Australia’s Natural Gas Dilemma: an example of domestic scarcity amidst natural abundance

“Australia’s Natural Gas Dilemma” (Asianometry, 26 September 2022)

Despite being the world’s leading natural gas exporter, exporting US$25 billions’ worth of LNG to Asia, Australia also suffers from shortages of natural gas in its domestic markets. This unusual paradox – the dilemma in the title of this mini-documentary from the Asianometry YouTube channel – arises from the nation’s physical geography, in which the bulk (about 80%) of its conventional natural gas supplies are found near the coasts of the thinly populated northwest to northern coasts of Australia, while most of Australia’s population lives at the opposite southeast end of the nation continent: a distance of at least some 5,150 kilometres (Dampier in Western Australia to Sydney in New South Wales).

This paradox leads into a very detailed and involved presentation about natural gas, what it is and what it consists of, how it forms and where it is found, and why geologists classify natural gas as either conventional gas (gas trapped in porous reservoir rocks) or unconventional gas (gas trapped in shale or in coal seam deposits). The discussion then goes into how natural gas is transported and why over distances longer than 700 miles over sea or 2,200 miles over land, it is best transported on tankers or trucks. With this information forming the context, the problem of transporting natural gas from northwest Australia to southeast Australia (where it is needed) becomes understandable: natural gas deposits in Australia fall into three groups or belts of fields in the northwest, the northeast (Queensland) and the southeast (Gippsland region in Victoria), all isolated from each other with no linking pipelines. This patchwork system is due as much as to the historical development of Australia which has been fragmented and centred mainly around the state capitals which incidentally were not linked by a common railway line and gauge until the mid-1990s, as to the harsh and unpredictable physical environment, the limited financial resources and the often unstable politics that help discourage the construction of a pipeline system that would link all major natural gas fields.

From then on, the mini-documentary dives into the plan to develop the northwest Australian gas fields, started by the Whitlam government in 1973 and continued by the Fraser government from 1975 onwards, after changes to ownership rules and taxation law that allowed foreign investors to invest more monies in the project. The issue with large infrastructure projects in Australia has always concentrated on how much local input into such projects can be maximised, given that local funding and expertise can be limited, so that the benefits flow to the domestic market first. Currently the North West Gas Shelf resource project is co-owned by both Australian and foreign (UK, US, Japan) companies. The video continues with investigating how unconventional natural gas resources in Australia are being developed and exploited.

Since February 2022 when Russia invaded Ukraine in a Special Military Operation aimed at demilitarising and de-Nazifying Ukraine, and protecting the rights and security of Russian-speaking populations in Ukraine, leading the West to sanction Russia and the EU especially to cut Russian supplies of natural gas, the global demand for natural gas has risen and put pressure on Australia to export more at a time when Australia is also under pressure to switch away from the use of fossil fuels towards renewable energies. As Australian progress in transferring to renewables from fossil fuels lags behind much of the rest of the developed world, due in no small part to past political inertia, the Australian domestic market relies more on natural gas than ever before. The result may well end up in a situation where Australia exports most of its natural gas to foreigners (principally China and Japan) at the same time that its domestic market suffers from shortages of natural gas and having to pay high prices for whatever natural gas it can get.

The mini-documentary is a good if rather rushed introduction to a complicated and paradoxical situation concerning Australia’s energy market. The politics and various financial shenanigans involved here, that has led to the paradox of Australia having plenty of natural energy resources, and yet at the same time its people end up being shafted in getting access to the resources they need to survive, are not much discussed. A parallel between Australia and its domestic access to natural gas, and the wealth and employment it could provide, and Middle Eastern nations and their populations’ access to the wealth that past decades of oil extraction should have given them, might come into being if Canberra is not careful to ensure that all Australians should share in the wealth of their country by having access to its energy resources.

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