Gas plans under threat due to emissions reality, oversupply and public opposition | RenewEconomy

Gas plans under threat due to emissions reality, oversupply and public opposition

Gas industry faces multiple challenges to its viability, including falling prices, a greater understanding of its environmental impacts and community opposition, new report finds.


The gas industry is facing multiple challenges to its viability, including falling prices, a greater understanding of its environmental impacts and community opposition, according to a new assessment of the global gas market.

The new report published by US-based think tank Global Energy Monitor has issued a dire warning about the future prospects for the global gas export industry.

Over the last decade, Australia has invested in significantly ramping up the production of liquified natural gas with the aim of selling it into the global export market. However, low prices and the emergence of additional suppliers, including the United States, as seen the viability investments put at risk.

Australia is set to face growing competition in an already oversupplied gas export market, as the United States is expected to join Australia and Qatar amongst the top global suppliers of gas.

According to the Global Energy Monitor report, the proposed list of new gas export investments in the United States is set to see Australia dwarfed in a market that is already over capacity.

This challenge has been further amplified by a collapse in global energy demand, as Covid-19 related restrictions have led to dramatic cuts to industrial activity and international travel during the first half of 2020.

It is yet another warning of the risks of pursuing a “gas-led” recovery for the Australian economy, as the industry may be heading into a period of significant contraction.

“Even before the twin shocks of the COVID-19 pandemic and global gas price collapse, LNG projects were facing an increasingly difficult economic environment,” the report says.

“Even though only a small portion of the planned increase in LNG capacity had gone into operation, gas markets worldwide were so oversupplied that prices had fallen far below the levels considered necessary for expensive new infrastructure to be viable.”

A similar warning was recently issued by the International Energy Agency, which described the global gas market as being in “meltdown”, and many major gas producers have either cancelled or indefinitely delayed major gas investments, including in Australia.

“The collapse in global oil and gas demand and pandemic-related worksite restrictions have forced many companies to declare force majeure delays and reschedule final investment decisions,” the Global Energy Monitor report says.

“As of late June 2020, at least 11 major projects have reported significant new difficulties, typically citing combinations of pandemic disruption, low prices, and organized opposition.”

The Global Energy Monitor report cites three Australian gas export projects have been cancelled, including the Browse LNG terminal, the Scarborough LNG terminal and the Pluto LNG terminal expansion. These projects, which are worth a combined $53 billion, were cancelled by Woodside Petroleum in response to plunging gas prices.

The report highlighted that a growing understanding of the contribution that natural gas had to global emissions, and that it was effectively losing its status as a ‘transition fuel’ meant that future projects would proceed without ‘social licence’ and could become a target for opposition from environmental campaigners.

This point was underscored by the response from GetUp, which said that the report showed that Australia should not be pressing ahead with new gas developments, particularly those being pushed in the Northern Territory again the wishes of traditional owners.

“Gas is in oversupply globally and domestically – there is no shortage, this is a myth designed for, peddled by and serving only the fossil fuel lobby,” GetUp’s First Nations justice campaign director Larissa Baldwin said. “There is no need for new gas. Demand is plummeting, it won’t create jobs and can’t build a clean energy future.”

GetUp particularly criticised oil and gas market executive Andrew Liveris, who sits on the Morrison government’s National Covid-19 Coordination Commission tasked with advising on Australia’s economic response, for pushing for an expansion of the Northern Territory’s gas industry.

“We know Andrew Liveris has been out selling the Northern Territory a lemon, peddling myths about the viability of fracking in the NT and ignoring the decades of opposition from Traditional Owners. But fracking the Beetaloo Basin is the equivalent of building 50 new coal fired power stations, it’s guaranteed to drive dangerous and irreversible climate change.”

“Now more than ever we need a long term plan to deliver the jobs of the future for regions – renewables are inevitable, but we need to invest heavily now to ensure Australia can compete globally in the future,” Baldwin added.

Liveris, during a forum held by the Australian National University last month, suggested that his proposed solution to concerns over the emissions caused by natural gas was to simply send the gas offshore and let it be burnt by other countries.

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