Developments needed for domgas demand

Chevron and Newcrest Mining have signed a supply deal for 16 petajoules of domestic gas until 2023, while a new analysis of the state’s gas market says the Scarborough and Browse developments are necessary to ensure sufficient supply.

The gas will be sourced from Chevron’s equity shares in Wheatstone, Gorgon, and North West Shelf Venture.

Newcrest operates gold mines, including Telfer in Western Australia.

The deal equates to about 12 terajoules of gas a day, roughly 1 per cent of the state’s usage.

There have been a series of domgas deals in the past year, including Alcoa of Australia in December 2018, which signed on with BHP, Woodside Petroleum and Chevron.

Worsley announced deals in July with Chevron and Woodside.

Also that month, Alinta inked a contract with Beach Energy.

Meanwhile, the Australian Energy Market Operator today released its gas statement of opportunities report, which said committed and prospective major projects in WA could add to gas demand by more than 20 per cent by 2025.

That would help lift demand from 1,046TJ/d next year to 1,165TJ/d in 2029.

On a high case projection, demand would be even higher at 1,355TJ/d.

“Strong global demand for battery-related commodities, including lithium, cobalt, and nickel, is expected to drive general mining sector gas demand growth at an average annual rate of 1.1 per cent over the outlook period,” the report said.

“On average over the outlook period, gas demand from gas-powered generation in the South West Interconnected System is expected to grow at an average annual rate of 1.2 per cent in the base scenario, from 112 TJ/day in 2020 to 125 TJ/day in 2029.”

On the supply side, production is expected to exceed demand, the report said.

“Potential gas supply is forecast to decline at an average annual rate of 1.5 per cent over the outlook period, in line with reserve depletion at existing production facilities,” the report said. 

“Prospective supply sources are expected to be available and economically viable to enter the market in 2022, 2024 and 2026, partly offsetting the decline in potential gas supply from existing production facilities.”

The prospective sources include Scarborough and Browse.

But those projects will be necessary to offset falling production at existing facilities, the report said.