The document is a briefing on Western Australia's 2013 Gas Statement of Opportunities. It summarizes key characteristics of WA's gas market including domestic gas demand growth slowing in recent years. Domestic gas demand is projected to increase slightly through 2022 driven primarily by electricity generation. LNG exports are expected to grow significantly through new projects coming online. Domestic gas supply is forecast to meet demand through 2022 based on remaining reserves and potential future discoveries, though prices are projected to rise.

1. Joachim Tan
Senior Analyst, System Capacity
7 October 2013
2013 July Gas Statement of
Opportunities – Stakeholder Briefing

2. Agenda
• WA’s Gas Market Characteristics
• Domestic Gas Demand Characteristics
• Domestic Gas Supply Characteristics
• Domestic Gas Demand Projections 2013 to 2022
• WA’s LNG Markets
• Domestic Gas Supply Projections 2013 to 2022

3. Why are we here ?
The GSOO is a periodic statement the primary purpose of which is to include
gas information and assessments relating to medium and long term natural
gas supply and demand and natural transmission and storage capacity in the
State.
IMO assigned GISP role in June 2012, GSOO published July 2013. To
promote the long term interests of consumers of natural gas in relation
to:
Supply
the security, reliability and availability of gas supply
Efficiency
efficient operation and use of natural gas services
Investment
the efficient investment in natural gas services in the State
Competition
the facilitation of competition in the use of natural gas services

4. What do we forecast for the GSOO ?
• Domestic Gas Demand (excluding oil and gas processing use,
domestic demand FID only, reported in TJ/day)
• Total Gas Demand (Domestic Gas Demand – FID only that
includes gas consumption relating to oil and gas processing by
applying assumptions, reported in PJ/annum)
• Potential Gas Supply available to the domestic gas consuming
market (reported in TJ/day)
• Gas Supply Processing Capacity (reported in TJ/day)
• Reserves (reported in number of years remaining)

5. WA Gas Market
Characteristics

6. Source: ERA (2010)

7. Western Australia’s Consumption of Energy by Fuel Source, 2003-
2004 to 2010-2011
Source: BREE (2012), Australian Energy Statistics Update 2012, Table C
53% 54% 54% 54% 54% 56% 57% 55%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
Proportion
Financial year
Coal Petroleum Products Natural Gas Others

8. Australia’s Gas Market (Domestic Gas and LNG) 2003-2004 to
2010-2012
Source: BREE (2012-2013), Energy in Australia, Table 21, Australia’s gas production, by state.
811
936 975
1130 1143 1235
1371 1439 1458
59.4%
62.0% 60.9%
69.4%
66.5%
70.7%
68.7% 68.8%
62.0%
0%
15%
30%
45%
60%
75%
0
500
1,000
1,500
2,000
2,500
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Share
Gasproduction(PJ)
Financial year
WA SA VIC NSW NT QLD WA's Share of Total

9. Total Gas Production, 1984 – 2012
Source: BREE (2012), Australian Energy Statistics Update 2012, Table C
0
200
400
600
800
1,000
1,200
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
PJ
Year
Domestic Gas Sales LNG Exports

10. 40%
13%
8%
52%
7%
25%
21% 31%
51%
31%
10%
31%
53%
12%
26%
47%
60%
85%
2%
8%
36%
14%
1%
1%
3% 5%
13%
8%
1%
1%
5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
WA SA VIC NSW NT QLD TAS
Proportion
State
Mining Manufacturing Electricity Residential Others
Gas Demand, Australian States 2010-11
Source: BREE (2012), Australian Energy Statistics Update 2012, Table F

11. Western Australian Average Natural Gas Prices, 1990 – 2012
Source: DMP (2011) and DMP (2013d).
0
2
4
6
8
10
12
14
16
0
2
4
6
8
10
12
14
16
Price(US$/GJ)
Price(A$/GJ)
Year
WA domestic gas price (left axis) Contracts (left axis) WA domestic gas price (right axis)

12. Domestic Gas
Demand
Characteristics

13. Source: DMP (1983-2012), calculated using domestic gas sales, 1983-2011.
1984-1990 1991-2000 2001-2010 2007-2012
Annual compounded
growth
15.71% 5.84% 1.24% 0.69%
1984-1990 1991-2000 2001-2010 2007-2012
Annual compounded
growth
15.71% 5.84% 1.24% 0.69%
1984-
1990
1991-
2000
2001-
2010
2007-
2012
Annual
compounded
growth 15.71% 5.84% 1.24% 0.69%
Annual domestic gas consumption growth, 1984-2011

14. Estimated Proportions of Gas Demand in WA (PJ), 2011
Source: SKM-MMA (2011).
71.0%
29.0%
SWIS Outside of SWIS

15. Energy Generation by Fuel Type (SWIS), 2007 – 2012
Source: IMO
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2007 2008 2009 2010 2011 2012
Energy(GWh)
Year
Coal
Gas
Gas/Coal
Renewable
Gas/Diesel
Diesel

16. Gas Demand for Electricity Generation in WA (GWh), 2008-
2009 to 2010-2011
Source: DMP (2012), Average domestic gas prices and domestic gas sales (by volume).
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000
2008-2009
2009-2010
2010-2011
Electricty produced by gas (GWh)
Financialyear
SWIS Non-SWIS

17. Estimated Market Shares of Major Domestic Demand
(excluding LNG industry)
Source: Allen Consulting (2009) and EISC (2010)
Gas Purchaser/Consumer Estimated Market Share
Alcoa ~25%
BHP Billiton and its JVs ~15%
Verve Energy ~20%
Yara Pilbara (formerly Burrup Fertilisers) ~10%
Alinta Energy ~13%
Newcrest Mining ~1 to 5%
Rio Tinto and its JVs Unreported
Wesfarmers (including subsidiaries) ~1 to 5%
Total ~90%

18. Comparison of Domestic Gas Demand against Average
Domestic Gas Prices, 1990 – 2012
Source: DMP (2012), Average domestic gas prices and domestic gas sales (by volume)
0
50
100
150
200
250
300
350
400
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
PJ/annum
Price(A$/GJ)
Year
WA average domestic gas price Gas Sales

19. Domestic Gas
Supply
Characteristics

20. Western Australia Domestic Gas Sales by Operator, 1990 – 2012
Source: APPEA Quarterly Production Data (1990-2012).
0
50
100
150
200
250
300
350
400
Production(PJ)
Year
Chevron - Carnarvon Basin BHP Billiton - Carnarvon Basin AWE/ARC Energy - Perth Basin
Origin Energy - Perth Basin Apache Energy - Carnarvon Basin Woodside - Carnarvon Basin

21. Proportion of Domestic Gas Sales (by Operator), 2012
Source: APPEA 2012 Quarterly Production data, http://appea.com.au/oil-a-gas-in-australia/statistics.html
1.7%
55.5%
42.8%
Origin/AWE Woodside Apache

22. Gas
Demand
Projections

23. NIEIR’s Gas Forecasting Methodology
Source: IMO’s GSOO
SWIS / non-SWIS Gas Demand
Modelling
SWIS / non-SWIS Economic
Projections
WA State Economic Projection
National Economic Environment
Projection

24. Gas Demand Projection Methodology
Source: IMO’s GSOO
Estimated
Domestic
Consumption
Economic Growth in
SWIS and non-SWIS
Residential
Commercial
Small industry
SWIS Electricity
Demand Growth
Major Industrial Loads
Individual Gas Loads
Pipelines
Projects
Power Stations
Mines
Commodity Prices and
Production Outlook
Gold
Iron Ore
Copper
Nickel

25. SWIS Electricity Energy Forecasts 2007-2008 to 2023-2024
Source: NIEIR Forecasts 2013-2022
16,000
18,000
20,000
22,000
24,000
26,000
28,000
Actual/forecastenergy(GWh)
Year
Actual High Expected Low

26. Comparison of Forecasts of Constrained Gas Demand against
other Demand Forecasts, 2014 – 2023
Source: NIEIR Forecasts 2013-2022
900
950
1000
1050
1100
1150
1200
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Quantity(TJ/day)
Year
Low Scenario Base Scenario High Scenario
Low Scenario (Constrained) Base Scenario (Constrained) High Scenario (Constrained)

27. Demand suppression due to Forecast Prices on SWIS and
non-SWIS Demand 2013 – 2022
Source: NIEIR Forecasts 2013-2022
$-
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
0
2
4
6
8
10
12
14
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Price
Quantity(PJ/annum)
Year
Impact of Prices on Forecast non-SWIS Demand Impact of Prices on Forecast SWIS Demand
Forecast Domestic Gas Prices

28. Forecasted Total Gas Demand (Domestic and LNG), 2013-2022
Source: NIEIR Forecasts 2013-2022

29. LNG
Markets

30. Committed and Speculative LNG Capacity in WA, 2013 – 2022
Source: DSD, BREE (2013) and public announcements
0
10
20
30
40
50
60
70
80
90
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Mtpa
Year
Abadi
PTTEP Cash Maple FLNG
Bonaparte FLNG
Sunrise
Scarborough
Browse
Prelude FLNG
Wheatstone
Gorgon
Pluto Train 1
North West Shelf
Committed Capacity - WA

31. Estimates of WA LNG Exports by Country, 2012
Source: IMO Estimates
76%
2%
16%
1%
5%
Japan Korea China Malaysia Spot Sales

32. Gas
Supply
Projections

33. Estimated Gas Processing Capacity of the WA Domestic Gas
Market, 2013 – 2022
Source: IMO and respective corporate websites
0
500
1000
1500
2000
2500
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Capacity(TJ/day)
Year
North West Shelf
Varanus Island
Devil Creek
Macedon
Gorgon
Wheatstone
Dongara
Beharra Springs
Empire Oil and Gas

34. Gas Supply Price Modelling
Oil Prices • Forecasted Oil
Prices
LNG
Prices
• An estimated
relationship
between oil and
LNG prices
LNG
Netback
• LNG less cost
of liquefaction
and shipping
WA
Domestic
Price
• Weighted average
that trades between
LNG netback and
estimated
production cost

35. Gas Supply Modelling
Figure 4.7: Schematic of state-wide supply forecasting process
International demand conditions for
LNG and Western Australian supply
capacity
Western Australian LNG demand and
capacity utilisation (WA)
Metres drilled
Estimated
remaining
reserves
Exchange rate
Discovery rate
State wide supply
estimate
Price of
international
crude oil
Identified
remaining
reserves
Demand
Response
including lagged
response to
previous new
contracts and
adjustment factor
to target domestic
gas price
LNG net back
price
New contract
price on domestic
gas

36. Forecast Gas Prices for Domestic Market, 2013 – 2022
0
2
4
6
8
10
12
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Price($/GJ)
Year
Low Supply Scenario Base Supply Scenario High Supply Scenario
Source: NIEIR’s Forecasts 2013-2022.

37. Potential Domestic Supply Forecasts, 2013 – 2022
Source: NIEIR’s Forecasts 2013-2022.
0
500
1000
1500
2000
2500
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Quantity(TJ/day)
Year
Low Supply Scenario Base Supply Scenario High Supply Scenario Processing Capacity

38. Estimated Remaining Years based on Production for Western
Australia, 2012 and 2022
Source: IMO Estimates.
Reserves McKelvey’s
Economic
and Sub-
Economic
Reserves +
EIA (2013)
Shale
Reserves
(PJ)
2011-2012
Production
(PJ)
Remaining
Years
beyond
2012
(based on
2012
production
)
Forecasted
2022 Total
Gas Demand
(PJ)
Remaining
Years
beyond
2022 (based
on 2022
Forecasts)
443,080* 1,458 304 3,395 131

39. Gas Supply
and Demand
Assessment

40. Comparison of Forecast Base Demand and Base Supply
Scenarios, 2013 – 2022
Source: NIEIR’s Forecasts 2013-2022.
800
1000
1200
1400
1600
1800
2000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Quantity(TJ/day)
Year
Base Demand Scenario - Constrained Base Demand Scenario - Unconstrained Base Supply Scenario

41. What next ?
• Canvassing views/improvements from stakeholders for 2nd GSOO
• Revising of GDP/GSP forecasts for the 2014-2023 – underway
• IMO requesting gas flow data from pipeline companies and GBB
for modelling early October
• 1st pass forecasts early November – checked/reviewed
• Publication of GSOO – 31 December 2013

42. Questions ?