AGL Warns of Gas Shortage in New South Wales

AGL Energy Limited has said that New South Wales (NSW) could potentially experience around 20 days of gas shortages from winter 2016.

The research report titled ‘Solving for ‘x’ – the NSW Gas Supply Cliff’ released Saturday has for the first time modelled the adjustment task for eastern Australia’s gas supply and demand over the next five years on a daily basis, AGL said.

“NSW has a number of gas supply contracts maturing from 2016-2018.  At any other time in history, a cliff-edge in NSW contracted gas supply would be solved through contractual renegotiations between gas producers, resellers and industrial consumers. However, unlike other states which produce surplus gas, NSW produces only five percent of its own gas.  As Queensland’s Liquefied Natural Gas (LNG) projects simultaneously come online, much of the existing domestic gas contracts from Queensland and South Australia are also scheduled to expire, thus creating a gas supply cliff in NSW,” the company said.

According to the report, households and small businesses are unlikely to experience any risk to their gas supply, the consequence of any unmet demand or gas shortage is likely to affect large gas-intensive manufacturing customers, who will either pay higher prices, or be forced to reduce their production. 

The paper highlights that even after pipeline expansions to the Eastern Gas Pipeline, the Culcairn Victorian-NSW Interconnect, and the completion of AGL’s Newcastle Gas Storage Facility, the only remaining option to prevent ongoing periods of gas shortages from occurring beyond 2016 is to increase gas supply in NSW.  

“If NSW gas fields located in Gloucester and Narrabri enter production, energy security can be restored from 2017,” AGL said.  

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