Australian Natural Gas comes off the backburner with soaring exports and prices  

The SMH has a summary of the evolution of the Australian natural gas market on the east coast - Gas comes off the backburner with soaring exports and prices.

Natural gas was little more than sideshow when hardy souls first started probing the seabed between Tasmania and the Australian mainland in the 1960s.

Five of the world's biggest oil nations had just formed a restrictive cartel, and Australia's dependence on imported petroleum products was both a concern and an entrepreneurial opportunity for those willing to join the fur seals in the high seas of Bass Strait.

Unable to extract the lucrative black liquid without also bringing up flammable gas, the pioneers struck a deal to hand the gas over to the Victorian government for a pittance as soon as it travelled the 77 kilometres to shore.

But almost 50 years and a few bouts of privatisation later, gas has risen to become very much front of mind in Bass Strait, and is at the centre of a new rush to secure energy supplies before prices soar. ...

Plans to export huge amounts of gas from Queensland to north Asia later this decade are having flow-on effects for the entire eastern seaboard, where a single gas grid connects NSW, Victoria, Tasmania, South Australia and Queensland.

Exporting gas is more attractive for companies because it can be sold for higher prices than the $3 to $4 per gigajoule paid by consumers in the domestic market.

The price pressure has been exacerbated by the growing realisation that some of Queensland's big gas export plants - particularly the one being built by Santos - don't have quite as much coal-seam gas coming down the pipeline as first thought.

That combination of factors is likely to drag domestic consumers into a bidding war with foreign buyers, and UBS energy analyst Nik Burns believes gas prices could triple as a result. ''Our view is that gas prices will peak around the $10 to $12 per gigajoule mark in Queensland from 2015 to 2019. Given the distance from the LNG projects in Queensland, other states will be sheltered from these prices to a certain degree, but we still anticipate gas prices there to nearly double from about $4 to as high as $8 per gigajoule,'' he said.

A squabble for gas would be ironic for a nation heavily endowed with the resource, but that is the likely outcome so long as Australia remains an exporter...