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By Sonali Paul
MELBOURNE, March 8 Australia faces a gas crunch
from 2019, raising the risk of power blackouts from a shortage
of gas-fired generation and gas supply cuts if no action is
taken, the country's market operator said on Friday.
The warning comes after a string of outages and electricity
price spikes in Australia's eastern states over the past year
that have highlighted the need for gas-fired generation to shore
up power supplies.
"We're going to see security of both systems, gas and
electricity, become more challenging," Mike Cleary, chief
operating officer of the Australian Energy Market Operator
(AEMO), told Reuters.
More gas-fired plants will be needed to beef up power
supplies as they can raise and lower output more quickly than
coal-fired plants as a back-up for wind and solar when the wind
isn't blowing and the sun isn't shining, the AEMO said in its
annual gas outlook.
However the need for more gas for power has arisen just as
three new liquefied natural gas (LNG) export plants have opened
in the northeast, tripling gas demand and drawing supply out of
the domestic market.
While gas goes for export, the AEMO projects production for
the domestic market will drop from 600 petajoules (570 million
MMBtu) in 2017 to 478 PJ in 2021.
That will result in a shortfall of gas supplies to homes,
businesses and industry of between 10 PJ a year to 54 PJ a year
between 2019 and 2024, or it could result in electricity supply
shortages of between 80 gigawatt hours and 363 GWh between 2019
and 2021, the AEMO said.
To encourage new supply, gas and power prices will
"We're going to see gas-fired generation increase demand
(for gas) and we're going to see an impact on price," Cleary
The AEMO said options for dealing with the shortage include
diverting a small amount of gas away from LNG into the domestic
market, increasing output from existing fields or developing new
However developing new fields by 2019 will be a challenge,
as the state of Victoria has just approved a moratorium on
conventional gas drilling onshore until 2020, while several
other states have limited fracking of unconventional gas.
A coal seam gas project proposed by Santos, called
Narrabri, could alleviate all of the gas shortfall if it starts
producing by 2020, the AEMO said, but that project faces a
lengthy approval process amid strong local opposition.
(Reporting by Sonali Paul; Editing by Richard Pullin)