Could you please tell me what % of the LNG to be imported at the proposed AGL gas import terminal project at Crib Point will be used for gas-fired power stations and what % of imported LNG will be for residential households and business customers?
For example, is the answer 50% for gas-fired power generation and 25% for residential customers and 25% for business customers?
Hello and thanks for your question!
The most current figures we have are from the AGL Energy 2019 Half Year Results released in February. For the first half of the current financial year gas sales by customer type was:
You can find this breakdown by volume (petajoules) in the Half Year Results Investor Presentation on slide/page number 45.
Thanks for your reply.
The 2019 Half-year figures for gas sales include current AGL owned generation.
Do you have any future projections on the amount of gas to be imported that would be required for gas-fired power stations?
I assume the amount of gas required for AGL owned generation would rise above 17%?
See https://www.aemc.gov.au/energy-system/gas/gas-markets https://www.smh.com.au/opinion/how-australia-blew-its-future-gas-supplies-20170928-gyqg0f.html and google Australian Gas Sales
@cribpoint123 Yes, as AGL transitions out of coal towards more reliable low cost and low carbon power, the amount of gas required is likely to rise above 17%. This was acknowledged in the East Coast Gas Outlook (December 2018) by EnergyQuest:
‘Gas-fired power generation (GPG) is losing market share and volume to renewables, but is expected to recover as ageing coal plants are retired.’
While we expect some rise, it is not yet certain how significant the rise will be. The ACCC Gas inquiry 2017-2020 interim report found gas demand for commercial and residential customers will remain relatively flat. Industrial users may also decline, although this is because the cost of gas will impact the commercial viability of businesses.
Gas plays a critical role in the transition out of coal, although it is not renewable, it is the cleanest burning fossil fuel. We understand that gas is only a medium-term fuel, and while some would like us to jump straight to renewables, we need a reliable supply of lower emission fuel to generate the firming capacity needed to make an effective transition to renewables in the next decade.
As also mentioned in the ACCC Interim Report (released July 2018), ‘the demand for gas powered generators (GPG) is difficult to forecast accurately as it is dependent on factors such as rainfall, wind, renewal generation investment, unexpected retirement of generation or unplanned outages.’
This is what made an LNG project like the Gas Import Jetty attractive because the FSRU will be leased and if the facility is no longer needed the FSRU will be unmoored and will sail away.
We are aware that there are some key challenges ahead, if gas is to lead the transition. Most pressing is access to gas because the legacy Bass Strait gas reserves are in decline.
While you say gas is the cleanest of fossil fuels, it is not a clean fuel at all. When methane leaks to the environment at every stage of production are taken into account, natural gas has a greenhouse impact as great as that of coal. Methane is a more powerful greenhouse gas than CO2. Methane leakage is generally at least 5% of production. There will be fugitive methane at Crib Point, in addition to the methane emitted from the original gas well, from the pipelines, compressor stations, LNG trains and LNG vessels.
My concerns about imported LNG at Crib Point relate to the initial claims by AGL that the imported gas was mainly for the Victorian gas market, the price of gas would move downwards and many jobs would be created.
We now know that there would only be a handful of local jobs, the gas price would not go back down and the imported gas would be used to fuel AGL's new gas-fired power stations in NSW and South Australia.
I have not been able to find the projected volumes of gas that would be required for the new AGL gas-fired power stations. I was told that the Crib Point LNG import project would supply these large volumes of gas.
As Shell announced recently, coal-fired power stations could be replaced by gas-fired power stations to generate electricity in the future along with renewable energy and possibly hydrogen power.
FYI - Shell is rumoured to be considering buying AGL.
Shell also recently bought the Sonnen battery storage company.
We agree that methane has a greater impact than carbon dioxide in the upper atmosphere. Both LNG production and coal production result in the fugitive emissions of methane to the environment. The amount of fugitive emissions for LNG production depends on the source of the LNG. Coal seam gas has a higher fugitive emissions than LNG sourced from traditional gas wells.
However, most of the gas produced in the world still comes from traditional sources, not coal seam gas. We are most likely to buy gas from these traditional sources (such as from Qatar and Africa) because it is the same sort of gas that we use in Victoria which relied on traditional gas reserves in Bass Strait which are now in decline.
For the scope of Gas Import Jetty Project, the greatest potential of fugitive emissions comes from "Boil Off" of the LNG in the storage tankers. LNG is stored at very cold temperatures at atmospheric pressure in insulated tanks. Boil Off occurs when heat from the environment (ambient temperature) warms the LNG and some of the LNG becomes gas.
However, the “Boil Off” gas is captured and depending on the operating scenario it is either:
At a last resort the Boil Off is combusted in an unforeseen operating scenario, such as after an equipment failure.
The Boil Off rate is approximately 0.15% of the total LNG cargo.
When the boil off gas is burnt for fuel or combusted, carbon dioxide(CO2) is released to the atmosphere rather than methane molecules. For every methane molecule burnt, 1 molecule of carbon dioxide is released. There are other components in LNG like ethane and propane, but they are very small percentages of LNG. Ethane and Propane have a higher impact as they release 2 and 3 molecules of carbon dioxide respectively for every 1 molecule. Combustion is not 100%, so a small amount of the methane will make it through to the atmosphere.
All onshore pipelines, piping and equipment is leak tested before operation to make sure that there are exceptionally low losses.
There will also be losses of methane to the atmosphere during maintenance when equipment and piping is opened. The design of all facilities is done to minimise releases to the environment.