over the past two decades, the gas market in Australia has matured and consumption growth has slowed. Australia's primary gas consumption has increased from 688 PJ in 1989-90 to 1158PJ in 2006-07, an average growth rate of 2.7%.
Significant expansion and integration of Australia's domestic gas transmission and distribution network in recent years, particularly in south eastern Australia, has facilitated growth in established gas markets and introduced gas into new regional centres (see following map). This is enhancing basin-on-basin competition in the supply of gas that will be beneficial to gas consumers and encourage the development of new industries as well as increase opportunities to commercialise gas discoveries.
The Blacktip field, located in the Northern Territory, is being developed by Italian company Eni is expected to start up in late 2009. Eni has signed an agreement with the Darwin Power and Water Utility to supply of a total amount of 20 billion cubic meters of gas from Blacktip for a 25 year period. Blacktip gas will be piped ashore near Wadeye to a pipeline that will connect with the existing South-North gas pipeline to Darwin.
A pipeline linking Victoria and South Australia is delivering gas from new projects in the Otway and Bass Basins to western Victoria and South Australia and increasing security of gas supply to these States. In addition, other pipelines are under consideration to facilitate the commercialisation of coal seam gas resources in onshore Queensland and New South Wales.
These pipeline projects will further integrate the pipeline network and enable gas from new upstream developments to be transported to domestic gas markets. A detailed map of Australia's pipeline infrastructure is shown below.