Coal gas shifts focus on energy

Daily Telegraph
Wednesday 3/9/2008 Page: 84

AUSTRALIA'S energy landscape is undergoing profound change, with a shift towards coal seam gas and dwindling oil production, according to new research. Investor interest in gas a relatively clean-burning energy source has been piqued by the Federal Government's planned carbon emissions trading scheme. According to a report released yesterday by energy strategists EnergyQuest, coal seam gas reserves in Queensland and NSW almost doubled to 12,400 petajoules about 20 times annual gas demand on Australia's east coast in 2007-08.

Coal seam gas production jumped 39 per cent to 133 petajoules, helping to lift total gas production by more than 5 per cent to 1018 petajoules. Oil production fell nearly 12 per cent to 115 million barrels of oil equivalent, despite the first production from BHP Billiton's Stybarrow field off Western Australia. The Bonaparte Basin off the Northern Territory, the Carnarvon Basin off WA and the Gippsland Basin off Victoria all experienced a drop-off in production, with the Cooper Basin in South Australia was the only major oil region to post an increase.

The fall in local production combined with a record-breaking run in oil prices to blow out Australia's petroleum trade deficit to a record $10 billion for the year to June 30 more than $30 million per day. Graeme Bethune, chief executive of energy analyst EnergyQuest, said the final quarter of 2007-08 in particular marked a "seachange" in eastern Australia's gas sector. During the three-month period, Dutch oil giant Shell and Malaysia's Petronas joined British-based BG Group in the scramble for a slice of Queensland's rich coal seam gas reserves.

The big international players are vying to put their feet on the energy source to supply planned LNG plants ahead of a predicted surge in Asian energy demand. Professor Ross Garnaut's Climate Change Review also predicted that domestic gas prices would rise to international levels over the long-term. "The increasing involvement of major international players in east coast LNG projects makes it no longer a question of whether east coast LNG projects will proceed but rather when and how much," Mr Bethune said.

At the same time, a significant increase in gas-fired power generation is probably the most effective way of mitigating growth in greenhouse emissions in the medium term." Australia's rapidly falling oil production was a worry for the long term, Mr Bethune told The Daily Telegraph. Meanwhile, global oil prices dropped to a four-month low yesterday, as Hurricane Gustav weakened before hitting the oil rich Gulf of Mexico. The storm was downgraded from a Category 3 to Category 1 by the time it reached the Louisiana coast late on Monday, easing concerns that oil rigs and refineries could be damaged. Light, sweet crude for October delivery fell nearly 4 per cent to $US111.40 a barrel.