AEMO says we’re running out of gas – again

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AEMO is warning of a potential gas shortage, but is basing that call on information from the industry – which wants to drill, frack and extract.

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(Kyodo via AP Images)
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It’s that time of year when the Australian Energy Market Operator (AEMO) publishes its annual “GSOO”. This gets us all excited that the world’s top gas-exporting nation is running out of gas … again.

AEMO is an entity responsible for planning aspects of how the energy-service wants and needs of Australians can be satisfied. The “GSOO” is AEMO’s annual Gas Statement of Opportunities.

To date, the GSOO seems to be a recurring opportunity for AEMO to call for fossil-fuel producers and pipeline builders to explore for more gas, frack for more gas, build more gas pipelines, and even build liquefied-natural gas (LNG) import terminals.

Why? Because AEMO’s GSOO says Australia is running out of gas.

But we have seen this before.

According to AEMO’s 2013 GSOO, New South Wales would suffer from ongoing gas shortages starting in 2018. AEMO’s 2015 GSOO pointed to gas shortages across eastern Australia. AEMO’s 2017 GSOO warned of acute gas shortages that would cause electricity blackouts in the summer just past.

(However as you can see via the hyperlinks above, each time we expressed a different view.)

“Shortages forecast / Shut operations 

AEMO’s recent 2019 GSOO media release stated “… additional sources of gas supply are required to address a forecast gap in meeting long-term gas demand from 2024”.

AEMO’s statement was then relayed by the oil and gas lobby group APPEA who wrote:

“With exploration at record low levels, [AEMO’s] analysis reinforces how vital it is for all governments to support developing new gas supplies as quickly and as cheaply as possible.

“This requires a focus from the newly re-elected NSW government to support the development of its identified onshore gas resources and ease regulatory burdens to developing that new supply, and for the Victorian government to urgently remove the bans and moratoriums in that state.”

Major media outlets followed up with:

“Gas shortages are looming during winter cold snaps in Victoria unless more supplies are discovered or imported.”

“National gas supply warning intensifies, with shortages forecast.”

“[AEMO’s] findings will put pressure on the [Victorian] Andrews Government … with a state ban on conventional onshore exploration due to expire next year.”

“… a shock warning that big users fear may force heavy industry and local manufacturers to shut operations”

So are we all going to freeze in the dark? Australia is the world’s #1 gas exporting nation. How can we be running out of gas?

AEMO uses industry estimates to call for gas industry expansion 

In preparing its annual GSOO, AEMO receives un-confirmed information from the gas industry describing:

  • how much gas it expects to produce over the next 20 years
  • how much LNG will be exported
  • how much gas will be used domestically.

When AEMO’s summing-up of these industry-provided estimates finds gas demand may exceed supply at some point over the next 20 years, AEMO’s suggested solutions include:

  • exploring for and developing new gas fields
  • importing gas via new LNG-import terminals
  • building and expanding major gas pipeline infrastructure
  • all of the above.
AEMO ignores climate breakdown

AEMO’s recurring recommendations to expand the fossil-gas industry don’t consider we have children marching in our streets calling for less fossil fuel burning, not more.

AEMO doesn’t recognise that 2018 was one of the hottest years in recorded history, nor that climate breakdown is already killing people and last year impacted 62 million people across our Earth.

AEMO’s sixty-six page 2019 GSOO is silent on “climate change” save for one mention of how a warming planet reduces the need for gas heating in buildings.

AEMO ignores gas demand-side options

If we were talking about electricity, in recent years AEMO received praised when it began to examine our electricity system from many angles. One angle is to look beyond merely the supply of electricity to what can be done on the electricity-demand side. Recent demand-side actions have helped the electricity system meet people’s needs at critical times, such as during summer heat waves.

But when it comes to gas, AEMO focuses only on the gas-supply side. AEMO supports ever-more-costly, uneconomic, and environmentally-damaging ways in which this fossil industry can expand year after year. AEMO provides not one single recommendation of how gas use could be reduced either throughout the year or at critical winter peak-gas-demand periods.

Gas buyers turn to cheaper options

Already Australian manufacturing industry can’t afford to buy gas, and gas demand is falling. Our manufacturers aren’t interested in supporting ever-more expensive sources of fossil gas. Manufacturers are cutting back on gas burning via efficiency measures and fuel-switching to renewable-electricity-based energy sources and manufacturing techniques.

In homes and other buildings, heating water and living spaces using modern renewable-heat-harvesting heat pumps (e.g. reverse-cycle air conditioners) can now be done at far less cost than connecting to the gas grid and burning gas. Thousands of Australians are doing just that.

AEMO needs better information and expertise

Another problem with AEMO’s analysis, as we pointed out in our research with the University of Melbourne in 2014, 2015, and 2017, is that AEMO relies on opaque and un-confirmed information the gas industry chooses to provide.

The oil and gas industry considers the details of its internal assessment of fossil-fuel deposits and gas-plant-processing capacities to be top secret, even though the fossil deposits are the property of the Australian people and gas-processing plants were built using a range of tax concessions.

AEMO and other agencies need greater powers to obtain detailed oil and gas company information.

AEMO and other agencies then must employ expertise that can judge the validity of gas industry information. AEMO would then be in a position to publish planning scenarios describing the full range of possible future outcomes.

Unfortunately, according to a statement by the COAG Energy Council, no move to greater transparency will happen before April 2020. Therefore next year we can look forward to the customary round of statements about how the world’s top gas-exporting nation is running out of gas.

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Tim Forcey is an independent energy advisor. From 2010-2012, Tim was Gas Principal at the Australian Energy Market Operator, responsible for producing the Gas Statement of Opportunities. Before then, Tim worked for 30 years with ExxonMobil, BHP, and Jemena. Tim curates the Facebook group “Australian Gas Market Insights“.

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