The Australian Energy Market Operator (AEMO) today released an update to its Victorian Gas Planning Report (VGPR) illustrating a need for additional gas production, alternative supply or other measures to meet natural gas demand beginning in winter 2021.
Annual Victorian gas consumption has been relatively stable at approximately 200 petajoules (PJ) per year since 2013. Victorian gas system consumption is forecast to slightly decline over the outlook period to 197 PJ per year by 2022, with a shortfall the result of decline in Victorian gas production.
A shortfall is also projected in the supply available to meet winter peak demand. Specifically, AEMO is forecasting a shortfall of up to 36 terajoules (TJ) during a 1 in 20 year winter peak day in 2021, and 220 TJ on a similar day in 2022, and 109 TJ on a 1 in 2 year peak winter day from 2022.
Based on infomation provided by gas producers, the report is advising that by 2022, gas production will reduce from 278 PJ to 171 PJ in Gippsland (38%) and from 50 PJ to 16 PJ in Port Campbell (68%), due to the depletion of offshore gas fields which have served Victoria well for many decades. Total production in Victoria is expected to decline from 435 PJ in 2017 to 187 PJ in 2022, resulting in a projected shortfall of 19 PJ for that year.
AEMO’s forecast supply reductions are consistent with results of a study commissioned by the Commonwealth government and advice delivered by the Australian Competition and Consumer Commission (ACCC) in November and December 2017 respectively.
“As the gas market and systems operator, our role is to provide advice to governments and industry and to flag issues well in advance in order to illicit a market response,” said Damien Sanford, AEMO’s Executive General Manager of Operations.
“We anticipate that these signals will encourage the market to respond accordingly with solutions with adequate resources to enable us to operate the gas system securely and reliably,” said Mr Sanford.
AEMO is currently working closely with both the Victorian government and the industry to investigate a number of solutions that could help resolve both peak day and annual supply issues.
“Market participants have advised us that they are currently investigating additional sources of gas supply including peak day capacity. Other options include increased production and storage capacity, additional pipeline import capacity into Victoria, and a liquefied natural gas (LNG) import terminal,” said Mr Sanford.
The bi-annual report assesses annual supply and consumption forecasts for Victoria over the next five years (2018-2022). The last VGPR was published in 2017 however materials changes in information provided to AEMO by gas producers have necessitated this update.
AEMO continues to seek further information about additional gas supply options and will provide an update by October 2018.
To view the full report please click here.
AEMO is responsible for operating Australia’s largest gas and electricity markets and power systems, including the National Electricity Market and interconnected power system in Australia’s eastern and south-eastern seaboard, and the Wholesale Electricity Market and power system in Western Australia.
AEMO also operates the Victorian Declared Wholesale Gas Market and the Victorian gas transmission system; the wholesale gas Short Term Trading Market hubs in Adelaide, Sydney and Brisbane; the Wallumbilla Gas Supply Hub in Queensland; and the Moomba Gas Supply Hub in South Australia.
As Australia’s independent energy markets and power systems operator, AEMO provides critical planning, forecasting and power systems security advice and services to deliver energy security for all Australians. For more information, head to