Senex has signed off on more than $1 billion of works to expand its natural gas developments in Queensland, which will supply 40 per cent of the state’s demand by 2025 and alleviate the energy supply issues affecting the country’s east coast.
After years of exploration and studies, Senex has announced it is ready to increase its natural gas production to 60PJ per year with work planned to begin in coming weeks on is expansion of its Atlas and Roma North natural gas developments in Queensland’s Surat Basin.
The gas from this major investment is targeted to deliver much needed supply to the domestic market within two years.
Gas production of 60 PJ per year represents more than ten per cent of annual east coast domestic gas requirements, around 40 per cent of Queensland’s domestic gas requirements, and is equivalent to the electricity used by more than 2.7 million homes each year.
Senex CEO, Ian Davies, said the new investment to significantly boost domestic natural gas supply supports Australia’s energy security and continues to underscore Queensland’s position as a reliable energy provider.
“Senex prides itself on supporting the production of natural gas for the Australian market. It was only three years ago Senex began supplying the east coast market from Queensland’s Surat Basin and to date has already invested more than half a billion dollars in new supply,” Mr Davies said.
“The willingness of our new owners POSCO International Corporation and Hancock Energy Corporation to commit significant additional new capital allows Senex to bring critical new gas supply to market – essential for manufacturing, industry, homes, hospitals and electricity generation – beyond which was possible prior to their acquisition of Senex earlier this year.
“The recent electricity crisis proved natural gas is critical to providing secure and reliable energy for Australians and is needed to underpin renewables and replace ageing coal generation, without which electricity costs will further rise, while infrastructure and technology is developed to support increased renewable generation.”
Jobs and economic win for Queensland
Senex’s investment is expected to create more than 200 jobs during construction and another 50 permanent roles, and is expected to inject more than $200 million into local businesses and regional areas.
“This investment will put people in work, support businesses and families in the country areas we operate in, and provide long-term benefits to Queenslanders with royalties helping to fund hospitals, roads, emergency services and more, as we support Australia’s energy independence and security,” Mr Davies said.
Certainty for manufacturers and other gas users
Senex supplies a diverse range of gas customers, signing seven new material domestic gas supply agreements last year alone.
“Senex supplies vital natural gas for electricity and the manufacturing of everyday consumer products from bricks to bottles to plasterboard. This investment continues to strengthen Senex’s support of domestic gas users with material new gas supply,” Mr Davies said.
Senex has now signed around 90PJ of term agreements, including 43PJ in the past 12 months alone. Senex has also agreed a number of long-term Gas Sales Agreements (GSAs) including an eight-year supply agreement with Orora and a seven-year supply agreement with Adbri that extends to 2030.
Senex will soon conduct a process seeking Expressions of Interest (EOIs) for the supply of gas from Senex’s new investment, supporting customers by optimising flexibility of terms and price competitiveness across a portfolio of buyers with varying needs, with Senex’s growing portfolio of natural gas supply.
Energy security for Australia
Mr Davies noted the Australian Competition and Consumer Commission (ACCC) July Gas Inquiry Interim Report underscored the importance of upstream competition and the timeliness of increased supply into the east coast gas market. Capital, infrastructure and regulation were identified as barriers to increasing gas supply to the east coast.
“The answer to bringing down prices is a greater diversity of producers in the market and more supply. For that producers must have the confidence to invest,” Mr Davies said.
“Senex is ready to invest more than A$1 billion in new gas supply and we call on governments and regulators, infrastructure owners and operators, and other gas market participants to work constructively to bring gas to market efficiently and as soon as possible.”
Mr Davies said Senex values its relationships with its customers that include household names such as Visy, CSR, Orora, Adbri, Southern Oil Refining and CleanCo.
“Senex is proud of its domestic gas relationships that are so important for Australians and our living standards.
“And through our supply arrangements with GLNG, we are providing energy security and economic security for our trading partners, displacing coal-fired generation,” he said.
Green light for governments to plan for the future
The recent electricity crisis caused by coal supply shortages and generation outages, combined with lower renewable generation and underinvestment in new gas supply since 2015, highlighted the need for more secure, reliable and affordable natural gas supply.
“Senex is showing that Queensland is continuing to do the heavy lifting in producing the natural gas that Australia needs to keep the lights on, especially during periods of peak demand in the National Electricity Market when renewables may be unavailable, and coal is becoming increasingly unavailable despite Australia’s reserves,” Mr Davies said.
“We look forward to continuing to work collaboratively with the Australian and Queensland governments to finalise the necessary regulatory approvals for this investment, and supplying more gas to market as soon as possible.”
Industry says investment is critical for Australia’s future
The Australian Petroleum Production & Exploration Association (APPEA) welcomed Senex’s major expansion and investment into Australia’s energy future.
APPEA Acting Chief Executive, Damian Dwyer, said the massive investment will help secure Australia’s energy future and ensure local natural gas keeps flowing to manufacturers, homes and businesses.
“Recent pressures on the energy system showcase the need for more investment such as this by Senex to ensure the supply and investment required for Australia’s energy security,” Mr Dwyer said.
“More secure, reliable and affordable natural gas supply has never been more critical following recent major coal-fired generation outages and coal supply chain challenges, renewable generation not stepping up and immense pressures on the global energy market due to the Russian invasion of the Ukraine.
“It also underscores that industry has, and always will, respond to any concerns around energy security and further highlights the critical importance of developing new gas resources.
“This accelerated response by the oil and gas industry confirms the growth and opportunities in the sector and highlights how gas will play a key role for a long time to come.”
Mr Dwyer added that supportive investment settings to position Australia more competitively in global markets would open up the significant opportunities for further industry investments.
“It brings home how critical the right investment policy settings are as Australia continues its journey to a cleaner energy future, underpinning high-quality jobs and the energy security required for our nation’s future.”
