The country’s rich gas industry is expected to play a significant role in Australia’s energy future, according to a new report by McKinsey Australia.
Christiaan Heyning, who co-authored The role of natural gas in Australia’s future energy mix with Joao Segorbe, presented the report at the APPEA 2016 Conference and Exhibition in Brisbane this morning.
Australia is projected to increase its final energy consumption by a total of 21 per cent between 2014 and 2030, according to the report.
“With GDP forecast to increase by 2.7 per cent per year on average, and an expected population of 30 million by 2030, the nation is projected to require an additional 873 petajoules of energy,” the report says.
“This roughly equates to 75 per cent of the energy consumed for all road transport in Australia today. The projected efficiency gains are not enough to completely offset increases in consumption however.
“The biggest driver of this growth in energy consumption is expected to be increased demand from industry, led by the oil and gas sector.”
The report suggest eight options which could see an increase in the demand for gas, which is expected to grow from 36 billion cubic metres to 43 billion cubic metres between 2014 and 2030.
It says by 2030, the combined yearly impact would amount to US$900 million in cost savings, CO2-e abatement of 10.2 million tonnes, and an increase in gas demand of 7.1 billion cubic metres per year by 2030.
Five of the options focused on powering transport with natural gas, including trucks, mining trucks, buses, domestic ships and rail.
“The five transport options to increase the use of compressed natural gas (CNG) and LNG make commercial sense, as gas is a lower cost fuel per unit of energy than diesel and gasoline,” the reports says.
“Trucks, public transport buses, mining haul vehicles, ships and rail are the most suitable candidates for a switch to natural gas, as their high utilisation shortens payback periods.
“Implementing all of these options in the transport sector could save US$1 billion per year and reduce CO2-e emissions by 1.7 million tonnes. Gas consumption would increase by 3.7 billion cubic metres of gas as a result.”
Switching off-grid and on-grid oil-fired power generation to gas, were two other options, as well as increasing the utilisation of existing efficient gas plants.
“Of the three options in power generation the first two, which involve replacing oil-fired generation with gas-fired generation, are expected to be economic. They could reduce fuel costs by US$400 million and emissions by one million tonnes of CO2-e per year,” the report said.
“Shifting power generation from coal towards existing, highly efficient combined cycle gas turbine (CCGT) plants would reduce CO2-e emissions, albeit at an economic cost.
“It would reduce CO2-e emissions by up to 7.5 million tonnes of CO 2 -e per year at an annualised fuel cost of US$400 million.”
The report admitted however, that the barriers to adopting natural gas for new uses in transport and power generation are “likely to be surmountable”.
“For transport, the oil and gas industry would need to gather the will and resources to build the required refuelling infrastructure to give users the same flexibility as they get from using diesel or gasoline,” the report says.
“For power generation, the same holds true: the gas industry would need to facilitate the move from oil-fired to gas-fired generation by supporting the necessary infrastructure investments.
“Satisfying Australia’s future energy consumption while at the same time reducing emissions significantly will require a different approach to what has worked in the past.
“Overall consumption in 2030 is expected to be 21 per cent higher than it is today, and the mix of fuels that supplies it will likely change as a result of increased renewable penetration and action to reduce CO2-e emissions intensity.”