GOT GAS: Is it really too late to avoid higher gas prices on the east coast?

Years of anti-gas policies have stymied exploration and development, making price rises on Australia’s east coast unavoidable.

Gas price rises are no longer avoidable. Pic: Getty Images

Welcome to Got Gas, where Stockhead senior energy journalist Bevis Yeo gives you the lowdown on the news and insights you need to know in the ASX energy sector. This time, he highlights several companies with potentially significant impending news.

Woodside has come out swinging over what it describes as more than a decade of political opposition, saying it is now too late to prevent east coast gas prices from soaring.

In a speech to the Melbourne Mining Club on February 6, its chief executive officer Meg O’Neill called on governments to move aggressively to boost gas supplies, saying that a six-year wait just to extend a major West Australian gas plant was proof of opposition to gas development.

“Ideology has stood in the way of sensible energy investment. In times of crises things can move quickly. We’d like to see them move before you get a crisis,” she said.

This is likely aimed at Victoria, which has been virulently opposed to gas development though recent moves to hasten approvals might be a sign that the state has finalised realised that gas supply shortages need to be addressed.

While Woodside is best known for its North West Shelf and Pluto LNG project in Western Australia’s northwest, the gas major also has exposure to Victoria’s offshore Bass Strait fields, which have seen steadily declining production.

Gas price rises unavoidable

Is O’Neill right?

The short answer is yes. The opposition to gas has resulted in a lack of new developments with the uncertain future of the major Narrabri coal seam gas field in New South Wales’ Gunnedah Basin being a prime example.

This has also been recognised by government bodies with the Australian Energy Market Operator warning that while storage and pipeline projects completed since 2023 had improved gas supplies to southern states and partially offset declining production from Bass Strait gas fields, gas production is forecast to fall faster than demand in the south.

Should the current governments at the federal and state levels pull their heads out of the sand – or should the opposition win at the upcoming polls and push for more development – the forecast price rise might only hold true in the short to medium term until new supply is introduced.

This will require not just exploring for and developing new gas fields, it will likely require new infrastructure as well with an increase in pipeline capacity from Queensland to the southeastern states being one likely example.

Should more gas-development policies be implemented, there are a number of mid-sized or junior players who will benefit outright or jump on new opportunities.

Getting a boost from relaxed policies

Companies operating in New South Wales that could benefit from relaxed politics include Bounty Oil & Gas (ASX:BUY), which has long being a proponent of exploring for gas at its 15%-owned offshore PEP 11. The other 85% is owned by Advent Energy an unlisted exploration company held jointly by BPH Energy (ASX:BPH) , Grandbridge and MEC Resources (ASX:MMR).

While most of the permit is believed to be located in federal waters, efforts to test the large Seablue target have been stymied by the NSW government’s ban on oil and gas exploration and development in the state’s coastal waters, which began on December 13, 2024.

Subsequently, the Commonwealth-New South Wales Offshore Petroleum Joint Authority decided on January 16, 2025, to refuse operator Advent Energy’s two applications to renew the permit.

The permit remains in force for two months from January 17 and the joint venture are currently considering their legal rights.

The adoption of more gas-friendly policies might enable the JV to renew the permit and start the process of drilling an exploration well.

While NSW might currently be hostile to gas exploration and development, neighbouring Victoria still has significant potential in its waters despite declining production.

Amplitude Energy (ASX:AEL) is an existing gas producer that sources most of its gas (60.7 terajoules per day during the December 2024 quarter) from its Sole field in the offshore Gippsland Basin that produces through the Orbost gas processing plant.

A further 10TJ/d came from its share of operations in the Otway Basin.

Besides further initiatives to improve the reliability of the OGPP and maximise production rates, the company is also assessing the potential to commercialise the shut-in Patricia Baleen field in VIC/RL16 as either a gas storage or production asset.

However, the real prize might be the company’s East Coast Supply Project, which seeks to maximise use of its Otway Basin infrastructure to supply gas into southeastern Australia from 2028.

This involves a program of up to three wells comprising the Elanora field with side-tracks to Isabella, Juliet and Annie-2.

While the company is already committed to drilling one well, the full three-well program will only be carried out with support from either its 50% partner Mitsui or other potential project partners.

Meanwhile, oil and gas mid-cap Beach Energy (ASX:BPT) and its partners have contracted a rig to drill in Q4 FY2025 the Hercules gas exploration well in the Otway Basin, offshore Victoria.

Hercules could host mean gas resources of ~100 billion cubic feet of gas and will de-risk nearby prospects in the event of success.

The rig will also plug and abandon a number of older wells, carry out well intervention and drill the La Bella 2 well in FY2026.

Gas-friendly jurisdiction

While Victoria and New South Wales are challenging jurisdictions to operate in, Queensland is far friendlier to oil and gas explorers such as Omega Oil & Gas (ASX:OMA), which is currently preparing to fracture stimulate and test its Canyon-1H horizontal well in the Taroom Trough.

A successful diagnostic fracture injection test completed in early January confirmed high overpressure of 0.79 psi/ft and favourable reservoir properties within the target Canyon sandstone reservoir, an indication that the well will flow plenty of gas.

Fellow Taroom Trough play Elixir Energy (ASX:EXR) has also leveraged its potential to really deliver the gas volumes needed to meet east coast demand into a non-binding memorandum of understanding with Australian Gas Infrastructure Group (AGIG).

This is aimed at developing gas infrastructure to support production for its Grandis project nor the definition of a maiden best estimate (2C) contingent resource of 245 billion cubic feet of gas.

Elsewhere in Queensland, QPM Energy (ASX:QPM) supplies gas from its Moranbah project to industrial customers and the Townsville Power Station, a peaking gas plant that operates for three to seven hours per day during peak morning and evening periods when electricity prices are at their highest.

Comet Ridge (ASX:COI) recently started pilot production testing at its Mahalo East project, which will determine its ability to produce commercial quantities of gas.

At Stockhead, we tell it like it is. While BPH Energy, Comet Ridge, Omega Oil & Gas and QPM Energy are Stockhead advertisers, they did not sponsor this article.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as GOT GAS: Is it really too late to avoid higher gas prices on the east coast?