The Federal Government's 20-year gas plan ‒ what's next

NGIP aims to ensure supply and internationally competitive prices 8 min read

The recently released 2021 National Gas Infrastructure Plan (the NGIP) sets out priority actions for ensuring affordable, reliable gas, and provides a pathway to unlocking new supply for the east coast gas market. It anticipates that gas will continue to play a major role in the Australian economy for the foreseeable future. However, it also flags the future impact on the gas market of the development of the hydrogen industry and the uptake of other low emissions technologies.

Key takeaways 

• The NGIP and Future Gas Infrastructure Investment Framework (the Investment Framework) were released on 26 November 2021.
• The Federal Government will support development of the NGIP's priorities through the Investment Framework, which lays out the principles for potential government support. The NGIP's aim is to avoid gas shortfalls, forecast in the near term in the south, and ensure domestic gas prices remain internationally competitive.
• Gas supplies in the east coast gas market are forecast to fall short of domestic and export demand by the end of the decade if industry doesn't take further action to unlock supply and deliver key infrastructure. The development of new gas fields in existing and emerging basins will require new and expanded infrastructure (including pipelines, expanded storage and an import terminal) to deliver gas to market.
• The Government is calling on industry to contribute to a new Expression of Interest (EOI) process to identify critical projects that require support to accelerate delivery. The EOI seeks submissions on critical mid-stream gas infrastructure projects that satisfy both the 2021 NGIP priority actions and the Investment Framework's principles. The Government will also use the EOI to determine whether there is a need for government support under the Investment Framework to assist identified projects overcome barriers to taking a Final Investment Decision (FID) within the next six to 24 months.
• In recognition of the complexity of the pathway to FID for mid-stream gas infrastructure, EOIs are invited from proponents through one of three broad categories: the early stage development stream, the advanced development stream and, finally, the market insight (request for information) stream.
• EOIs for projects that enhance competition in the market and gas infrastructure also supporting hydrogen, carbon capture and storage, and biomethane will be considered.
• Submissions for the EOI process opened on 26 November 2021 and close on 10 January 2022.

Who in your organisation needs to know about this?

Commercial and business development teams, legal teams, government relations teams, board members.

Background and priority actions

The NGIP presents a sequenced blueprint for the development of the east coast gas market over the next 20 years. It sets out a long-term development pathway to ensure supply for households and manufacturers, and five priority actions for east coast gas supply and infrastructure out to 2040. It follows the release of the National Gas Infrastructure Plan: Interim Report in May 2021 (the Interim NGIP), which provided practical solutions to alleviating risks of gas supply shortfalls in the near term¹ and $38.7 million in support for projects.

The NGIP identifies five priority actions to support efficient infrastructure development and avoid supply shortfall risks:

• expanding storage and flexible supply capacity close to southern demand centres;
• prioritising exploration and appraisal of new upstream gas resources in both existing and new basins;
• advancing early stage infrastructure design and development activities that enable access to new basins;
• enabling increased north-south flows; and
• coordinating gas infrastructure priorities with the National Hydrogen Infrastructure Assessment (the NHIA), which will consider possible hydrogen development pathways and implications for gas infrastructure.

Supply and demand predictions

Modelling for the NGIP was undertaken in relation to three demand scenarios:

• the 'Stable Demand' scenario, based on the Australian Energy Market Operator’s (AEMO) 2021 Gas Statement of Opportunities ‘Central’ scenario;
• the ‘Grid Stability’ scenario, which assumes continued strong renewables adoption requiring gas powered generation to play a more important role in power generation; and
• the ‘Low Demand’ scenario, which reflects a lower demand for gas compared with the stable demand scenario, based on increased electrification, energy efficiency and hydrogen blending.

Interestingly, demand for gas in the east coast gas market (including gas for domestic consumption and LNG for export) to the mid-2030s is forecast to be relatively stable across all demand scenarios, with established domestic customers and LNG export contracts supporting continued production. However, without new development, supply from existing southern and northern basins is set to decline during the remainder of this decade.

Maximising supply

The NGIP identifies the following new short-term supply options:

• Onshore: Bowen-Surat and Cooper Eromanga basins by 2023; and
• Offshore: Bass, Otway and Gippsland basins.

It also identifies that developing additional southern storage and an LNG import terminal will help to ensure the risk of shortfalls is alleviated in the short term, while new fields in the existing Bass, Otway and Gippsland basins are brought online. Development of the Golden Beach Gas Storage and Iona Gas Storage projects is identified as critical to delivering additional supply security, particularly during winter months.

In the longer term, the NGIP indicates that, without action, progressive declines in production from existing northern and southern basins will lead to shortages of gas. The NGIP identifies that at least one new basin will need to be brought online before 2030 to meet projected east coast domestic gas demand and export contracts. Basins identified as critical to unlock, out to 2030 include:

• the Gunnedah basin (Narrabri) (NSW);
• the Beetaloo sub-basin (NT);
• the Galilee basin (Qld); and
• the North Bowen basin (Qld).

Strategic expansions to existing pipeline capacity and the construction of entirely new pipelines will be needed to transport gas supplies to east coast markets, and expanded transportation capacity from north to south is required as northern supply expands and southern supply declines. In particular, enhanced pipeline capacity will be important during peak periods when pipelines can become constrained.

Subject to the results of ongoing exploration and appraisal activity over the next two to three years, the pipeline development sequence identified in the NGIP to connect new basins to the east coast market includes:

• a new pipeline (contingent on Beetaloo development) to connect early stage Beetaloo to existing infrastructure, to be completed by 2025, then upgraded sequentially from 2028 as larger Beetaloo volumes come online;
• expansions to the Amadeus Gas Pipeline, Northern Gas Pipeline (the NGP) and Carpentaria Gas Pipeline (the CGP) to transport initial Beetaloo volumes, to be completed by 2025;
• twinning the NGP and CGP to transport higher Beetaloo volumes, to be completed by 2028;
• a new pipeline to connect the NGP at Mount Isa to the new Galilee Gas Pipeline (the GGP), to be completed by 2028 if the Beetaloo development goes large scale;
• a new pipeline (contingent on South Galilee development), connecting the NGP extension to Injune, to be completed by 2028;
• a new common user pipeline (contingent on North Bowen development), connecting Moranbah to the east coast gas market by 2028;
• twinning the Queensland Gas Pipeline to facilitate Beetaloo and Galilee/North Bowen supply by 2028; and
• a new pipeline connecting Gunnedah to the east coast gas market by 2026 (contingent on Narrabri Gas Project development).

Impact of low emission technologies

The NGIP identifies that the pace of low emissions technologies uptake, such as hydrogen, large-scale renewables, or renewable gases, will be the key driver of gas demand during the period to 2041 and beyond. Gas can support decarbonisation and electrification by supplying lower carbon fuel to generate electricity, while providing essential firming to ensure renewable generation remains reliable. AEMO forecasts that 6 to 19 gigawatts of new dispatchable capacity, including gas generators, will be required by 2040 to provide a reliable and secure source of electricity supply. To help underpin system reliability, gas generators will require a readily available and flexible gas supply to operate.

Next steps

The Government has committed to developing an ongoing series of NGIPs, with the next report to be delivered in late 2022. The 2022 NGIP will integrate planning for gas infrastructure with the potential development of the hydrogen industry, following completion of the NHIA.

The NGIP also identifies three key commercial decision points, which will ultimately inform the development pathway of the east coast gas market:

• By late 2022: Determine what combination of new basins in the north will create sufficient supply once most southern supplies are depleted.
• By early 2025: Identify the new northern basins to be scaled up based on commercial conditions.
• By mid-2027: Evaluate the role expanded north-south flows can play in placing downward pressure on domestic gas prices.

To make an EOI submission under either of the three categories (early stage development stream, advanced development stream and market insight (request for information)), project proponents will need to fill out the relevant form and prepare supporting documents to upload at the Department of Industry, Science, Energy and Resources website.

Actions you can take now

• Submit an EOI in relation to critical projects requiring support to accelerate delivery.
• Continue to monitor development of gas projects, the hydrogen industry and other low emissions technologies, and government policy, to evaluate their potential impact on the east coast gas market.
• Make submissions to government to be taken into account in development of the 2022 NGIP.