Leslie Massey
Gas is a significant component of Australia's energy sector, making up 29% of its energy production and 28% of its total energy supply. Australia is one of the world's largest exporters of liquefied natural gas (LNG), with around 80% of its gas exported overseas. The country's gas reserves are located in onshore basins in the Northern Territory, Western Australia, and Queensland, as well as offshore in the North West Shelf. Gas extraction methods in Australia include unconventional methods such as fracking, horizontal drilling, and dewatering, which have been criticised for their environmental impact.
| Characteristics | Values |
|---|---|
| Types of Gas | Conventional, Unconventional (coal seam gas, shale gas, tight gas) |
| Composition of Gas | Methane, heavier hydrocarbons, carbon dioxide, nitrogen, hydrogen sulphide, helium |
| Gas Locations | Onshore basins in the Northern Territory, Western Australia, Queensland, North West Shelf |
| Gas Projects | Gorgon, Wheatstone, North West Shelf, Pluto, Prelude, Ichthys, Darwin |
| Gas Exports | 80% of gas is exported as liquefied natural gas (LNG) |
| Gas and the Economy | WA is a significant gas exporter, but gas is insignificant to the WA economy |
| Gas and Employment | Gas industry employs less than 1% of the NT workforce and around 0.2% nationally |
| Gas and Energy | Gas made up 29% of Australia's energy production in 2021, 19% of electricity generation |
| Gas and Climate Change | Gas is a polluting source of energy that contributes to climate change |
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What You'll Learn
Gas extraction methods in Australia
Conventional Gas Extraction
Conventional gas is found in relatively permeable materials, allowing the gas to flow more freely towards a production well. Australia's conventional gas resources are primarily located on the North West Shelf, with gas produced from the Northern Carnarvon, Browse, and Bonaparte basins providing feedstock to several LNG projects. In 2022, Australia's proven and probable (2P) reserves for conventional gas were estimated at 78,061 petajoules (PJ), accounting for the majority of the country's total remaining 2P gas reserves.
Unconventional Gas Extraction
Unconventional gas is found in more complex geological formations that limit the ability of gas to be extracted. Three types of unconventional gas are extracted in Australia: coal seam gas, shale gas, and tight gas.
Coal Seam Gas Extraction
Coal seam gas (CSG) is natural gas found in coal deposits, typically 300-600 meters underground. To extract the gas, water must first be removed through a process called "dewatering," lowering the pressure so that the gas can flow out of the coal. CSG poses significant risks to local users of groundwater, including farmers and sensitive environments, if water is extracted from the aquifers they rely on.
Shale Gas Extraction
Shale gas refers to gas held in fractures and pore spaces within shale rock. It is extracted through hydraulic fracturing or "fracking," which involves pumping fluid, usually water, at high pressure into the rock to create fractures for the gas to flow into the production well and then to the surface. Small particles, typically sand, are then pumped into these fractures to keep them open.
Tight Gas Extraction
Tight gas is similar to shale gas, but the methane is found in sandstone or limestone rather than shales. Tight gas extraction, like shale gas, often requires fracking. However, there is currently very little tight gas production in Australia, although several potential reserves have been identified.
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Gas reserves and resources in Australia
Gas is a polluting source of energy that is driving climate change, worsening asthma in children, and driving up power bills. Australia's gas comes from both conventional and unconventional sources. Conventional gas and coal seam gas (CSG) are Australia's most important gas resources for energy generation and export. CSG is largely methane gas that is extracted from shallow coal seams using hydraulic stimulation. Most of Australia's CSG resources are produced in Queensland, where they form feedstock for three major LNG projects: Curtis Island LNG, Australia Pacific LNG, and Gladstone LNG.
In 2022, Australia's proven and probable (2P) reserves for conventional gas were estimated at 78,061 petajoules (PJ; 69.41 Tcf), a decline of 5,246 PJ (6.3%) from 2021. For coal seam gas, proven and probable reserves were estimated at 30,859 PJ (27.44 Tcf) in 2022, an increase of 1,107 PJ (3.7%) from 2021. Australia's identified contingent (2C) conventional gas resources in 2022 were estimated at 98,649 PJ (87.71 Tcf), a decrease of 5,883 PJ (5.6%) from 2021. Coal seam gas contingent resources were estimated at 25,489 PJ (22.66 Tcf), a decrease of 2,075 PJ (7.5%) from 2021.
About 93% of conventional gas resources are located on the North West Shelf, with the remaining onshore basins in Queensland holding the greatest quantity of identified remaining coal seam gas resources. Other unconventional gas resources are located in onshore basins in the Northern Territory, Western Australia, and Queensland. The majority of Australia's natural gas production is exported, with about 74% exported in 2019-20.
Unconventional gas is found in more complex geological formations that limit the ability of gas to be extracted. Three types of unconventional gas are extracted in Australia: coal seam gas, shale gas, and tight gas. Shale gas and tight gas extraction almost always require fracking, one of the most environmentally damaging ways to extract fossil fuels.
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Gas exports from Australia
Gas exports are a significant part of Australia's economy, with the country being a substantial net exporter of natural gas. In 2022, Australia exported about 70% of its produced gas volumes as LNG, generating $90 billion in export earnings. LNG exports from Australia have been increasing over the years, with an average annual increase of 14% over the last decade. This has been facilitated by the rapid expansion of the LNG industry on both the west and east coasts of the country.
Australia's LNG exports reached a record high in 2021, making the country the world's largest LNG exporter. However, in 2022, Australia was the second-largest LNG exporter, slightly behind Qatar. The gas-producing basins of the North West Shelf, including the Northern Carnarvon, Browse, and Bonaparte basins, are significant contributors to the country's gas production, accounting for about 66% of annual gas production as of 2020.
The types of gas exported from Australia include conventional gas and unconventional gas, such as coal seam gas (CSG), shale gas, and tight gas. CSG is expected to remain the most important unconventional gas resource in the near term, constituting around three-quarters of identified unconventional gas resources. In 2022, Australia's proven and probable (2P) reserves for conventional gas were estimated at 78,061 petajoules (PJ), while CSG reserves were estimated at 30,859 PJ.
While the gas industry in Australia contributes significantly to export earnings, there are concerns about the environmental impact of gas projects and the lack of economic benefits for local communities. The Northern Territory, for example, faces a wave of gas mega-projects, but these projects have minimal economic benefits beyond the gas industry itself. Additionally, the Australian government chooses not to charge royalties on a significant portion of the gas exported, resulting in lost revenue that could have been used to fund public services and infrastructure.
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Gas consumption in Australia
The sources of gas consumption in Australia include conventional gas and unconventional gas. Conventional gas, which includes coal seam gas (CSG), remains the country's most important gas resource for energy generation and export. In 2022, Australia's conventional gas reserves were estimated at 78,061 PJ (69.41 Tcf) of 2P reserves and 98,649 PJ (87.71 Tcf) of 2C contingent resources. About 93% of conventional gas resources are located on the North West Shelf, supplying feedstock to LNG projects. Unconventional gas, on the other hand, is found in more complex geological formations that make extraction challenging. Three types of unconventional gas are extracted in Australia: coal seam gas, shale gas, and tight gas. These unconventional gas resources are located in onshore basins in the Northern Territory, Western Australia, and Queensland.
The Australian government has been focusing on gas reform for several years, aiming to improve liquidity in the wholesale gas and pipeline trading markets. The Australian Energy Market Commission (AEMC) and the Australian Competition and Consumer Commission (ACCC) have been actively involved in this process, conducting reviews and making recommendations. Additionally, the government has directed the ACCC to investigate the supply of and demand for wholesale gas in the country and publish regular information on supply and pricing.
As Australia transitions to cleaner and cheaper sources of energy, the role of gas as an energy source is being re-evaluated. Gas is recognized as a polluting source of energy, contributing to climate change and adverse health effects such as worsening asthma in children. There is a growing consensus that there should be no new fossil fuel infrastructure to avoid dangerous climate change. Instead, Australia is exploring renewable alternatives, such as induction cooktops, electric heating, renewable hydrogen, and batteries, which may lead to a decrease in gas consumption in the future.
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Gas transmission pipelines in Australia
Gas transmission pipelines are essential to the operation of modern Australian society, providing access to energy for all Australians and enabling participation in the modern economy. The Australian Energy Market Commission (AEMC) is responsible for establishing and maintaining a register of all pipelines that are, or have been, subject to any form of regulation or exemption from regulation under the National Gas Law (NGL) and the National Third Party Access Code for Natural Gas Pipelines.
The AEMC's Gas Pipeline Register includes information on all gas pipelines by state, noting their classification as distribution or transmission pipelines. The regulatory framework that applies to gas pipelines has recently changed, impacting the form of regulation for some pipelines. The Australian Energy Regulator (AER) is the regulator for all pipelines except those in Western Australia, where the National Gas Access (WA) Act 2009 applies.
There are varying degrees of regulation for gas transmission pipelines in Australia: Full Regulation, where the AER sets a reference tariff for at least one service; Light Regulation, where the AER arbitrates disputes and monitors compliance with price disclosure obligations; and Part 23 Regulation, where the AER sets guidelines on financial and pipeline use information disclosure and enforces compliance.
The AEMC also provides strategic forecasting and planning advice and runs working groups and forums for energy stakeholders to discuss issues and share information. The Australian Competition and Consumer Commission (ACCC) has also been directed by the government to conduct inquiries into the supply of and demand for wholesale gas, as well as publish regular information on supply and pricing.
Australia's gas resources include conventional gas and unconventional gas, such as coal seam gas, shale gas, and tight gas. About 93% of conventional gas resources are located on the North West Shelf, while unconventional gas resources are found in onshore basins in the Northern Territory, Western Australia, and Queensland.
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Frequently asked questions
Gas is found in various locations across Australia. About 93% of conventional gas resources are located on the North West Shelf, with gas produced from the Northern Carnarvon, Browse, and Bonaparte basins. Other unconventional gas resources are found in onshore basins in the Northern Territory, Western Australia, and Queensland.
Australia has both conventional and unconventional gas resources. Coal seam gas and shale gas are examples of unconventional gas, while natural gas is the most common type of conventional gas.
In 2021, Australia generated a total of 265 Terawatt-hours (TWh) of electricity, with natural gas accounting for 18.8% of that generation. Australia is also a significant exporter of gas, with around 80% of its gas being exported overseas as liquefied natural gas (LNG).
Gas production in Australia is used for various purposes, including electricity and heat generation, industrial processes, residential buildings, and the transport sector. In 2021, natural gas usage was highest in electricity and heat generation (33.9%), followed by the industrial sector (23.3%).
Gas is a polluting source of energy that contributes to climate change and has negative impacts on human health, such as worsening asthma in children. Fracking, a common method used to extract unconventional gas, is particularly harmful to the environment as it involves forcing massive quantities of sand-bearing water, loaded with chemicals, deep underground, which can contaminate local land and water supplies.
