Australia finalises offshore exploration permits to support gas supply and economic transition

The Albanese Government of Australia will finalise new offshore exploration permits for gas supply to firm renewables and support the economy as the country makes the transition to net zero emissions.

The Minister for Resources and Northern Australia Madeleine King will finalise permits for Esso and Beach Energy in the Otway and Sorrell Basins, with any discovered gas to support the domestic east coast market.

Exploration permits will also be finalised for Chevron, INPEX, Melbana and Woodside Energy on Australia’s west coast, supporting energy security in Western Australia. In addition, 10 permits will be finalised for carbon capture and storage exploration.

The International Energy Agency, the CSIRO, the UN Intergovernmental Panel on Climate Change and Australia’s Climate Change Authority all identify that carbon capture, utilisation and storage will be needed to support the net zero transition by boosting Australia and the region’s long-term gas supply.

As Australia’s economy transitions to clean energy, gas is required to firm renewables. Since the government has come to office, there has been a 25% increase in renewable energy generation in the National Electricity Market, and this has driven both its total emissions and emissions intensity to record lows.

Samantha McCulloch, Chief Executive for Australian Energy Producers, welcomed the Resources Minister’s announcement of three years’ worth of acreage releases, which is critical to maintaining the pipeline of gas supply projects needed to ensure Australia’s long-term energy security.

“The Future Gas Strategy made clear that natural gas will remain a critical part of Australia’s energy and net zero transformation, to 2050 and beyond,” McCulloch said, adding that, “Exploration is an essential part of this – as the first step in delivering the natural gas Australia needs to power industry, back up renewables and fast-track the phase out of coal. With oil and gas exploration at an all-time low across Australia, industry needs policy certainty and regulatory stability to invest in the next generation of gas supply to meet the significant demand for gas that Australia and our region will need.”

Supply challenges

The most recent ACCC Gas Inquiry Interim Report makes clear that the domestic east coast market may experience gas supply shortfalls as early as 2027. Supply challenges could persist into the mid-2030s unless new sources of gas supply are developed.

“As ageing coal generation comes offline in coming years, gas will continue to be needed to firm renewable energy generation and as a backup during peak energy use periods. Gas is critical for the transition. But it will be a diminishing proportion of our energy mix to 2050 as other storage technologies come online,” Minister King said.

The first principle of the government’s Future Gas Strategy is Australia needs to reach net zero emissions by 2050. Gas demand will decline sharply during the transition to clean energy, but steps to secure supply will still be necessary to ensure domestic demand can be met.

The Future Gas Strategy makes it clear the government will focus on optimising existing discoveries and infrastructure and aligning with our net zero targets.  

The finalisation of offshore exploration permits does not automatically allow new offshore gas production to occur. Separate and extensive safety and environmental approvals are required through Australia’s independent National Offshore Petroleum Safety and Environmental Management Authority.