This the Stakeholder presentation slides that accompanied the Gas Statement of Opportunities Report that was written by Joachim Tan

1. 2014 December Gas Statement
of Opportunities
Joachim Tan
Senior Analyst, System Capacity
Stakeholder Presentation 3 February 2015

2. 2
Forecast context
Findings
Forecasts
Other information

3. Forecast context
Challenging time to prepare long-term forecasts of gas demand
and supply:
• Volatility in oil prices
• Significant fall in the prices of WA commodities
• North West Shelf and related commercial decisions
• Falling Asia Pacific gas prices, making supply to the domestic gas
market relatively more attractive
3

4. Falling oil prices, January 2014 – January 2015 (Brent)
4
$40
$50
$60
$70
$80
$90
$100
$110
$120
US$/barrel
December 2014
GSOO Released
Peak - Brent price US115.19 on 19
June 2014
OPEC
27 November 2014
Decision
Source: EIA, Brent Spot Prices FOB

5. Changing oil (Brent and average) forecasts for 2015
5
Source: Compiled by the IMO
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
Q4 2014 Forecast Q1 2015 Forecast
US$/Barrel
IMO - December 2014 GSOO EIA Goldman Sachs
JP Morgan BoA Merril Lynch Standard and Poor
Morgan Stanley Citibank OECD

6. Commodity prices, January 2014 – December 2014
6
0
10
20
30
40
50
60
70
80
90
100
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14
IndexValue
Index of commodity prices; All items US$ Index of commodity prices; Bulk commodities (spot); US$
Source: Reserve Bank of Australia, Base Year = 2012-13

7. North West Shelf update
NWS and WA Government signed an amendment to the State Agreement on 20 November
2014 (awaiting ratification by WA Parliament) that requires the NWS to:
• adhere to the WA Government’s domestic gas policy – reserve approximately 715 PJ
• upgrade and maintain the NWS domestic gas facilities with sufficient capacity
• diligently market the committed gas quantities to the domestic market
• report to the WA Government annually
While the Agreement Amendment provides more domestic supply certainty, several on
going decisions have to be made.
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8. North West Shelf update
It now appears likely that some supply will be available from the NWS beyond 2020 but …..
the amendment does not specify :
• the timing or a minimum amount of domestic gas that must be made available beyond
2020
• the minimum level of domestic gas production capacity that must be maintained
The availability of domestic gas from the NWS remains contingent on whether the NWS can
profitably and commercially maintain gas supply to the domestic market and multiple
investment decisions (beyond Persephone) are yet to be made by the JVs.
However, in the 2015-2024 period, Hess may contract NWS to supply domestic gas
(subject to commercial negotiation). Hess announced on 23 December 2014 its intention to
develop and toll its WA gas reserves through the NWS processing facilities.
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9. 9
Forecast context
Findings
Forecasts
Other information

10. Key findings
• The supply of gas to the domestic market is expected to be adequate
to meet demand over the forecast period
• However, with several commercial and investment decisions yet to be
made, the extent of any future supply from the NWS is not yet known
with certainty, and the supply-demand balance may tighten after 2020
10

11. Supply – Demand balance
11
900
1,100
1,300
1,500
1,700
1,900
2,100
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Quantity(TJperday)
Expected gas demand Lower potential gas supply forecasts
Upper potential gas supply forecasts Total production capacity
Source: NIEIR and IMO Estimates, 2015-2024

12. Other findings
Gas Demand
• Demand in the non-SWIS areas will grow faster than SWIS
• Rapid growth of total gas demand (domestic & LNG); start-up of Gorgon,
Wheatstone and Prelude domestic gas & LNG projects
Resources and Reserves
• Conventional gas reserves is estimated to last between 12 to 37 years,
depending on technology (Table 9.4), unconventional reserves (105 years)
• Gas production in WA remain reliant on conventional reserves in the
Carnarvon Basin (Table 9.5)
• Exploration of unconventional resources need to be fostered
12

13. 13
Forecast context
Findings
Forecasts
Other information

14. Gas demand 2015 – 2024
Growth in the early years of the gas demand forecasts is driven by new large
gas-consuming projects. These projects include:
• Sub161’s CNG facility at Port Hedland
• the Fortescue River Gas Pipeline
• the Eastern Goldfields Gas Pipeline
And increased gas consumption relating to:
• Alinta Energy’s Newman Power Station which will supply electricity to the Roy Hill mine
• operation of TransAlta’s South Hedland Power Station
• the Pilbara Temporary Power Station
• CITIC Pacific’s Sino Iron’s magnetite mine
14

15. Domestic gas demand and forecasts 1983 – 2024
15
0
200
400
600
800
1000
1200
1400 1983
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
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Quantity(TJperday)
Historical gas consumption Base demand forecast High demand forecast
Source: DMP and IMO Estimates, 2015-2024

16. IMO and CMEWA WA demand forecasts 2015 – 2023
16
340
350
360
370
380
390
400
410
2015 2016 2017 2018 2019 2020 2021 2022 2023
Quantity(PJperannum)
CMEWA's forecast NIEIR's forecast
Source: CMEWA, Deloitte Australia and IMO Estimates, 2015-2023

17. Total gas demand forecasts 2015 – 2024
17
0
1,000
2,000
3,000
4,000
5,000
6,000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Quantity(PJperannum)
Base scenario High scenario
Source: NIEIR and IMO Estimates, 2015-2024

18. Forecast prices used in modelling 2015 – 2024
18
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Price(A$perGJ)
December 2014 Base scenario January 2014 GSOO Base scenario
Source: NIEIR and IMO Estimates 2015-2024

19. Gas supply forecasts 2015 – 2024
19
Source: IMO Estimates 2015-2024
900
1,100
1,300
1,500
1,700
1,900
2,100
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Quantity(TJ/day)
Lower Potential Gas Supply Forecasts Upper Potential Gas Supply Forecasts
Total Production Capacity

20. 20
Forecast context
Findings
Forecasts
Other information

21. What’s new in the December 2014 GSOO
Modelling
• Prospective gas projects included in High gas demand scenario
• Improvements to gas consumption estimates of iron magnetite projects
• Improvements to potential gas supply model (considers non-LNG linked
facilities)
• LNG feedstock and processing requirements (now considers utilisation rates)
Information
• Greater use of GBB data (more details to come)
• More detailed analysis of demand and its drivers
21

22. Other information in December 2014 GSOO
Additional Information on:
• Drivers of domestic gas consumption
• Gas production outages
• Gas injection and withdrawals (Mondarra)
• Gas production statistics
• Gas shipping by pipeline
22

23. Gas demand, August 2013 – November 2014
23
31% 29% 30% 30% 32% 31% 27% 26%
30% 30% 28% 29%
32% 32% 32% 29% 28% 29%
31% 33%
34% 30%
30% 31%
12% 12% 12% 12% 12% 12% 14% 12%
15%
15%
13% 14%
11% 11% 11% 12% 11% 11% 11% 10%
2% 8% 11% 11%
5% 7% 7% 7% 7% 5% 5% 5% 7% 7% 6% 6%
10% 8% 9% 9% 10% 11% 13% 12% 12% 10% 10% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec-2013 Feb-2014 Apr-2014 Jun-2014 Aug-2014 Oct-2014
Proportion
Minerals processing Electricity Mining Industrial Other Distribution network
Source: IMO GBB

24. Production facility outages, August 2013 – November
2014
24
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Proportion
Source: IMO GBB

25. Gas injections and withdrawals (Mondarra), August 2013
– November 2014
25
0
10
20
30
40
50
60
70
80
90
100
Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14
Quantity(TJperday)
Gas withdrawn Gas injected
Source: IMO GBB

26. Gas production statistics, Q4 2013 to Q3 2014
Facility Nameplate
capacity (TJ per
day)
Peak production
October 2013 to
September 2014
Day of peak
production
Average production
Q4 2013 (TJ
per day)
Q1 2014 (TJ
per day)
Q2 2014 (TJ
per day)
Q3 2014 (TJ
per day)
Beharra
Springs
19.6 19.8 5/10/2013 10.2 9.2 13.9 18.1
Dongara 7 2.5 4/9/2013 2.1 1.8 1.7 1.4
Devil Creek 220 172.5 22/11/2013 135.6 69.6 65.8 76.2
KGP 630 671.9 1/8/2013 443.6 459.2 470.0 493.7
Macedon 200 213.1 10/9/2013 164.5 141.5 142.9 152.3
Red Gully 10 14.7 14/4/2014 7.6 6.0 4.0 7.7
Varanus
Island
390 371.7 3/1/2014 272.5 299.4 271.6 234.9
Total 1476.6 1,036.1 986.7 969.9 984.3
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Source: IMO GBB

27. Gas production statistics, Q4 2013 to Q3 2014
Facility Nameplate
capacity (TJ per
day)
Peak production
October 2013 to
September 2014
Day of peak
production
Average production
Q4 2013 (TJ
per day)
Q1 2014 (TJ
per day)
Q2 2014 (TJ
per day)
Q3 2014 (TJ
per day)
Beharra
Springs
19.6 19.8 5/10/2013 10.2 9.2 13.9 18.1
Dongara 7 2.5 4/9/2013 2.1 1.8 1.7 1.4
Devil Creek 220 172.5 22/11/2013 135.6 69.6 65.8 76.2
KGP 630 671.9 1/8/2013 443.6 459.2 470.0 493.7
Macedon 200 213.1 10/9/2013 164.5 141.5 142.9 152.3
Red Gully 10 14.7 14/4/2014 7.6 6.0 4.0 7.7
Varanus
Island
390 371.7 3/1/2014 272.5 299.4 271.6 234.9
Total 1476.6 1,036.1 986.7 969.9 984.3
27
Source: IMO GBB

28. Quantity of gas shipped by pipeline, Q4 2013 to Q3 2014
28
0
10
20
30
40
50
60
70
80
90
100
Q4 2013 Q1 2014 Q2 2014 Q3 2014
Quantity(PJ)
DBNGP GGP PEP All other pipelines
Source: IMO

29. Events since publishing December 2014 GSOO
• Oil prices (Brent and WTI) falls below US$50/bbl -> Contracted LNG prices falls
below spot (Japan)
• First shipment of LNG leaves Queensland’s QCLNG project
• Shell drops Arrow LNG project
• Quantity of gas reserves relating to Red Gully JV are upgraded
• ACCC commences an inquiry into Woodside’s purchase of Apache Energy’s
interests
• Ivernia’s Paroo lead mine placed into care and maintenance (from February 2015)
• TEPCO and Chubu Electric establishing 50/50 JV (to manage all energy assets)
• Proposed Panama Canal charges for LNG carriers released
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