The role of gas in Australia’s energy transition: Why gas is essential to meet Australia’s energy needs

Australia’s Energy Market Operator (AEMO), has issued a stark warning of imminent electricity shortages in the next three or four years. This urgent situation has prompted the Federal Government to swiftly turn to gas as a solution to help Australia meet its electricity needs, especially as the country is in the process of gradually shutting down its coal-fired power plants.

Thanks to the Herald Sun and the ABC we explore how gas can help Australia meet its energy needs.

Currently, Australia’s gas supplies are falling faster than demand. Australia’s largest gas plant, Longford, which supplies the majority of gas to Victoria, New South Wales, South Australia and Tasmania is scheduled to close in 2028. AEMO says this will result in a significant shortfall of gas supplies. Shortfalls may occur during peak periods, when demand for gas and electricity spikes, from as early as next year.

In response, the Federal Government has issued permits to explore waters between South Australia, Victoria and Tasmania to establish new offshore gas wells.

This doesn’t automatically allow for new offshore gas production to occur. For gas production to occur, separate approvals and community consultation would be required. However, it is all but certain approvals will be forthcoming if there is a visible need for new supply.

The new approvals for offshore gas exploration are not just about meeting immediate needs. They are a strategic move to ensure a reliable supply of gas to Australia’s East Coast. According to AEMO, gas is required to not only meet Australia’s current energy needs but also play a pivotal role in Australia’s energy transition. Experts argue gas plays a critical role as it provides a flexible and affordable source of energy.

Predicted energy shortages in Australia come despite the country being one of the world’s largest producers of liquid natural gas. However, the vast majority of Australia’s gas production is contracted to be exported overseas. It is estimated that more than 80% of gas extracted in Australia is sent overseas.

Under the new approvals, Esso and Beach Energy are expected to explore the Otway Basin, which extends from south-west South Australia to North-West Tasmania. In addition, they will explore the adjoining Sorrell Basin to the west of King Island and Tasmania.

Exploration permits are also being offered to resource companies operating off the West Australian coast, including Chevron, Inpex, Melbana Energy, and Woodside.

According to Federal Resources Minister Madeleine King, gas will play a critical role in Australia’s transition to renewable energy, a sentiment shared by Victorian Energy Minister Lily D’ambrosio.

The Victorian Government recently approved Beach Energy’s plan to pipe gas from an offshore gas field in the Otway Basin near Port Campbell. This was the first gas extraction to be approved in Victoria in a decade. However, experts are warning it will not be enough with Victoria to increasingly rely on gas supplies from Queensland in the coming years. This will lead to increased transport costs, as the gas has to be moved longer distances. As a result, without urgent action, the cost of gas in Victoria could significantly increase.

While renewable energy is seen as the future of Australia’s energy supply, the importance of gas for reliable and consistent supply cannot be underestimated.

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