Squadron insists gas terminal is best “practical answer” to supply gaps, as AEMO changes tune

Adjusted forecasts from the Australian Energy Market Operator (AEMO) could mean Squadron Energy is not required to supply additional gas from its hastily built Port Kembla Energy Terminal until 2027 at the earliest.

The Sydney-headquartered Squadron, owned ultimately by Andrew and Nicola Forrest’s Tattarang group, was working to complete the project in time to address forecasted gas shortfalls expected to occur this year.

The facility has been built to accommodate the supply of more than 70 per cent of NSW’s gas needs before a planned switch to the import and export of green hydrogen.

However, with plummeting gas demand for non-industrial uses coupled with increasing electrification, AEMO recently adjusted its forecasts and now predicts shortfalls in supply to maybe occur later this decade – 2027 at the earliest. 

“A little bit of the best”

Squadron turned its attention to fast-tracking the Port Kembla gas import facility in early 2024, in a move explained by the staunchly pro-renewables Forrest as necessary to Australia’s transition from fossil fuels.

The facility would use “a little bit of the best” of the world’s gas to temporarily firm the changing power grid, Forrest said in January last year. As opposed to, say, drilling for new supplies of poor quality and highly emissions-intensive gas from Australia’s North West Shelf.

In a statement emailed to Renew Economy on Friday, Squadron CEO Rob Wheals said that even with AEMO’s revised forecast, the completed Port Kembla terminal remains the only facility capable of filling near-term supply gaps without the need for new gas fields or “significant investment” in new pipelines.

“Infrastructure takes time, and time is short. Port Kembla is the practical, near-term answer,” Wheals said.

“Thanks to our collaboration with Jemena and the reversal project for the existing Eastern Gas Pipeline (EGP), Port Kembla can supply gas to both New South Wales and Victoria.

“It is also the only regassification terminal which has a contract with one of the 51 Floating Storage Regasification Units (FSRUs) in the world, at a time when FSRUs are in high demand and short supply.”

Squadron says the terminal has enough capacity to supply 500Tj of gas per day and once commercially viable, will switch to importing and exporting green hydrogen. However, with the future of Australia’s green hydrogen industry looking uncertain, it’s hard to predict when, or even if, this would happen. 

New gas terminal in Victoria

In related news, the Victorian government on Thursday gave its seal of approval for the construction of a new floating gas terminal located off the coast of Geelong.

The developer, Viva Energy, has yet to secure offtakers for the project, but hopes to commence construction on the project sometime next year to deliver the project in time to address gas supply shortfalls currently predicted to occur in Victoria during 2028.

“Timing remains a critical factor – we need to hit a range of milestones in order to get the LNG terminal constructed in time to meet the gas shortfall expected to develop from 2028 onwards,” said Viva chief strategy officer Lachlan Pfeiffer.

Squadron’s Wheals said on Friday that Victoria’s approval of the Viva terminal “reinforces what industry and governments recognise – LNG regasification infrastructure is essential.”

But, Wheals adds, “Viva’s project is many years away from delivering energy.

“Port Kembla Energy Terminal (PKET) in NSW has completed construction and is the only facility in Australia ready in time to address the gas shortfalls forecast by the Australian Energy Market Operator (AEMO) in 2027/28.”