Volume #2:
Dec 2019

Activity, Projections & Latest Data

 PRODUCT HIGHLIGHTS

Upstream Analytics Australasia: A comprehensive database of reports detailing E&P assets and activity across Australia, New Zealand Timor and PNG.

E&P Databases

UCube: Upstream Database - Complete overview of the global upstream oil and gas industry, with reserves, production profiles and economical figures for all fields, discoveries and exploration licenses globally.  Includes more than 65,000 assets and 3,200 companies globally, with coverage by continent, region, country, province and state. Historical data from 1900 and forecasts to 2100.

ECube: Exploration Database - Well-by-well database tailored specifically for exploration analysis, from 79,000 assets and 18,000 producing fields. Includes multidimensional data parameters such as discovered volumes exploration costs, acreage positions, license round information and a range of reservoir parameters.

Upstream Analytics: frequent reports and commentaries with global upstream sector analysis, both on a macro level and in detail, powered by our proprietary databases and our experts. Upstream Analytics is included with the database subscriptions and is available as a standalone product.

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products@rystadenergy.com


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Australian Coal Seam Gas (CSG) assets to decline by 60% over the next 10 years

Queensland’s CSG to LNG projects have struggled since their inception in 2014. The three LNG export facilities on Curtis Island are capable of producing 25.3 million tonnes of LNG per annum (tpa). However, Rystad Energy expects these facilities to have produced just 20.95 million tpa in 2019, representing just 83% of nameplate capacity. To put that into context, we expect that Australia’s East Coast facilities had 21% more spare capacity in 2019 than the entire nameplate capacity of Shell’s Prelude project, home to the world’s largest floating LNG facility. At average JKM futures pricing for 2020, this spare capacity represents lost sales revenues of approximately A$2.7 billion per annum. The problem looks set to persist if not worsen, as 2P reserve write downs in projects like Ironbark and Mahalo signal tough times lay ahead for Queenslanders.

This conclusion has been drawn from Rystad Energy’s recently completed well-level production forecast for CSG projects in Australia. Based on reported remaining 2P reserves and well numbers, production from currently producing or under development CSG projects is expected to decline by 60% over the next 10 years. Countering this, we expect projects currently in the discovery and exploration phases to offset this reduction by 30%. This still leaves a net 30% decrease in CSG production over the period. For an LNG export industry already struggling to fill facilities, an additional 30% reduction in feed gas would be disastrous, causing multiple trains to be taken offline.

Image_QLD LNG production forecast and capacity

Figure 1: QLD LNG production forecast and capacity
Source: GasMarketCube, Rystad Energy Research

Australia’s Perth basin gas output to overtake Cooper by 2025

Western Australia has been blessed (or cursed, depending on what side of the deal table you sit) with an abundance of domestically available gas via its domestic gas reservation policy. However, with LNG production growth slowing and domestic gas demand increasing, the days of gas trading below A$3/GJ on spot markets are unlikely to persist. This sets the scene perfectly for the Perth basin to begin its rise to national if not international significance. Rystad Energy’s base-case production profile for the basin has it reaching a peak gas production rate of over 400 MMcfd by about 2024, surpassing that of the once mighty Cooper basin. Moreover, significant upside risk exists in this forecast, and production rates of more than 1 Bcfd could materialize in our high-case forecast.

Perth and Cooper basin production forecasts

Figure 2: Perth and Cooper basin production forecasts
Source: UCube, Rystad Energy Research

Electrification of LNG could save O&G majors billions 

Australia currently has an LNG production capacity of 88 million tonnes per annum (mtpa) or ~4.1 trillion cubic feet of gas. The amount of gas consumed in the operations of an LNG facility can be as high as 10% of the gas that flows through it. Given this, if 4.1 Tcf of gas were to flow through facilities in Australia, a staggering 410 Bcf of gas could be consumed in operations. To put that into context, 410 Bcf of gas would be almost enough to supply the entire 2019 Australian East Coast gas demand of 438 Bcf (excluding LNG operations). Taking a step back and looking at the whole of Australia, saving 10% of the potential 88 mtpa of LNG production would be the equivalent to saving A$4.2 billion worth of LNG at December 2019 JKM futures pricing. With the ongoing cost of replacing this gas with electricity from the grid modeled at A$2.5 billion (or about A$85 per megawatt hour), we estimate electrifying all LNG facilities in Australia would create A$1.7 billion of additional value annually for Australian LNG operators (excluding additional debt costs from electrification capex). Assessing this from the c-suite, the average LNG project operator in Australia – with 12.5 mtpa of capacity – has the potential to reduce their annual running costs by close to A$245 million through the electrification of their operations.

Liquefaction capacity by operator and potential power demand

Figure 3: Liquefaction capacity by operator and potential power demand
Source: UCube, Rystad Energy Research

Australian East Coast Gas Production

For a field level breakdown of oil and gas production in the region, please see Rystad Energy’s UCube or Analytics products.

2019 East Coast Gas Production (million cubic feet)

Figure 4: 2019 East Coast Gas Production (million cubic feet)
Source: AEMO, Rystad Energy Research 

Table_2019 East Coast Gas Production (million cubic feet)

Table 1: 2019 East Coast Gas Production (million cubic feet)
Source: AEMO, Rystad Energy Research

Australian Gas Cost Curve

To see which assets are feeding into the below cost curve, please see Rystad Energy’s UCube.

Australian Gas Supply Cost Curve (USD/kcf)

Figure 5: Australian Gas Supply Cost Curve (USD/kcf)
Source: UCube, Rystad Energy Research

Short-Term Gas Price Forecast

For medium and long-term gas price forecasts, or for a price series not shown below, please see Rystad Energy’s UCube, Analytics or Gas Markets products.

Short Term Gas Price Forecast

Table 2: Short Term Gas Price Forecast
Source: GasMarketCube, Rystad Energy Research