Australia is now in peak angst as gas supplies tumble, says EnergyQuest report

Production from the gas facility which supplies the majority of Australia’s eastern seaboard is rapidly declining and there’s insufficient time to replace it, a widely watched consultancy says.

Australia has run out of time to ­replace eastern seaboard gas supplies and is now in “peak angst” about the prospect of bill shocks, says ­consultancy EnergyQuest.

The warning sharpens the alarm about a looming gas shortfall from which manufacturers fear their viability is at stake. Industry experts say insufficient supplies threaten to increase future electricity prices.

The industry has increasingly sounded the alarm about the supply shortfall, and lending its voice to the growing concern, EnergyQuest said supplies from ExxonMobil’s Longford – the dominant supplier to Australia’s eastern seaboard – was rapidly depleting. Australia’s LNG industry was now being ­relied upon to make up the shortfall.

“We conclude that time has run out, and only a few options are available which will make an impact. Truly a time of peak angst,” EnergyQuest says in its quarterly report.

“There is now a consistent pattern around Australia where domestic gas supply runs short, and all eyes turn to LNG producers to make up the shortfall.

“Often blamed unjustly for domestic gas shortfalls, we find that in current days it is more often LNG to the rescue of domestic gas markets.”

EnergyQuest said Australian demand for gas spiked during the three months ended June 30.

Australia’s eastern seaboard had near-record low levels of electricity from wind power thanks to a so-called renewable energy drought, which some energy officials believe increases the susceptibility of Australia’s energy grid as its moves to one dominated by wind and solar at a time when there is insufficient backups.

The future of Australia’s energy grid is the subject of substantial debate. Federal Labor has set a target of having renewables generate 82 per cent of the country’s power by 2030, but the Coalition has said it would develop seven nuclear power stations to reduce the upheaval of developing large-scale wind and solar projects, and associated infrastructure.

Labor has labelled the Coalition’s plan too expensive and unviable as nearly all Australia’s coal power stations are due to be decommissioned before the first of the nuclear plants would be ready.

With Australian households buckling under a cost-of-living crisis in which a record number of people are unable to pay their utility bills, the government is struggling to convince Australians that its plan will lower energy bills.

It insists its plan will work and recent utility bill shocks were as a result of Russia’s invasion of Ukraine, although EnergyQuest said price pressures were already rising.

“The genie which was supposedly put back in the bottle at the end of the 2022 energy crisis, is never far away when supply falls and demand peaks. More peak angst,” EnergyQuest said.

Senior energy executives have warned Australia must urgently develop new sources of gas to replace the production from the Longford facility in Gippsland.

But EnergyQuest said production was falling rapidly. Gippsland Basin Joint Venture production fell 18.2 per cent in the second quarter to 45.5PJ, marking the sixth consecutive quarter of double-digit falls in percentage terms. This decline dragged down east coast conventional production to a record low for a June quarter, EnergyQuest said.

The federal government and its state counterparts are under mounting pressure to expedite new developments, although Canberra has said it would not rush through the environmental and community approvals process.

Critics have said the refusal to rush through applications is indicative of the government’s lukewarm attitude towards gas, a claim Labor rejects.

Activists have won widespread support for campaigns against gas, which have inhibited the ­capacity of authorities to approve developments, although politicians have shown little willingness to alienate potential voters despite appreciating the dire outlook.