Four new gas projects fast-tracked as consultants warn Australia could face investment challenges

While Australia’s Future Gas Strategy has highlighted a commitment for the country to remain a reliable trading partner for LNG its gas industry could still face challenges securing investment.

That’s according to Wood Mackenzie which said the plan unveiled this week underscored the role of gas in Australia’s energy mix until 2050 and beyond - and may lower perceptions of “sovereign risk” for investors. 

However, on Friday the consultant identified challenges that remain in attracting investment to the nation’s gas industry, including government intervention, legal challenges, and difficulties in accessing affordable capital. 

Patience required

John Gibb, Wood Mackenzie’s Research Director, Australasia Upstream, explained that a “turnaround in sentiment” would not be quick. 

“In parallel, the government must be seen to support and implement this strategy, and back away from hasty interventions,” he said.

His comment came as Australia’s oil and gas industry welcomed an announcement by the Queensland government to invest in energy security via A$21 million to support fast-tracking four new gas projects in the Bowen Basin.

The New Frontier Gas Exploration Programme is viewed as important in securing new gas supply for Queenslanders, while delivering wide-ranging benefits across communities.

Broader prosperity

Australian Energy Producers Queensland Director Keld Knudsen said the funding would boost 30,000 existing jobs along the supply chain in Queensland, and billions of dollars spent with local suppliers and contractors.

“In the same week the Future Gas Strategy (FGS) recognises the critical role of natural gas for Australia’s energy security in a net-zero economy to 2050 and beyond - and that continued investment in new gas supply is needed - we welcome Queensland Government’s support for the gas sector,” Knudsen said.

“This investment demonstrates leadership and understanding of the key role gas will play in the energy mix to provide reliable and affordable energy to homes and businesses, and drive domestic manufacturing to 2050 and beyond.”

Supporting the gas agenda

Knudsen explained the funding would drive innovation in exploration technologies, tapping into the sector’s innovation and expertise, ultimately bringing more Queensland gas to market.

He added: “This underscores the state’s dedication to meeting current and future energy demands sustainably and responsibly.”

Wood Mackenzie highlighted how the FGS prioritised development of existing gas discoveries in basins with existing infrastructure to prevent domestic supply shortages. 

Securing ongoing value 

Dr Anne Forbes, Senior Analyst, Australasia Upstream, said a “use it or lose it” policy on existing discoveries could be implemented to drive development of discovered gas resources. 

She continued: “This would need careful consideration, with potential issues from misalignment of resource and infrastructure ownership, which has long stymied gas development on Australia’s North West Shelf, to LNG plant backfill schedules - where these long-term investments often require decades worth of gas discoveries in store.” 

Strategy requirements

The FGS also commits to further releases of offshore acreage for greenhouse gas storage assessment, something highly sought after in recent years. 

And the strategy pledges to review the offshore regulatory regime for carbon capture and storage (CCS), and introduce measures to further cross-border CCS. This could encourage international investment in CCS projects in Australia.