A new gas import plant on the New South Wales coast is now 90% complete and could be brought online as soon as next year, more than making up for projected shortages, Squadron Energy’s CEO, Rob Wheals, says.
The Australian Energy Market Operator warned in a report released on Thursday that southern states could face gas shortfalls by the winter of 2025 and “small seasonal gaps” the next year as supplies from Bass Strait dwindle faster than demand.
Squadron, a company owned by billionaire Andrew Forrest, said its Port Kembla energy terminal was nearing completion and its connecting pipeline to the main Victoria-NSW markets was also finished.
The plant “can absolutely meet this forecast gas shortfall” and there was “really no need for our energy system to be thinking we need to supplement power generation with dirty and more expensive diesel” as suggested by Aemo, Wheals said.
“This terminal could supply all of Victoria’s gas needs on an average day” and as much as 70% of NSW’s, said Wheals, who previously headed the APA gas pipeline group. “[It] will be ready in 2026 winter, and if it needed to be accelerated, it could be available to support the market in [20]25.”
Predictions of gas and electricity gaps have been a regular feature of Aemo reports over the past decade or more. The timing of when those shortfalls might eventuate varies, with last year’s mild winter and shifting consumer behaviour – particularly as households ditch fossil gas – pushing back expected gas gaps in some markets.
Squadron’s Port Kembla plant – with a floating storage and re-gasification unit to store imported liquefied natural gas – will have an annual capacity of 130 petajoules, or 500 terajoules a day.
Customers can start to sign up for the gas about 18-24 months before the plant comes on line. Squadron was engaged in “detailed discussions” with them now, Wheals said.
The source of the gas could be Western Australia, Queensland, the US, the Middle East or elsewhere, he said, declining to specify how much the terminal itself would cost.
The Energy Users Association of Australia, a group representing big consumers, said energy security was at threatened by “serious delays” in critical projects.
“Not only new gas developments but wind and solar projects seem mired in a planning and approvals system that just isn’t keeping pace with the needs of Australia’s energy consumers,” the association’s chief executive, Andrew Richards, said.
“The combination of delayed approvals and this uncertainty are the biggest issues facing the gas industry and its millions of customers.”
Experts such as Alan Pears, an industry fellow at RMIT university, said authorities tended to focus on supply rather than making energy waste reduction a priority.
“It is bemusing that most discussion and media articles focus on supply-side issues, when clearly we must improve efficiency of buildings and replace inefficient gas and electric appliances,” Pears wrote in a submission late last year to a Senate inquiry into household electrification.
“More efficient buildings will also facilitate wider application of demand response measures, as they remain comfortable for longer when heating output is being managed or shut down,” he said.
By contrast, developments of new gas fields would take time, be expensive “and create assets at risk of becoming stranded as we decarbonise”, Pears said.
“Even at present fossil gas prices, gas cannot compete [with electricity] in many industrial processes and almost all residential and commercial activities, which are the main drivers of southern state emerging winter supply shortages,” he said in a separate paper. “Almost all studies show that most households and commercial businesses will be financially better off over time” by switching to electricity.
