Australia’s Victoria seeks further gas storage capacity

The state Labor government of Victoria will introduce laws to allow offshore gas storage projects in its waters as it grapples with a predicted supply deficit because of declining Bass strait production.

Victoria, which is Australia's largest user of household and commercial gas, will allow gas to be stored in empty gas reservoirs offshore in a bid to boost supply security, Victorian energy minister Lily D'Ambrosio said on 11 September. But the state's waters extend three nautical miles offshore, meaning the laws will not cover most of the state's depleted fields in the Otway and Gippsland basins which lie in federally administered zones.

Victoria's largest storage is the 26PJ (694.3mn m³) onshore Iona facility in the state's west, owned by domestic gas storage firm Lochard Energy which plans to expand its capacity by 3PJ.

But further capacity is needed to help bridge seasonal gaps, with the new laws possibly advancing privately-owned GB Energy's Golden Beach gas project, which could add 12.5PJ of storage to the grid.

The Gippsland basin joint venture (GBJV) and Kipper Unit JV which feed the three Longford gas plants in the state's east have historically supplied about 60pc of southern states' gas, but operator Exxon plans to close one of the plants in July-October, cutting the 1.15 PJ/d facility's capacity to 700 TJ/d and further to 420 TJ/d later this decade.

GBJV operated just 50 producing wells and six gas platforms in the 2024 southern hemisphere winter, with Exxon expecting a 70pc reduction in the number of wells from 2010 levels by next winter.

The Australian Energy Market Operator's (Aemo) 2024 Victorian Gas Planning Report (VGPR) update confirmed the need for greater supply in Victoria, as declining demand would not offset the loss of supply from the GBJV.

Peak southern state winter demand exceeds 2 PJ/d, but at full capacity, pipelines linking Queensland state's coal-bed methane fields to the southern states can meet only 20pc of such demand.

Coal and gas-dependent Victoria this year approved its first nearshore gas project in a decade as the government softens its anti-gas stance.

LNG import plans

The possibility of LNG imports is firming in Victoria, with Australian refiner Viva Energy announcing public consultation has begun on its supplementary environmental effects statement (EES) for a planned floating storage and regasification unit, adjacent to its 120,000 b/d Geelong refinery.

The Geelong LNG terminal would have the capacity to supply more than half of Victoria's current gas demand, Viva said on 12 September. The terminal's surplus gas could also flow into the connected southern states of South Australia, New South Wales and Tasmania.

A public hearing into the proposal, which could see the import of 45 cargoes/yr, is expected to be held in December before an independent committee reports to the state's planning minister next year.

Subject to a final investment decision, works could commence in 2026 to deliver first gas for winter 2028, Viva said, aligning with Aemo's expected shortfall of 50PJ in that year.

By Tom Major