The issue of low prices in Asia poses a serious threat to the economic viability of projects in Western Australia like Gorgon and Wheatstone, according to a report from global consulting firm Stratas Advisors. Meanwhile, CSG-to- LNG projects in Eastern Australia, have an issue further up the supply chain that could derail their export plans before price ever becomes an issue.

According to the report, titled “Australia: An Imperfect Storm”, project such as QCLNG, APLNG and GLNG, which just became the second of the three to ship first cargo last week, may run into future issues with coal seam gas reserves. The report questions the ability of these reserves to satisfy the feed gas requirements the new facilities will demand.

“It’s a bit of a tales of two halves in the country. In the west they have these really expensive projects, but they are still tied to conventional gas. In the east, everyone got really excited about coal seam gas (CSG) as the next solution,” said Tom Campbell, director of LNG and gasification at Stratas Advisors. “It’s a contentious point, but there is some suggestion out there that this gas is may be insufficient to really meet LNG export obligations.”

Using Stratas Advisors’ Global Natural Gas Service and Global LNG Service, it is possible to compare forecasted total volumes of Australian LNG exports to forecasted liquefaction capacity. In the chart above, take from the Stratas Advisors report, export capacity is represented using the full expected capacity of a train for the entire year that it comes online, and does not account for ramp-up or a mid-year start time. Regardless, it provides a rough indication of total volumes available for export.

As the chart above demonstrates, total volumes available for export are expected to rise out to 2021, up to just short of 9 billion cubic feet per day (Bcf/d). However, this will be insufficient to match the expected demand for liquefaction expected over that time, which will rise to more than 11 Bcf/d over the same time. During this time, volumes available for export will rise from 30 per cent of nameplate in 2015, to 47 per cent in 2016, before plateauing at just over 77 per cent of name plate starting in 2019.

“We looked at forecast Australian exports and capacity compared to Australian gas available minus domestic demand,” Campbell explained. “In other words, once you’ve served your domestic markets, how much gas is available for the [LNG exports] and it’s not enough.

‘It’s certainly not enough to justify new facilities, it’s not even enough to run the existing ones at full-tilt.”

The report says that such a situation would prove be troubling in and of itself, but more unnerving though is that the effects of natural gas supply shortfall will be more acutely felt for the Eastern Australian projects. “In this case, operators would be forced to develop alternate solutions in order to meet contracted volumes, or face declaring force majeure and further damning the economics of what have proven to be frustrating projects,” the report states.

Campbell said that one interesting question to ponder is whether or not the shortfall is based on geography. For example, could the Western Australia facilities be closer to the having a better percentage of feedstock gas available? If so, what is the viability of a cross-country pipeline?

While the report paints a bleak outlook for the emerging CSG-to-LNG industry in eastern Australia, Campbell said there are some promising signs for the Australian gas market in general.

“What’s the good news for the Australian market is that, theoretically, is there’s this much demand that’s not going necessarily be met, it would spur a high Australian gas price,” he said. “That’s beneficial because it would make their operations a little bit more economic.”

The entire report and more information is available from Stratas Advisors at

Len Vermillion can be reached at