Gas prices set to fall

Distribution charges for natural gas are set to be slashed from the start of the new financial year, after energy company Jemena’s pricing and services plan was endorsed by the Australian Energy Regulator in June.

As a result, distribution charges for a typical residential customer in New South Wales will be reduced by around $254 over the next five years.

The reduction is even greater for people living in regional areas, who typically consume more gas, where savings will average around $369 over the next five years.

Jemena’s managing director, Frank Tudor, said it is now up to energy retailers to pass these savings on to customers.

“Since 2014-15 gas distribution charges have made up a smaller and smaller portion of a customer’s total gas bill. In 2014-15 distribution charges accounted for around 50 per cent of a customer’s total bill, whereas today that figure is between 35 and 40 per cent,” said Mr Tudor.

Mr Tudor said that in determining the new pricing structure, the company conducted an extensive customer engagement program.

“Jemena met with individuals, families, small business owners and large industrial customers over a two-year community engagement program across NSW. We were told quite clearly, that customers wanted natural gas for cooking, heating, and hot water at a fair price, and that is what we have delivered.

“Now, as the economy recovers from the COVID-19 pandemic, and we’ve hit winter, it’s more important than ever for customers to have access to affordable gas.”

How much do you pay for gas? Do you think energy retailers will pass on the full saving from lower prices?

9 comments

Don't hold your breath, that's $50 a year saving if passed on, big deal, better than nothing but not nearly enough or near  a "fair price".  And I've got all electricity so not a saving for me at all!

 

Like you Tood

I'm all electricity power, hence any gas saving cost wise will have no effect.

However sadly digging up more gas will have affect me as on others environmentally ... poor outcome form this measure

There is something wrong in the gas industry when the government are allowing some much to be exportede, we are the world's largest exporter of natural gas, when our retail prices are so very high. People in overseas countries can buy Australian natural gas cheaper that we can here.

Come on Angus Taylor tell us why and without the usual pollie speak and dodging of questions. 

Wont affect me, I have never lived in an area where we have reticulated gas. We use bottled gas to cook. 

 

HEADLINE - Gas prices set to fall

DETAIL: "distribution charges for a typical residential customer in New South Wales"

If not in NSW a misleading headline.

Far too much misleading and time wasting creeping into YLC newsletters.

Under a Liberal Gov. pigs will fly.

No reductions to my gas cylinder price to date but have had a notice about electricity ... a slight reduction in Daily Supply Charges from 1 July 2020.

ill believe it when i see it,   i have always had high gas bills,   and changed from A,G,L,   to oRIGIN,    THINKING IT MIGHT BE CHEAPER,   but no difference,      these companies are there to make money,   not give us handouts,    how else are they going to pay these  big wigs the millions they do, in salary,    if they drop our prices,      reading in the paper last week,    hundreds of people are on the ;poverty line with both gas and elc,  getting subsidies from the gov,   

We were lucky enough to have a faulty gas meter that stayed on the same reading for the last 12 months so only paid the service charge. Supplier obviously had no checks in their system to flag "possible meter fault". I figured that it was their problem, so enjoyed lots of cooking and long hot showers!!!

 

The Western Australian economy relies on natural gas more than any other Australian state or territory. Natural gas fuels over half of Western Australia’s primary energy needs and 60 per cent of its electricity generation. In contrast, in 2007-08 natural gas comprised 20 per cent of energy consumed in Victoria and only 9 per cent in New South Wales according to DomGas Alliance-commissioned report Western Australia Natural Gas Demand and Supply – A Forecast (the DomGas Report) released 22 June 2010.

Western Australia is also the largest producer of gas in Australia, accounting for 64 per cent of national production in 2008-09, Australian Bureau of Agricultural and Resource Economics outlined in its report Energy in Australia 2010. In total, Western Australian gas production was 1,095 petajoules (PJ) in 2008-09, across 67 fields – an increase of 9 per cent on the previous year while LNG production increased by 23 per cent.

Western Australia’s Premier Colin Barnett said “Western Australia’s proximity to Asian markets combined with the state’s largely undeveloped natural gas resources, places it in an ideal position to meet growing demand.

Colin Barnett is since retired!

Mark McGowen is Premier of WA now.

I thought perhaps the people on the East Coast may like to read about WAs situation regarding gas.

“The Government is actively supporting the sector’s expansion by working to secure land and infrastructure for industry development, including port facilities to support development of Chevron’s Wheatstone project and activities in the Browse Basin,”? Mr Barnett said.

The DomGas report stated forecasts of production from current gas fields indicate a decline from around 1,000 terajoules per day (TJ/day) to between 300 and 500 TJ/day in 2020.

“This decline will need to be replaced by production from new fields or enhanced recovery from existing fields. Between 500 and 700 TJ/day of new production is needed to maintain existing consumption without any growth in demand,”? stated the DomGas report.

Western Australia Minister for Mines and Petroleum Norman Moore outlined the Government’s policy on production; “Future policy arrangements related to promotion of secure and sustainable gas supplies in Western Australia are being considered under the State Government Strategic Energy Initiative, Energy 2030.

“The project involves consultation with industry and the community to develop an ambitious and practical plan that aims to meet the state’s energy needs over the next 20 years,”? Mr Moore said.

Exploring the west

Australian Petroleum Production and Exploration Association (APPEA) Western Australia Director Tom Baddeley is excited about gas exploration in Western Australia. “In 2008-09, petroleum exploration expenditure in Western Australia was $2.9 billion which, when you consider that $3.8 billion was spent nationally, indicates the significance of the sector in the west.

“Offshore exploration is very exciting with more than 160 trillion cubic feet (Tcf) of gas already identified in the Carnarvon, Browse and Bonaparte Basins and plenty of more exploration to come,”? Mr Baddeley said.

Mr Moore said “The [Government’s] introduction of the $80 million Exploration Incentive Scheme is also encouraging development of Western Australia’s resources, particularly in under-explored regions of the state.”?

While the majority of exploration capital continues to be invested in conventional offshore reserves, improved technology, geological knowledge and increasing domestic gas prices are making onshore exploration for unconventional gas resources in the Perth and Canning basins increasingly attractive, according to Mr Baddeley.

“Unconventional gas production in the US has risen four-fold since 1990 to around 50 per cent of total output, with shale gas representing about 15 per cent of that, and both the Perth and Canning basins have some exciting unconventional prospects including shale plays, so the outlook there is pretty positive. But it is a question of getting the right equipment here and, for a small explorer, the “˜cost of entry’ can be prohibitive,”? Mr Baddely said.

The state’s first shale gas well, the Woodada Deep-1 well, is located in the onshore Perth Basin, about 100 km north of Lancelin, near Eneabba was spud by AWE in May 2010. As the magazine went to print, AWE had not released drilling results.

Commenting on the drilling Western Australia’s Minister for Mines and Petroleum Norman Moore said “The drilling has potential to spark a new industry which may significantly increase Western Australia’s economic growth and enhance its reputation as an international resources hub.”?

Developments in planning

BHP Billiton is discussing options to commercialise the offshore Scarborough and Thebe fields via an LNG development. The Scarborough field has previously been reported to contain 8 Tcf of gas and according to analysts the field contains enough gas to support a plant producing 5-10 MMt/a of LNG for up to 20 years. Options under consideration include construction of an offshore LNG facility, a standalone facility at Onslow, or the possibility of working with other projects such as Wheatstone or Pluto. BHP and ExxonMobil are aiming to commence a front-end engineering and design (FEED) contract and a definitive project schedule in the 2011 financial year.

Earlier this year participants in the Browse LNG Project selected James Price Point, 60 km north of Broome, as the location for the processing facilities associated with the development. The project is now in the basis of design phase, to be followed by FEED in 2011, enabling a final investment decision by mid-2012.

The initial development concept for the Browse LNG Project involves offshore facilities and two LNG processing trains, each with a capacity of 7 MMt/a of LNG. Gas will be sourced from the Brecknock, Brecknock South and Tarosa (formerly known as Scott Reef) fields, estimated to contain reserves of over 14 Tcf of gas and 370 MMbbl of condensate. The first cargo from Browse could be delivered from late 2012-2014 subject to additional appraisal and customer negotiations. This will require a final investment decision to be made by mid-2012.

Following a recent breakdown in negotiations between native title claimants, and the passing of the end-of-June deadline for reaching an indigenous land use agreement, Western Australian Premier Colin Barnett has said the state government may compulsorily acquire land for the development if the dispute is not resolved.

Cougar Energy and Eneabba Gas have formed a joint venture for the development of an underground coal gasification and power station project in the Sargon tenement, located in the state’s mid-west. Gas produced through the project could potentially power Eneabba’s proposed 168 MW gas-fired Centauri-1 Power Station, located near Dongara. A strategic review of the hydrogeology is nearing completion and planning for a pilot plant will begin in early 2011.

Following a strategic review of commercialisation options for the offshore Crux Liquids Project, Nexus is considering the use of floating LNG technology as a development option. The company is looking for a joint venture partner to progress the development.

Developments in design

Chevron has said it is on track to make a final investment decision for the Wheatstone LNG Development by mid-2011. The project includes two 4.3 MMt/a of LNG trains to be supplied by the Wheatstone Field.

Chevron is seeking approval for an additional three trains that would extend the project’s capacity to 25 MMt/a. A 250 MMcf/d domestic gas plant will be constructed at Ashburton North and gas will be delivered through pipelines to the existing domestic gas network and/or directly to local users via dedicated gas pipelines. Production is expected to commence in 2015.

BHP Billiton Petroleum expects to sanction the Macedon gas project, located offshore in the Carnarvon Basin, in the coming months. All of the engineering is in the final stages of completion and the company expects first gas in 2013. Regulatory approvals are also moving forward for the project, which is anticipated to produce approximately 200 MMcf/d of gas.

The Macedon Gas Field is located in the northern Carnarvon Basin, approximately 100 km west of Onslow and 40 km north of Exmouth. Gas from the subsea Macedon Field will be piped via a 20 inch, 81 km offshore pipeline and 15 km onshore pipeline to a gas plant at Ashburton North. The 67 km Macedon tie-in will connect the gas plant to the Dampier to Bunbury Natural Gas Pipeline.

Shell has awarded contracts for the front-end engineering design (FEED) elements specific to the Prelude Gas Field development and for the terms under which the FLNG facility would be built, if the final investment decision for the Prelude project is made. For more information on the project, see the offshore review.

Under Construction

Work is well underway on Apache Energy and Santos’ Devil Creek Gas Plant. The plant will comprise gas treatment/dehydration, condensate liquid stablisation, storage and road loadout facilities, gas compression and metering. An onshore single three-phase 406 mm raw sales gas pipeline will link to the shore crossing at Forty Mile Beach and tie-in to the existing Dampier to Bunbury Natural Gas Pipeline. The gas condensate will be exported from the project area via heavy haulage trailers to Kwinana. The project will initially provide up to 100 MMcf/d of dry natural gas and 80 kl/d of gas condensate, however the facilities will be designed to process up to 200 MMcf/d of natural gas and 160 kl/d of condensate. First gas is targeted for the end of 2011.

Bulk earthworks are being completed on the project and foundations for the process modules, piperacks and equipment have been established. Piperack modules have been transported to the Devil Creek site and are now installed on their foundations. Installation of the onshore pipeline adjacent to Forty Mile Beach Road is well advanced. Clough is performing engineering, procurement and module fabrication works for the gas plant, while John Holland is constructing the gas plant and onshore gas pipeline.

Construction work continues on the Gorgon LNG Development, located on Barrow Island. Gas for the project will be sourced from the Gorgon and Jansz fields. Three 5 MMt/a LNG trains to be located on the central-east coast of Barrow Island will process the gas. Reservoir carbon dioxide will be removed and reinjected into deep saline reservoirs beneath the island. LNG will then be shipped to international markets, while compressed domestic gas would be delivered via a 90 km subsea pipeline to the Western Australian mainland, interconnecting with the Dampier to Bunbury Natural Gas Pipeline.

To date, more than $A20 billion worth of contracts has been awarded on the project, including the fabrication and assembly of the main LNG modules, construction of the 2.1km LNG jetty and marine structures and LNG tank construction.

The development is operated by Chevron in a joint venture with ExxonMobil and Shell. Major construction activity is expected to commence in the second half of 2010, with construction of the project expected to take five years. First gas is due in 2014.

Woodside is also developing the Pluto Gas Project. The initial project phase includes a single 4.3 MMt/a LNG production train, which will be connected via a 180 km, 914 mm diameter offshore pipeline to a platform in 85 m of water, which in turn will be connected to five subsea big bore wells on the Pluto field. The LNG train is being built in modular form in Thailand and shipped to the site as 264 modules. The target start-up date for the plant is by the end of February 2011, with first LNG expected by the end of March 2011.

Woodside has commenced FEED for a second and third LNG train which are expected to be added to the project, in addition to a domestic gas facility for the Western Australian market. Final investment decisions on the two additional trains are targeted by end 2010 and end 2011 respectively.

Moving through the pipeline

Gas is brought to the Western Australian market via several pipelines, the largest of which are the Dampier to Bunbury Natural Gas Pipeline (DBNGP) and the Goldfields Gas Transmission Pipeline.
Completed in 1984, the 1,530 km DBNGP transports the huge gas resources located in the offshore North West Shelf area which are processed at the Karratha Gas Plant and delivered to customers in southern WA. The 600 mm diameter pipeline has undergone three expansion projects, most recently Stage 5B, which involved 440 km of looping, adding over 110 TJ/d of firm full haul capacity.

The Goldfields Gas Transmission line is a 1,380 km pipeline that supplies natural gas from Western Australia’s northwest to mines in the Pilbara and Goldfields regions. First gas flowed through the pipeline in June 1996.

Following an expansion completed in 2009, which involved the construction of new compressor stations at Ned’s Creek and Wyloo West, the pipeline’s capacity increased by 20 per cent to 130 TJ/d of gas.

The Gas Supply (Gas Quality Specifications) Act 2009, passed by the Western Australian parliament on 17 November 2009, enables producers to supply leaner quality gas to transmission pipelines in Western Australia. The change aims to encourage development of gas fields that sit outside current pipeline delivery specifications.

Broader quality gas can result in reduced capacity and increased operating and maintenance costs for pipeline operators, gas storage facility operators and large gas consumers. The legislation requires producers of broad-quality gas to compensate operators and consumers for these losses.

The Act ensures additional gas resources reach the domestic market increasing competition.

Gas generating power

Gas-fired power is increasingly popular as a fuel source for mining projects, particularly as mining companies work towards reducing their carbon footprint.

The Sino Iron Project is the largest planned magnetite project in Australia and will be supported by a combined-cycle gas fired power station, the Sino Iron Ore Turbine. Located at Cape Preston, the 450 MW power station will comprise three power blocks and one gas turbine in open-cycle operation. Each power block comprises two 47 MW Siemens SGT-800 gas turbine and generators, one Shin Nippon steam turbine and two Austrian Energy & Environment heat recovery steam generators.

Gas will be supplied from the offshore Reindeer Gas Field over a seven-year period commencing in the second half of 2011. The turbines and generators have been established on their foundations. At the time of writing, turbines 1 and2 are approaching readiness for commissioning, the punch list is being prepared for turbines 3 and 4, and works are ongoing for the mechanical completion of turbines 5 and 6.

Rio Tinto is constructing the 7 Mile Power Station near Karratha to support its mining and port operations in the Pilbara region. The station will be linked to a substation at Cape Lambert via a new 220 kV transmission line. The power station which will replace aging plants at Dampier and Cape Lambert. Power generated by the station will be supplied to mining and port operations throughout the Pilbara region, as well as to the towns of Dampier, Wickham, Tom Price, Pannawonica and Paraburdoo. The project is costing approximately $A700 million. The power station is supplied with gas from the Dampier to Bunbury Natural Gas Pipeline.

The initial phase of the project involves four 40 MW open cycle gas turbines, which are currently being commissioned and are expected to come on line during the second half of 2010. The turbines are GE LM6000 PD-type aeroderivative gas turbine units. The second phase would involve the installation of two more open cycle gas turbines, subject to power demand. The total nominal power output of a six-turbine station would be 240 MW.

The recently commissioned 86 MW Karratha Power Station comprises two 43 MW General Electric turbines and is augmented with a heat recovery steam generator. The power station will feed into the North West Interconnected System (NWIS), which services Horizon Power customers in Karratha, Port Hedland and surrounding towns.

Industry reservations

Western Australia’s domestic market is unique in the fact that 90 per cent of the state’s domestic supply serves five major customers – Alinta, Alcoa, BHP Billiton, Burrup Fertilisers and Verve Energy. Residential usage accounts for just 4 per cent of the Western Australian gas market.

Western Australia’s Premier Colin Barnett said “Western Australia is highly dependent on natural gas for meeting the needs of industry, households, small business and electricity generation.”?
The state”˜s domestic gas reservation policy, instated in 1977, was updated in 2006 and requires proponents to provide domestic gas commitments up to the equivalent of 15 per cent of LNG production from each export gas project.

Premier Barnett is committed to a domestic reservation policy.

“Western Australia is highly dependent on natural gas for meeting the needs of industry, households, small business and electricity generation. The domestic gas reservation policy ensures sufficient gas is available to underpin the State’s economic growth into the future,”? he said.

Australian Petroleum Production and Exploration Association (APPEA) Western Australia Director Tom Baddeley said “The domestic reservation policy is having the perverse effect of discouraging new market entrants and supply diversity. It creates the perception among the smaller players that large increments of gas will be forced into the market at prices subsidised by LNG sales and that discourages them from investing because they wouldn’t be able to compete.”?

“We need policies that increase investment in the sector and not deter or add unnecessary costs to the commercialisation, and thereby use, of gas.

“There is also a risk that if we put all our domestic gas eggs in the LNG project basket by virtue of the policy, LNG prices then collapse and the proposed LNG projects don’t go ahead, we will be left high and dry. That said, if we must have a reservation policy, it’s got to be flexible,”? Mr Baddeley said.

Distribution and the end-user

As of October 2009 there are over 600,000 customers in the Western Australian retail gas market.

For the purposes of gas licensing, Western Australia has been divided into eight supply areas – Kimberley, Pilbara, Gascoyne, Mid-west, Wheatbelt, Goldfield-Esperance, Great Southern and Coastal.

WA Gas Networks owns the majority of the reticulated gas infrastructure in Western Australia. Its gas reticulation networks serve Geraldton, Kalgoorlie, Albany, Bunbury, Busselton, Harvey, Pinjarra, Brunswick Junction, Capel, Manudrah and the Perth greater metropolitan area. These combined networks constitute over 12,800 km of gas mains and associated infrastructure.

Over the last five years the annual growth of these networks has been approximately 260 km with an average annual new customer connection rate of 20,000, with a total of 620,000 end user connections.

WA Gas Networks transports gas to energy retailers, such as Alinta and Synergy who then on sell the gas to customers. In 2009 WA Gas Networks transported over 29 PJ through its distribution system in Western Australia.

Esperance Power Station and Wesfarmers Energy subsidiary Kleenheat Gas also hold distribution licences in the state.

Alinta’s retail energy business (formerly AlintaAGL) is the largest retailer of natural gas in Western Australia, serving approximately 570,000 customers. Alinta supplies gas to customers in Perth, Geraldton, Albany and Kalgoorlie.

Kleenheat Gas, WorleyParsons Asset Management, Synergy and Perth Energy also hold trade licenses enabling them to retail gas to West Australian customers.

 

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