Victoria's largest gas producer ExxonMobil has warned the number of wells it operates in the Bass Strait could almost halve in the next eighteen months.
The company's commercial director David Berman told a Sydney conference yesterday that new gas production would be needed to meet demand in southern Australia.
He said the company's wells in the Bass Strait off the Gippsland coast have shrunk in number from 122 in 2010 to 68 today, and would continue to rapidly decline.
"By next winter, we expect to have 36 wells producing to six gas platforms supplying two onshore gas plants; a 70-per-cent reduction in the number of producing wells since 2010," a transcript of his speech said.
Mr Berman said the Gippsland Basin production plant "will no longer have the capacity to step in as it has in the past to provide whole-of-market solutions when planned or unplanned maintenance events occur, or when additional gas is required to support the electricity market."
"However, for ExxonMobil's gas customers, we will continue to be a significant and reliable supplier of gas," Mr Berman told the Australian Domestic Gas Outlook conference.
Last week, in an annual forecast of Australian gas supply, the Australian Energy Market Operator identified continued risks of near-term shortfalls and a longer-term supply gap due to declining gas production in the southern states.
The regulator said extreme weather could mean gas shortfalls would occur as early as this winter, especially if coal and renewable alternatives to meet demand were unavailable.
Premier calls for domestic reserve
On Wednesday, Victorian Premier Daniel Andrews rejected the notion of lifting restrictions on certain gas fields.
"The lead scientist … makes it very clear that there are no known or probable onshore reserves that can be conventionally extracted," he said.
"So if you want us to frack the place, no. That is not happening."
Mr Andrews said Victoria exports 70 per cent of the gas it produces.
He called for a national domestic gas reserve to be established, to ensure gas was supplied to local households and businesses as a priority.
"The rest of it, the bit we don't need, sell that to the world and get the best price you can," he said.
"But we shouldn't have to compete against the rest of the world for something that comes out of our ground and our seabed."
He said the federal government would need to step in to implement such changes.
Enough gas to meet demand
Bruce Mountain, director of the Victorian Energy Policy Centre, told ABC Radio Gippsland that if ExxonMobil kept its gas within Victoria, there wouldn't be shortages.
"We have plenty of Gippsland gas and always have had to meet Victorian demand, and that can go on essentially for the foreseeable future," he said.
"The death of the Gippsland Basin gas has been much overstated. It's always been dying as far as I know and somehow every year … the aggregate that they get out of the Gippsland fields seems to be pretty constant, if not rising.
"I generally would take it with a pinch of salt, the claim that it's going to die so terribly quickly."
Professor Mountain urged people to consider the broader context of international export markets.
"It's entirely in the gift of our governments to say, 'sorry, you guys need to meet Australian demand first and then export demand,'" he said.
He said Victoria has "more than enough gas" to meet local demand, should policy-makers prioritise it.
ExxonMobil Australia has been contacted for comment.
