February 2014 – Australian Domestic Gas Outlook
Allan Dawson
CEO
Western Australia’s Gas Services
Information – a step towards a transparent
and liquid future for domestic gas markets
Agenda
• The Western Australian domestic gas market
• Gas information published by the IMO
– Gas Bulletin Board (GBB)
– Gas Statement of Opportunities (GSOO)
• Opportunities to improve transparency and liquidity
The WA Domestic Gas Market
• Market is concentrated
– both demand and supply
• Vast distances between:
– major gas fields
in the north west
– key demand centres
in the south west
Source: Economic Regulation Authority of WA
Gas Supply
Gas Producers
– 7 domestic gas production facilities
– 4 major companies providing 97% of total gas supply
– 2 main operators
Gas Reserves
– 9 companies holding approximately 90% of total 2P reserves
Gas Transmission
– 8 key transmission pipelines
– 2 main pipeline operators
Source: IMO’s Gas Statement of Opportunities – January 2014
19.5%
0.6%
15.5%
0.6%
0.2%
1.0%
43.9%
0.7%
18.1%
Apache Energy AWE Limited BHP Billiton Empire Oil and Gas ERM Power
Kufpec North West Shelf JVs Origin Energy Santos
Concentration of Gas Producers, Q4 2013
Source: EnergyQuest and IMO Gas Statement of Opportunities – January 2014
28.8%
16.6%
11.3%
10.3%
8.8%
4.5%
3.3%
3.0%
2.9% 10.6%
Chevron Shell ExxonMobil Inpex Woodside
TOTAL BP BHP Billiton Apache Others
Concentration of 2P Reserves, November 2013
Major Gas Production Facilities – Joint Ventures
NWS
LNG &
Domgas
Gorgon LNG
& Domgas
W’stone
LNG &
Domgas
Varanus
Island
Domgas
Devil Creek
Domgas
Macedon
Domgas
Apache
BHP Billiton
BP
Chevron
ExxonMobil
Shell
Woodside
Other
Gas Demand
Gas Consumers
– 36 large gas consuming facilities (> 10 TJ/day)
– 3 companies who account for around half of total consumption
Gas Shippers
– 35 shippers across 8 transmission pipelines
– many of these part of same corporate group
Source: IMO’s Gas Bulletin Board
85%
7%
8%
Large User Distribution Other
Concentration of Gas Consumers 1 August to 31 December 2013
Source: IMO’s Gas Bulletin Board
16%
4%
3%
3%
33%
0%
2%
4%
32%
2%
Dampier Goldfields Kalgoorlie Karratha Metro
Mid-West Parmelia Pilbara South-West Telfer
Consumption of Gas by Location 1 August to 31 December 2013
• No centralised gas market – most gas is traded bilaterally under
long term agreements
• Some short term trading of gas and capacity by individual market
participants and via private sector broking and trading
arrangements
The WA Domestic Gas Market
Source: Gas Trading Australia
0
5
10
15
20
25
1/1
2/2
012
11
/12
/201
2
21
/12
/201
2
31
/12
/201
2
10
/01
/201
3
20
/01
/201
3
30
/01
/201
3
9/0
2/2
013
19
/02
/201
3
1/0
3/2
013
11
/03
/201
3
21
/03
/201
3
31
/03
/201
3
10
/04
/201
3
20
/04
/201
3
30
/04
/201
3
10
/05
/201
3
20
/05
/201
3
30
/05
/201
3
9/0
6/2
013
19
/06
/201
3
29
/06
/201
3
9/0
7/2
013
19
/07
/201
3
29
/07
/201
3
8/0
8/2
013
18
/08
/201
3
28
/08
/201
3
7/0
9/2
013
17
/09
/201
3
27
/09
/201
3
7/1
0/2
013
17
/10
/201
3
27
/10
/201
3
6/1
1/2
013
16
/11
/201
3
26
/11
/201
3
6/1
2/2
013
16
/12
/201
3
26
/12
/201
3
5/0
1/2
014
15
/01
/201
4
25
/01
/201
4
4/0
2/2
014
14
/02
/201
4
24
/02
/201
4
Qu
an
tity
(T
J/d
ay)
e.g. Gas Available for Short-Term Trading via
Gas Trading Australia, December 2012 to February 2014
Transparency in the WA gas market
• Before the introduction of the GBB and GSOO – limited/fragmented information available about gas supply and usage in WA
• GBB and GSOO were implemented in response to the recommendations of the Gas Supply and Emergency Management Committee in 2009
• Some of the benefits of improved transparency: – Assist investment decisions, reducing uncertainty/risk
– Help identify opportunities to buy/sell gas and capacity
– Potentially reduces barriers to entry attracting more supply competition from different gas fields, more retail competition
– Opportunities for closer integration between electricity and gas sectors
– Can signal potential supply shortfalls, allowing for mitigation action
– Improved understanding of the market for participants, government etc.
• Transparency should help increase liquidity in the market
WA’s Gas Bulletin Board
• The GBB is a public website. Its primary purpose is set out in the Gas Services Information Act
…to include information relating to short and near term natural gas supply and demand and natural gas transmission and storage capacity…
• The GBB includes the following public information: – Forecasts of daily gas production, storage and transmission capacity
– Forecasts of daily gas flows gas (pipeline and storage)
– 12 month ahead forecasts of changes to the capacity of production, transmission and storage facilities (maintenance reports)
– Daily actuals of: • gas production by facility
• pipeline and storage gas flows
• gas consumption by large user facilities
• Emergency Management Facility – restricted access part of the GBB activated in an emergency
• Live from 1 August 2013
Comparison of GBBs
Information WA GBB Eastern Australia GBB
Network information Map & detailed topography showing
points of connection between
facilities/pipelines
Map
Capacity outlook 7 day ahead 3 day ahead
LCA flag 3 day ahead 3 day ahead
Medium term capacity outlook
(maintenance)
Production, pipelines and storage facilties Not included
Nominations and forecast flows 7 day ahead 3 day ahead
Daily actual flow – pipelines and storage >10 TJ/day >20 TJ/day
Actual consumption – user facilities >10TJ/day Not included
Notice board Yes Yes
Emergency management Restricted access, some periodic data &
ability to share ad hoc data
Free text facility
Source: IMO’s Gas Bulletin Board
0
200
400
600
800
1,000
1,200
1,400
1,600
Qu
an
tity
(T
J/d
ay)
Gas Day
Dongara Beharra Springs Devil Creek
Macedon Varanus Island NWS
Red Gully Total Production Capacity (LHS)
Facility Production – 1 August to 31 December 2013
Source: IMO’s GSOO – January 2014 (based on information provided by DBNGP (WA) Transmission Pty Ltd
0
100
200
300
400
500
600
700
800
900
1,000
Av
era
ge
Qu
an
tity
Sh
ipp
ed
(T
J/d
ay)
Gas Month
Monthly Average Gas Flows - Full haul Monthly Average Gas Flows - Part haul Nameplate Capacity
DBNGP Gas Flows – 2010 to 2013
Source: IMO’s GSOO – January 2014 (based on information provided by the APA Group
0
20
40
60
80
100
120
140
160
Av
era
ge
Qu
an
tity
Sh
ipp
ed
(T
J/d
ay)
Gas Month
Monthly Average Gas Flows Nameplate Capacity
Goldfields Gas Pipeline Gas Flows – 2010 to 2013
Source: IMO’s Gas Bulletin Board
0
200
400
600
800
1,000
1,200
Qu
an
tity
(T
J/d
ay)
Gas Day
Metro South West Dampier
DBNGP Gas Deliveries (by Zone) – 1 August to 31 December 2013
Source: IMO’s Gas Bulletin Board
0
10
20
30
40
50
60
70
80
90
100
Qu
an
tity
(T
J/d
ay)
Gas Day
Quantity of Gas Injected Quantity of Gas Withdrawn
Mondarra Storage Facility Injection/Withdrawal – 1 August to 31 December 2013
Source: IMO’s Gas Bulletin Board
31%
7%
13%6%
25%
19%
Electricity Generation
Gas Distribution Network
Industrial
Petroleum, LPG & Domestic LNG (noexports) Processing
Minerals Processing
Mining
Gas Consumption by Industry – 1 August to 31 December 2013
• The GSOO contains forecasts of gas demand and supply in WA
for the next ten years, including information about:
– natural gas reserves
– gas production and storage facilities
– gas transmission pipelines and pipeline augmentations
– large users of gas
• IMO published one GSOO in July 2013, another in January 2014
• Future GSOO’s will be published annually from December 2014
WA’s Gas Statement of Opportunities
WA’s GSOO – key features
• Attempts to quantify the availability of gas supply, rather than
simply applying gas production capacity
• Focuses on topics of industry concern (e.g. North West Shelf)
• Provides estimates of gas usage by WA’s LNG sector
• Considers how developments in the global and Asia Pacific LNG
markets may impact on the domestic gas market
• Shows utilisation of existing gas infrastructure
• Discusses other issues and policies that may affect the domestic
gas market
Source: IMO’s Gas Statement of Opportunities – January 2014
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Qu
an
tity
(T
J/d
ay)
Year
Base Demand Scenario Lower Potential Supply Forecasts Upper Potential Supply Forecasts Gas Production Capacity
Supply and Demand Balance, 2014 – 2023
(GSOO – January 2014)
Opportunities for more transparency
• Limited/fragmented information is currently available about:
– Prices
– What capacity is available (production, transmission)
– Short term trading of gas and capacity
– Key details of long term gas supply contracts (prices, volumes, expiry dates)
• Improving transparency should encourage further competition and liquidity in the market
• Existing information sources (GBB and GSOO) could be expanded to capture more information
• Other initiatives could include development of a centrally coordinated gas market
February 2014 – Australian Domestic Gas Outlook
Allan Dawson
CEO
Thank you