As 2018 draws to a close, Wood Mackenzie's experts discusses five key themes to look out for in Australasia's oil and gas industry in 2019.
1. East Coast gas to remain tight
"As outlined in our east coast gas study, the supply-demand balance on the east coast will remain precariously tight. With LNG demand from Asia staying strong, the Queensland LNG plants will look to maximise output. This will continue to limit the gas available to domestic buyers, and gas that is available is likely to be priced close to LNG netback," said research director, Nicholas Browne.
"A key marker in 2019 will be Gippsland Basin JV production. We are forecasting an 11% decline. This decline is a major contribution to increasing demands being put on Queensland to supply the east coast market."
2. Power market needs rule changes
Consulting vice president Mark Hutchinson said, "We are concerned that without a reliability obligation like that required by the National Energy Guarantee, or a capacity market, gas peaking plants will begin to retire and make the National Energy Market less reliable. Additionally, to provide guidance to investors in all technologies, there should be a clear federal policy around renewable energy targets and market-based auction systems to drive the future development of the power network."
Watch our latest webinar on Australia's electricity reliability challenge.
3. Explorers get their mojo back
"After a decade of decline and its near death in 2017, offshore exploration in Australasia began to show signs of life in 2018. We expect the rejuvenation to continue in 2019, with up to 15 offshore wells planned," commented senior analyst Chris Meredith.
"Our top five high-impact offshore wildcats include BP's multi-tcf Ironbark prospect in offshore Western Australia, Total's first ultra-deepwater Mailu wildcat in Papua New Guinea, Woodside's Achernar well in North West Shelf (NWS), Eni's Kanase wildcat in the Timor-Leste Australia JPDA, and finally Cooper Energy's Elanora and Annie wells in the Otway basin."
4. The next wave of Australian LNG begins… and collaboration could be the key
Senior analyst Daniel Toleman said, "Racing for FID in Western Australia are three NWS and Pluto backfill options – Scarborough, Browse and Clio-Acme – and one expansion project – Pluto train 2. These projects are not slam-dunks. To reduce costs and to get projects across the line, Australian operators are mooting something they have never tried before: collaboration. This raises two questions. Can the rival operators successfully share infrastructure? And will this sharing be enough to make Australian projects cost-competitive? If the NWS tariff can be agreed, Clio-Acme could be the surprise FID in 2019, taking some of the ullage available before Browse is developed."
Read our thoughts on collaboration in the Carnavon Basin.
5. Expect policy changes (election or not)
"We forecast that Australian carbon emissions from the power sector will drop by 34% by 2030 compared with 2005. This is on a business as usual basis. If the Labour government wins the upcoming election and implements its target of 50% renewables and a substantial increase in storage by 2030, emissions will drop even more. But at what cost? And will there be an impact on reliability? Renewables are currently the lowest-cost form of electricity in Australia, but key questions remain about levels of storage and backup fossil fuel generation needed to keep the system reliable," concluded Hutchinson.