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The Australian east coast gas supply cliff

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  • Paul Simshauser
  • Tim Nelson

Abstract

On Australiaùs east coast over the period 2013ó2016, we forecast that aggregate demand for natural gas will increase three-fold, from 700 PJ to 2100 PJ per annum, while our forecast of system coincident peak demand increases 2.4 times, from 2790 TJ to 6690 TJ per day. This extraordinary growth is being driven by the development of three Liquefied Natural Gas plants at Gladstone, Queensland. In this article, we present our dynamic partial equilibrium model of the interconnected gas system and produce forecasts with daily resolution. We find that absent additional supply-side development, unserved load events will remain more than a theoretical possibility in the short-term due to inter-temporal spatial constraints. In the long-term, with appropriate policy settings in place, additional supplies will be brought to market, albeit at higher than historical prices.

Suggested Citation

  • Paul Simshauser & Tim Nelson, 2015. "The Australian east coast gas supply cliff," Economic Analysis and Policy, Elsevier, vol. 45(c), pages 69-88.
    • Handle: RePEc:eee:ecanpo:v:45:y:2015:i:c:p:69-88
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    Cited by:

    1. Xunpeng (Roc) Shi & R. Quentin Grafton, 2018. "Reforming the Eastern Australian gas market," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 5(3), pages 641-650, September.
    2. Simshauser, Paul, 2018. "Garbage can theory and Australia's National Electricity Market: Decarbonisation in a hostile policy environment," Energy Policy, Elsevier, vol. 120(C), pages 697-713.
    3. Rai, Alan & Nunn, Oliver, 2020. "On the impact of increasing penetration of variable renewables on electricity spot price extremes in Australia," Economic Analysis and Policy, Elsevier, vol. 67(C), pages 67-86.
    4. Nelson, Tim, 2018. "East-coast Australian gas markets—Overcoming the lumpiness of capital allocation and temporal instability," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 103-112.
    5. Billimoria, Farhad & Adisa, Olumide & Gordon, Robert L., 2018. "The feasibility of cost-effective gas through network interconnectivity: Possibility or pipe dream?," Energy, Elsevier, vol. 165(PB), pages 1370-1379.

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