international outlook
Keeping the
Lights On At home and abroad, the Australian coal industry is thriving By Glenn Schumacher, NRG Gladstone Power Station
flag: ziggymaj / photos.com, background: Josef Hanus / photos.com
W
hile the United States’ coal-fueled electricity industry is contemplating its future under the influence of declining wholesale electricity prices and the shale gas boom, the situation in Australia is somewhat different. In the U.S., approximately 45 percent1 of all electricity generated is fueled by coal, while Australia uses coal to fire 75 percent2 of electricity generation. Coal is keeping the lights on in Australia. Australia is having its own “rush to gas,” with significant natural gas developments on the west coast combined with a massive coal seam gas (CSG) industry developing on the east coast. The western side of Australia has a very low population (2.35 million of the country’s total population of 22.6 million3) and thus a very small domestic gas market. Therefore, those gas developments are naturally focused on export. The situation on the eastern side of the country is quite different still. 50
American Coal | Issue 2 2012 | americancoalonline.com
Figure 1 – Location of the Australian National Electricity Market
The eastern seaboard of Australia is home to the vast majority of the population and the larger domestic gas and electricity markets (See Fig. 1). Developing CSG projects sit alongside existing major natural gas supply regions on the southeast coast and in the arid center of the country which link into the eastern energy markets. However, the major driver for the development of CSG in the eastern region of the country, as in
the west, is aimed at export. Herein lies the issue – Australia is reported to be headed toward supplying onefifth of the global liquefied natural gas (LNG) supply by 2020, making it the largest LNG exporter in the world with Asia emerging as the largest gas market by 2040.4 The upshot of the focus on the export of LNG is that the domestic Australian gas market is going to be exposed to export parity-pricing