EL: Matthew, can you tell us about the early origins of gas in Australia?
MC: In the past, a lot of the gas we originally used in Australia was called ‘town gas’, ‘syngas’ or ‘coal gas’. This was a blend of hydrogen, carbon monoxide and methane that was produced from coal using a process called the ‘Lurgi process’, named after its inventor in Germany. Incidentally, one of the pipelines in Victoria is still called the Lurgi Pipeline because this pipeline was built to supply town gas from the brown coal gasification plant in Morwell.
During the 60s and 70s, natural gas was discovered in Queensland, South Australia, Victoria, and Western Australia. Pipelines were built to supply the major cities and towns, enabling town gas to be replaced by the natural gas we use today.
EL: Where is gas produced and extracted in Australia?
MC: In Australia, there are two sources of natural gas – conventional natural gas and coal seam gas. Conventional natural gas, which is mainly methane with some ethane, was historically the only source of natural gas in Australia. It is produced from onshore and offshore gas wells in Victoria, South Australia, Queensland and Western Australia.
Usually the production of this natural gas is accompanied by the production of LPG (liquefied petroleum gas) and condensate, which is sent to a refinery to produce petrol. In some cases crude oil is also produced from these oil and gas fields.
More recently, natural gas has been extracted from underground coal seams in Queensland, hence its name, coal seam gas. This natural gas is mainly methane and is used to supply domestic Australian demand and to produce LNG (liquefied natural gas at -160 degrees Celsius) for export.
EL: Generally speaking, what do we use gas for these days?
MC: There are three main uses: For domestic and commercial heating, including space heating, hot water and cooking. In industrial processes, including everything from milk processing and growing hydroponic tomatoes, to paper, chemical and plastics manufacturing, oil refining, and glass and steel production. And finally, as a fuel for gas-fired power stations.
EL: Has this changed over the years?
MC: Some industrial users of natural gas such as the car industry have closed, but many others continue to operate. Much of the decline in the use of gas has been offset by population growth, particularly during winter when there are more homes to heat.
The closure of coal fired power stations in Victoria and South Australia, together with the rise of renewable energy, has seen an increasing dependency on gas for electricity generation in gas-fired power stations, especially when renewable energy production is low.
Natural gas usage for power generation typically increases during periods of peak electricity demand, which is during hot summer weather when air conditioning use increases. Natural gas is also used for power generation during winter to supply domestic and commercial customers that use electric heating including reverse-cycle air conditioners (also called heat pumps in Tasmania).
EL: Why are we forecasting a shortfall in gas production in Australia?
MC: Australia is a very large producer of gas. As I have mentioned earlier, gas is a key source of energy for heating and industrial processes and it has become critical for maintaining electricity supply in Australia.
While there is plenty of gas being produced here, production from offshore Victoria in particular, is reducing. Victoria also supplies gas to Tasmania, New South Wales, ACT and South Australia. If Victorian and South Australian gas production is less than the gas use in Victoria, Tasmania, New South Wales and South Australia, additional gas would need to come from Queensland or from some other source. If supply from Queensland is increased, eventually the supply pipeline from Queensland would need to be expanded or another pipeline built.
LNG import terminals in Victoria and New South Wales have also been proposed as an alternative source of supply. The reasoning for LNG imports is that this may have a lower overall cost compared to building new pipeline capacity if it is mainly used to supply winter peak demand (Victoria’s monthly winter gas consumption is almost triple the typical monthly consumption during summer).