Setting aside potential environmental impacts, Australia’s Liquid Natural Gas (LNG) development is undoubtedly a success story, despite the industry often having delivered behind schedule and over budget (on average by 40%).
Between 2010 and 2014, Australia had $US 200 billion ($290 billion) invested in major gas projects, which turned the nation into an LNG powerhouse.
As its exports are projected to rise in value to $49 billion by 2019-2020, Australia is set to overtake the current world’s largest exporter, Qatar.
Seven LNG projects were completed since 2015: the Queensland Curtis LNG (QCLNG), Gladstone LNG (GLNG), Australia Pacific LNG, Gorgon gas, Wheatstone LNG, Ichthys LNG and the Prelude Floating LNG projects.
In June, the Prelude project reached a major milestone, as the first cargo of LNG produced more than 200 kilometres offshore Western Australia was shipped to customers in Asia.
It’s the world’s largest floating gas platform, 488 metres long and 74 metres wide, and is expected to stay moored at the Prelude gas field for next 25 years. There the facility will produce gas which is then liquefied to LNG onboard by cooling, which avoids the need for piping the gas to a land-based plane.
It allows the joint venture of Royal Dutch Shell, Kogas and Inpex to tap into the estimated 3 trillion cubic feet equivalent of resources contained in the field, which otherwise would not be commercially viable. And after the 25 year lifespan of the field, the facility can then be moved to produce LNG elsewhere .
According to a CSIRO report from 2008, there are an estimated 140 trillion cubic feet of gas resource in remote locations offshore the mainland. It presents a massive opportunity, but that the Prelude project, the world’s first, is deployed in Australian waters is also testimony to the overall strength of the nation’s gas industry.
Australian projects dominated the investment in LNG projects during the recent global boom between 2010 and 2014, and investors are now again expected to loosen their purse strings for new mega projects, with energy forecasters projecting $200 billion of capital expenditure between 2019 and 2025.
However, this time around most of the new investment is set to go to other parts of the world, namely Canada, Qatar, Mozambique and the US.
Just recently, Shell along with four joint venture partners, announced it would go ahead with constructing a major LNG processing facility located at the Canadian west coast.
The projected new sweep of money for LNG projects will end a dip in investments over recent years after projects were marred by their complexity causing overruns and delays. And now there is also the the headwind of low LNG prices, a challenge that also remains for new projects. However, according to an article in Forbes by chief analyst and chairman of Wood Mackenzie Simon Flowers, the risks are on the upside.
For Australia it could mean that it is on borrowed time at the top of LNG exporting nation’s, with the US and Qatar set to fight it out among themselves.
Meanwhile, the LNG boom in Australia’s north is contrasted by gas supply issues in its south, where production of gas, notably in Victoria’s Gippsland fields, is falling behind rising demand. A recent report by EnergyQuest suggests that a projected shortfall in gas from the mid of next decade could eventually spark a move to import LNG from overseas, as piping down gas from Queensland will hit infrastructure constraints.