Posted February 16, 2018 16:02:34In recent years, the Australian natural gas industry has faced an increasingly challenging environment.
With more and more Australian households needing to rely on their gas supply to heat and cool their homes and businesses, gas prices have been rising at an alarming rate, as have the costs of producing gas.
Gas companies have been increasingly struggling to maintain their profitability in the face of rising prices, and the industry has experienced growing pains as the costs for gas to supply electricity and heating grew.
Natural gas is the main source of electricity in Australia, supplying nearly one in three of our electricity needs.
The industry has been in decline for a number of years, as more households were opting to purchase alternative energy sources to meet their heating and cooling needs.
In 2014, natural gas prices hit their lowest level in nearly 30 years, and prices for natural gas to power homes and other businesses have been falling for some time.
The average price of natural gas in 2016-17 was $5.77 per million British thermal units, down from $5,619 in 2014-15.
But it is predicted that natural gas will be around $7.70 per million Btu by 2021-22, which is down by more than 50 per cent from 2016-18.
According to the Australian Energy Market Operator, the average price for electricity was $2.38 per kilowatt hour in 2016, and is expected to continue to fall for many years to come.
In 2017, the Commonwealth Government’s gas-free energy policy will see gas prices fall to $1.50 per kilo of gas, down by $200 per megawatt hour.
This will also see gas price increases of around $30 per megajoule, meaning households will pay about $1,400 per year for gas.
This trend will continue in the near future.
By 2021-23, the price of gas will fall to less than $1 per million, which means that by the time we reach peak demand in 2022-23 gas prices will be below $1/MWh.
The gas industry needs to focus on delivering the best value for money, but these tough times in the gas sector are likely to continue for some years to follow.
In a 2016 interview with the ABC, Australian gas producer EnergyAustralia chief executive Paul Anderson said that the gas industry was in a “very precarious position” and that there was “no guarantee” the industry would survive.
“We are in a very precarious position with gas prices,” Mr Anderson said.
“The last few months have been a challenge for the gas producers in the sector, particularly the gas exporters.”
Gas prices are increasing and, of course, it is a bit of a shock when prices go up and you see a decline.
“But the price increase in the last few years has really been quite challenging for us and we are just trying to keep the price down.”
Mr Anderson said there were also concerns over the cost of natural resources in Australia.
“I think we are seeing a lot of the costs that go into producing gas are really going to be a challenge,” he said.
“Natural resources like coal, which are very expensive to mine and produce, and iron ore and so on, which also are expensive to extract, are going to continue being a major cost.”
In an interview with ABC News, EnergyAustralia executive director of business development, David O’Sullivan, said that gas prices would continue to rise, as they had in the past, as long as the price was still below $3 per MWh.
“You know, the gas is $3, it’s going to go up because the price is $4, it will go up again because the cost to mine it will be $5 per MWH, so the gas will keep going up,” Mr O’Brien said.
The decline in natural gas demand is not solely the result of the current low prices, he said, but a range of factors including the global economic crisis, which has hit the gas and oil industries hard, and increased competition from cheaper alternatives.
“It’s a combination of all of these things that have created the challenge for Australian gas,” Mr Hutton said.
Topics:energy-and-utilities,business-economics-and.energy,energy-environmental-issues,natural-gas,business,gas-industry,coal-mining-and‐power,gas,gasfield-gas-exploration,gas_and_electrical,gasprice,market-and,gasrefining,industry-and_entertainment,energy,canberra-2600,act,ana Source: News24