2018 WA GSOO upda te Presented by Rebecca Petchey, Senior Analyst, Reserve Capacity (WA)
F ive -ye a rly re vie w o f the WA GSOO – pro g re ss o n a c tio n ite ms Engaged external consultant to refine internal potential gas supply model. LY SUPPLY Conducting additional analysis and discussion of prospective supply projects. Further disaggregation of demand forecasts by region/usage category. DEMAND Developing a new method to represent peak gas demand. Widened view on prospective projects in 2018 formal information request. MARKET KET Further analysis of historical GBB data to capture recent trends. Developing a reference price series to replace domestic gas price forecasts. 2
Supply: Po te ntia l g a s supply mo de l re vie w AEMO has engaged an external consultant to re-design potential gas supply model. • Key changes: Da ta (inputs) E xte rna l re vie w Formal information Supply by production • • request data by facility facility, not portfolio. – more accurate.* Under consideration: Short-and long-run Competition among • • costs for existing and suppliers. prospective supply Reserves decline over sources. • time. Domestic gas price • Greater inclusion of forecasts from external • prospective projects. consultant – low, base and high. ‘What-if’ scenarios. • * No confidential data has been provided to external consultant. 3
Supply: Asse ssme nt o f pro spe c tive g a s supply so urc e s Assessment will take into account both physical and qualitative features of prospective gas supply sources. Physic al fe atur e s Qualitative fe atur e s Likely development path Proponent experience (backfill, new plant) Strategic drivers (e.g. Unit cost of development global LNG demand) (upstream + midstream, Commercial arrangements $/GJ) (JV, tolling) Reserves Domestic market Distance to infrastructure obligation (tie-back, production facility) Reservoir characteristics 4
Supply: Ava ila b ility b a se d o n 2018 fo rma l info rma tio n re q ue st 1,800 1,600 1,400 1,200 1,000 TJ/day 800 600 400 200 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Contracted supply Uncontracted DMO Gas demand - 2017 GSOO Firm supply capacity • Not forecasts, except 2017 gas demand forecast. The 2018 gas demand forecast is under development. • Contracted supply and firm supply capacity sourced from the 2018 formal information request (FIR) data from existing and some non-Gas Market Participants, ie. not representative of 100% of market. • Net uncontracted DMO calculated by AEMO using information from DJTSI’s website and 2018 FIR data, assuming all is made available from 2019.
Supply: Additio na l me tho d fo r c a pturing g a s supply fo re c a sts AEMO to present another method to capture gas supply forecasts by following the steps below: Categorise existing and prospective gas supply sources via physical and qualitative criteria outlined. Provide visualisation of supply categories stacked in order of likelihood (e.g. operating and under construction, likely, evolving, prospective) under the low, base and high demand forecasts. Show which supply source categories may be required to meet various levels of demand. 6
De ma nd: Disa g g re g a te d fo re c a sts a nd pe a k de ma nd a na lysis AEMO has engaged external consultant for provision of: Disag saggregat ated ed g gas as Peak eak g gas d as dem eman and Recon onciliati tion on analy lysis is demand f d forecasts Compare annual GSOO By region (North, East Historical peak days with forecasts to actual GBB and Metro/South-West) contributing factors gas consumption Capacity of all facilities + By usage category maximum on distribution networks 7
Ma rke t: Additio na l g a s de ma nd a nd supply fo re c a st sc e na rio s Supply Demand nd Sta tate domestic g gas p polic licy Impact o of r renewable e energy p proje jects on gas-po powered g d generation This scenario will assume: These scenarios (2) will assume: All LNG facilities with state Altered assumptions from 2017. • • agreements offer their full Changes to the number of • domestic market obligation prospective renewable projects (DMO). included and the dates of their DMO volume to be based on commencement to reflect recent • the average TJ/day estimation growth trends in Australia. by DJTSI over the life of the Allows retirement of existing • project. generation facilities based on age 100% of current obligations to and cost competitiveness. • be supplied from 2019. 8
Ma rke t: F urthe r a na lysis o f GBB da ta a nd re fe re nc e pric e s GBB d data ta • Examining historical trends since 2013 as compared to more recently: o Total flows: seasonality. o Gas consumption: flows and changes in share for usage categories, regions and some commodities. o Gas storage: injections and withdrawals. o Gas supply: flows and changes in share by production facility. • Results to be published separately on AEMO web site prior to publication of the WA GSOO. Refer eren ence p price s e series es: • Under development in conjunction with external consultants. • Further assessment by AEMO on short- and long-run costs for existing and prospective supply sources.
K e y me ssa g e s fo r the 2018 WA GSOO • Positive resources outlook boosts WA gas demand. • Strong resource demand (particularly iron ore, gold, nickel, and lithium) is expected to support gas demand growth over the outlook period. • Additional 47 TJ/day 1 gas demand to be added to the base demand case and a further 56 TJ/day 2 of prospective projects in the high case. • Additional supply developments have firmed up. • Supply capacity is expected to exceed gas demand over the outlook period, supported by new gas supply sources commencing operation in 2018 (Wheatstone) and 2019 (Pluto). • Development progress has been made on several prospective supply sources, including Scarborough and Browse (potential backfill for the Karratha Gas Plant), Equus, and Waitsia. 1. This 47 TJ/day is comprised of (approx.) 25% gold, 60% iron ore, and 15% lithium projects 2. This 56 TJ/day is comprised of (approx.) 5% gold, 50% lithium, and 45% other/unspecified projects 10
K e y me ssa g e s c o ntinue d • WA domestic gas prices have remained low after falling in recent years. • Low domestic gas prices are the result of various factors including the domestic gas reservation policy, increased competition, lower oil prices, and stagnant historical gas demand. • Renewables growth continues to influence gas-powered electricity generation. • Potential and committed renewable generation projects in the SWIS are expected to continue to affect gas demand. • Several mine sites have installed solar power and battery storage to offset gas use. • Two additional gas demand scenarios have been developed which consider the impact if WA seeks to adopt a 26% emissions reduction target (linear or accelerated trajectory). 11
Ne xt ste ps Items to be covered at the Oct 9 WAGCF: • Update on the 2018 WA GSOO development program. • Results from historical GBB data analysis. • GBB scoping study. • In-house gas demand forecasting. • DJTSI update on WA domestic gas policy. Please contact wa.capacity@aemo.com.au for any questions.
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