Bruce Robertson, IEEFA Gas/LNG Australasia analyst will be giving evidence at the Scientific Inquiry into Hydraulic Fracturing of Onshore Unconventional Reservoirs in the NT which starts today.
“The development of an onshore gas industry in the Northern Territory is economic stupidity in the face of a deepening global gas glut,” said Mr Robertson.
“Australia’s high-cost LNG producers are already in dire financial trouble with a number of Gladstone trains set to shut down within the next two years.
“In Qatar, gas production costs are the lowest globally at below A$0.20/GJ. The recent lifting of a 12-year moratorium on the world’s largest natural gas field by Qatar and increased US gas exports heralded by the Trump administration will further depress international prices.
“In the US the delivered price to the Henry Hub market averaged A$3.67/GJ in June 2017. In the Northern Territory production costs have been estimated at A$7.50/GJ. The price of NT gas blows out to become in excess of A$11/GJ when delivered to a metropolitan market or to the Wallumbilla Hub, Queensland.
“Currently spot prices in Japan are A$6.90/GJ. That is after the gas has gone through the expensive liquefaction and transport process a process that costs around A$4.95/GJ. Total costs of Northern Territory gas would be over A$16/GJ delivered to Japan which is more than twice the price currently being paid.
“If the industry proceeds in the Northern Territory the assets will become stranded as export customers look to lower cost sources. Domestically high cost shale gas in the Northern Territory could result in higher prices and decreased energy security for consumers as has occurred in the eastern states,” concluded Mr Robertson.
Bruce will be presenting his evidence Today at 11.05am (NT time) and the Darwin Convention Centre, Northern Territory.