Australian gas market

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Australian gas market

Postby HBS Guy » 12 Oct 2017, 11:00

We are being snowed about gas supply and gas prices. Michael West reports:

https://www.michaelwest.com.au/shell-plays-australian-gas-customers-for-mugs/

turdfull’s jawboning has had some effect in reducing spot prices here—but for how long? How good is our supply when no exploration has been done?
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Re: Australian gas market

Postby Lefty » 16 Oct 2017, 10:54

From the article....

Contract gas in WA for commercial and industrial customers is $A6 or lower compared to $10-$16/GJ in the east of the country. WA and eastern Australia are both large exporters of gas. WA is a substantially larger exporter of gas than the eastern states. The difference is WA has a domestic gas reservation policy whereas the east does not.


Yep. Without strictly enforced measures like these or similar, the eastern gas cartel whose massive export edifice sits right across the harbour from my hometown will simply continue to exploit us to the hilt. And the effects are not trivial. How the fuck can a country that is swimming in nearly all kinds of energy resources - both old types and new - be forced to pay some of the highest energy prices in the developed world for it's own energy resources?

Overturning state fracking bans is unlikely to do much as long as the industry is dominated by a cartel - any extra gas produced will simply be hoovered up and exported. This is the bit that Turdfull doesn't get - or much more likely, does understand but is corrupt/bound by ideology - there is no domestic market in the east in the normal sense - production and supply are dominated by a cartel whose shareholders interests are the opposite of those to Australian consumers and domestic businesses. As long as this situation remains, no amount of extra gas production will help.

It is imperative that the cartel be broken - it is desperately in the national interest.
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Re: Australian gas market

Postby Lefty » 19 Oct 2017, 11:35

Bad news if true....

In the next few weeks there will be an announcement that a large, gas-intensive Australian manufacturer is to lay off about 1000 workers. The ripple effects this will have on society will be devastating and most certainly could have been avoided.

It is likely this news will be made to the backdrop of an opportune reaction from the Turnbull government: there is a gas “crisis” in Australia and workers have lost their jobs because of skyrocketing electricity prices. Either the Prime Minister or one of his ministers will swiftly propose the solution: extract more gas and lift the fracking moratoriums.

What will be strategically left out of this narrative is that onshore coal seam gas has proven to be very high-cost. It is globally uneconomic in a low-cost gas world. We are currently experiencing a massive international glut in the supply of gas that is keeping prices at historic lows. Producing high-cost onshore gas is not going to bring the price of domestic gas down and stop further job redundancies. But it is financially advantageous for the handful of gas companies running this national sideshow – Origin, Santos, Shell and BHP/Exxon.

To find a policy response that will bring down domestic prices, save gas intensive industry and jobs and lower electricity costs for the domestic and industrial consumer, we do not have to look far – just to Western Australia.

In WA, industrial consumers of gas pay less than $6/GJ for gas. On the east coast, however, prices have recently been in the range of $10 to $16/GJ. Why is this? The answer is simple: WA has a domestic gas reservation policy.


Link to above quote is near the bottom of this MB article I can't link directly because my months worth of free articles at SMH has run out and I couldn't be fucked subscribing.

If Turdfull allows this to go on, I could only describe it as treason.

There is no shortage of domestic gas production for our own commercial and industrial needs - we are absolutely swimming in gas production like never before. Instead, there is a cartel with zero interest in the fate of 25 million or so Australians and their country, with their feeding tubes plugged in, hoovering up all the gas - including the cheaper to produce gas - and vomiting huge quantities of it into Asia cheaply, while making the people who actually own the resource pay prices so exhorbitant that serious economic harm is begining to unfold.

Again, for a government to simply allow this to go on because, oh dear we're terrified of sovereign risk, can only be either the most appalling act of ballless-ness by a government or......treason. Sovereign risk? What about risk to the sovereign? Are we truly so terrified that stopping the cartel (whom we absolutely fell over ourselves to give the keys to) from parasitising us to the point of economic wreckage will stop them from future investment that we are prepared to simply lay down and accept this kind of exploitation?

The message we are currently sending the multinationals of the world is not merely that we are open for business but that we are open for plunder. We are spreading our cheeks wide and saying to them "ream us out for all it's worth - we'll cop everything you dish out and you'll never hear a squeak from us".

Perhaps free market logic might say "Australian gas-dependant industries should just spend billions on relocating their productive capital and workforces (a combined total of close to a million taking both direct and indirect into account) somewhere where the gas is cheap, like perhaps WA (where it cheap because of GOVERNMENT POLICY, not the free market! :roll ).

Or we could just bring down the hammer on these cunts with strictly-enforced domestic reservation and use it or lose it rules.

My bet is that Malcom will take the "bend over and spread em" option while waxing lyrical about how the fault is someone elses.
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Re: Australian gas market

Postby HBS Guy » 19 Oct 2017, 11:50

Yes, actually doing things is not a trait of PM turdfull.

Shit, I hope some sense prevails somewhere.
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Re: Australian gas market

Postby HBS Guy » 19 Oct 2017, 12:11

smh link:

http://www.smh.com.au/comment/job-cuts-on-the-way-but-dont-be-fooled-by-gas-crisis-spin-20171018-gz343n.html

A truly pathetic, do–nothing government. Just implement a domestic reservation policy FFS! Then start reclaiming gas/oil leases where the leaseholder has done nothing to explore the lease area!

No time for a carrot, the stick must be wielded and wielded decisively—we know it won’t.

Do the Libs think what 1000 new unemployed on NewStart will do to their precious Budget deficit? Less PAYE tax, more Newstart payments. Not*rocket*science!
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Re: Australian gas market

Postby Squire » 19 Oct 2017, 13:03

This is government interference in the markets which never ends well.

If governments had not interfered, cheap Bass Strait gas would have been distributed to NSW and SA four decades ago.

The Liberals blocked Whitlam and Rex Connor from having a pipeline from Dampier WA to Sydney with spurs to SA and other locations.

In regard to WA's gas reservation policy, the people of WA paid up front by a huge investment to allow early gas supply and Energy Company revenue by a domestic gas supply 6 years before LNG revenue started to flow. WA consumers paid premium prices above world gas price at that time and probably still are paying a premium price.

On top of that, some corruption was afoot at the time with the WA Inc. scandal with Brina Burke and other politicians filling their pockets with free money.
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Re: Australian gas market

Postby HBS Guy » 19 Oct 2017, 13:33

Interference or not something does have to be done.

Moving on leases not explored would give the gas companies a clear message.
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Re: Australian gas market

Postby Lefty » 19 Oct 2017, 13:43

The problem here is entirely stemming from the lack of intervention by government. They were elected to represent the interests of Australians first and it is their job to do so by moving to prevent a cartel from inflicting great socio-economic harm.

The "not end well" part is already emerging, precisely because they refuse to meaningfully intervene.
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Re: Australian gas market

Postby Squire » 19 Oct 2017, 18:25

The real beneficiaries of Australian resource exports are MNCs, foreign money lenders, and international investors.

The trickle down is a drip.
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Re: Australian gas market

Postby Lefty » 20 Oct 2017, 06:02

Squire wrote:The real beneficiaries of Australian resource exports are MNCs, foreign money lenders, and international investors.

The trickle down is a drip.


Yes and yes.
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Re: Australian gas market

Postby Lefty » 20 Oct 2017, 12:37

David Llewelyn-Smith - not exactly a red ragger - understands the dire need for state ownership and control of certain things.......

The answer is obvious and it is not market-based. Gas reservation needs to be ramped-up aggressively and the prices fixed.

Remaining gas reserves are too expensive to develop privately. They should be expropriated and developed by a gas national champion.

This market has failed. Only government can fix it.


https://www.macrobusiness.com.au/2017/10/deliver-cheap-gas-east-coast/

Exactly. Government LET a predatory and parasitic cartel do just about whatever it liked, on the premise that markets are always and ever the only efficient and effective way to allocate just about every resource that exists. This premise has been so blindingly obviously demonstrated horribly wrong so many times now that you would think common sense would have prevailed and the need for state ownership and control of certain crucial resources, infrastructure and institutions been admitted long ago and appropriate action taken to swing the pendulum back leftward towards some balance.

That the Australian government continues to stand blithely by and simply watch the millions of people who elected to lead them be virtually raped and pillaged economically is the most base act of betrayal of it's responsabilities. The continued unswerving belief that markets will fix this if left to their own devices is deluded ideolgical madness.
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Re: Australian gas market

Postby HBS Guy » 20 Oct 2017, 12:45

deluded*ideological*madness*

Sums up the last 4 years very well. And they are STILL trying to push that stranded asset, coal.
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Re: Australian gas market

Postby Squire » 21 Oct 2017, 12:53

Let us not forget that all the resource projects, especially oil and gas, were developed with borrowed money from overseas lenders and investors.

The only thing real Australians invest in is cases of beer.
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Re: Australian gas market

Postby HBS Guy » 21 Oct 2017, 12:56

It is a reflex. We have a HUGE pool of superannuation, like $2Trn or so, surely that could supply at least some of the funding?
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Re: Australian gas market

Postby Lefty » 21 Oct 2017, 13:06

Squire wrote:Let us not forget that all the resource projects, especially oil and gas, were developed with borrowed money from overseas lenders and investors.

The only thing real Australians invest in is cases of beer.


We should commission someone to do a 200 foot high statue of that in Canberra.
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Re: Australian gas market

Postby Squire » 21 Oct 2017, 22:01

Lefty wrote:
Squire wrote:Let us not forget that all the resource projects, especially oil and gas, were developed with borrowed money from overseas lenders and investors.

The only thing real Australians invest in is cases of beer.


We should commission someone to do a 200 foot high statue of that in Canberra.


Such a commission would be illegal since we went metric. It would have to be specified in metric dimensions.
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Re: Australian gas market

Postby Lefty » 22 Oct 2017, 07:32

Squire wrote:
Lefty wrote:
Squire wrote:Let us not forget that all the resource projects, especially oil and gas, were developed with borrowed money from overseas lenders and investors.

The only thing real Australians invest in is cases of beer.


We should commission someone to do a 200 foot high statue of that in Canberra.


Such a commission would be illegal since we went metric. It would have to be specified in metric dimensions.


True, but at the rate at which this country is going backwards we'll be using imperial again by Christmass time. Give it another ten years and we'll be back to handspans and cubits.
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Re: Australian gas market

Postby Squire » 25 Oct 2017, 16:26

Bad news for Victoria Darlings. The Bass Strait is running out of gas. Why has gas production over the past few years been higher than normal?

This may just be playing politics by ExxonMobil which is subject to the old oil/ new oil pricing whereby older discoveries such as the main gas fields Marlin and Barracouta are subject to lower hydrocarbon prices than new discoveries.

http://gastoday.com.au/news/40_years_of_gas_from_bass_strait/1404
http://www.theaustralian.com.au/business/mining-energy/bass-strait-gas-drained-by-high-demand-says-exxon/news-story/b52c399b089fa922a48af99675f9a133

Bass Strait gas drained by high demand, says Exxon

The Australian12:00AM October 25, 2017
MATT CHAMBERS
Resources reporterMelbourne
@mattchambers1

Oil major ExxonMobil has defended a looming slide in production at the Bass Strait gasfields it owns with BHP Billiton, after accusations from the competition watchdog that the fall is partly the result of previous investment ­decisions.

Exxon Australia chairman Richard Owen said the oil major had been running the big offshore gasfields at record rates since last year but pulling gas out of its ageing fields meant they were depleted faster.

Next year, the gas pumped from Bass Strait would return to levels it ran at from 2011 to 2015, Mr Owen said.

“Our outlook to 2020 is stable and we are working hard to keep this going,” Mr Owen said, saying the oil major was looking at a range of options to keep gas flowing through its Longford gas plant as its big legacy fields — Marlin, Barracouta and Snapper — ran out of gas.

Exxon and Bass Strait have been under the spotlight since the Australian Energy Market Operator last month issued warnings of a big potential gas shortage on the east coast next year.

While most attention has been on the three Queensland gas exporters, who have promised to fill any shortfall to avoid export restrictions, the Australian Competition & Consumer Com­mis­sion at the same time revealed that Exxon was forecasting a 24 per cent drop in gas production from the big Bass Strait fields, which have been producing at record rates for the past two years.

Mr Owen said the fall should not be a surprise and that the Longford gas plant — Australia’s biggest domestic gas producer — was only returning to previous operating levels as its big old fields ran lower after going full speed for two years to fill growing demand.

“The decline of our heritage gasfields comes as no surprise to those with knowledge of the industry,” Mr Owen said, noting that a 1997 plan to pipe gas to Queensland from Papua New Guinea — which morphed into the PNG LNG plant when coal-seam gas reserves were proved up in Queensland — had been based on falling Bass Strait reserves.

He also said that AEMO had as early as 2013 been forecasting a 2018 domestic gas shortfall as Queensland’s three LNG plants started up.

Mr Owen said that since the start-up of the $5.5 billion Kipper-Tuna-Turrum project and associated carbon dioxide stripping plant last year, Exxon has been looking hard for ways to extend Bass Strait production.

“We set up a multidisciplinary taskforce to look for gas we can bring online in the short term, as well as to engineer longer term Bass Strait gas developments,” Mr Owen said.

“This taskforce is looking at everything from geotechnical assessments and small investments such as debottlenecking facilities to larger projects requiring major capital.”

The strident defence of local operations by the oil major, which has run the Gippsland Basin joint venture it has with BHP for 40 years, comes after the ACCC revealed volumes would fall from a record 330 petajoules this year to 244 petajoules next year due to the decline of old fields “and investment decisions made by the GBJV”.

“We have known for a while their production has been reducing, but it did take a while to get the final number,” ACCC chairman Rod Sims said after the September gas report was released.

Mr Owen pointed to work Exxon is doing on the potentially large Dory discovery in Bass Strait.

“Next year, we will spend around $100m in a highly uncertain deepwater exploration program. in the hope of finding new gas for the market,” he said.

“If successful, these could then be developed to help offset the inevitable production decline of our heritage gasfields.”

Last month, Mr Sims also said an investigation into whether BHP and Exxon should be able to continue being allowed to jointly market Bass Strait gas was nearly finished.

He would not comment on the outcome.

“It’s at a very advanced stage and we’ll be reaching a conclusion on that very soon,” he said.

“Given the public interest, we’ll be saying what we are doing and why we are doing it.”

Exxon and BHP are also still waiting on a joint federal and Victorian government decision on a retention lease for the 2010 Southeast Remora discovery, which was filed in February and which would allow them to delay development for another five years. Exxon says the discovery has too much carbon dioxide to run through the current gas set-up at Longford.
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Re: Australian gas market

Postby HBS Guy » 25 Oct 2017, 17:50

Yeah, I read an article on that. It certainly is an old oil/gasfield but there could be an agenda at work too—let us explore in the Bight, give us more tax exemptions etc.
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Re: Australian gas market

Postby Lefty » 27 Oct 2017, 07:49

There are no market forces responsable here - there is no longer a functional market as such. We simply handed control to a cartel and surprise, surprise, they are doing what cartels do. And Turdfull is bending over backwards to let them keep on doing it.

There should not even be a debate as to why this is happening. We are not running out of gas, we are simply being screwed.
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Re: Australian gas market

Postby Squire » 27 Oct 2017, 13:03

Something is certainly crook in Tallarook. Victorian gas price A$ 1 per GJ in Dec 2010 to ~ A$8+ recently after a winter peak of ~$9+

Victoria is running out of cheap gas. The US natural gas price is ~ US 3.80.

International LNG spot price is ~ A$ 7 for East Asia

https://www.aer.gov.au/system/files/styles/accc_aer_statistics_full_view/private/AER_Average%20daily%20weighted%20price_1_20171005102421.png?itok=us8eNsCQ

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