The current talk about gas prices rising to LNG netback once the shiny new LNG plants come on-stream has been the backdrop to some of the lowest gas prices we can remember seeing at the Brisbane hub since we first started tracking the gas market with our GasWatch product a couple years ago.
Here’s a snapshot today with current gas prices at only $1.02/GJ (no, that’s not a misprint!). A big contrast to the $4.10/GJ prices in Victoria, driven by (at least in part) high heating demand with the cold weather currently.
This has been happening for a little while (though not to the extent that we’ve seen today).
So what’s Queensland doing with these volumes of dirt-cheap gas?
Well, burning it in the electricity market, for one thing – which is one reason why we’ve seen such low prices in the electricity market, as well.
Here’s a NEM-Watch snapshot of the 12:40 dispatch interval today (Friday 1st August) highlighting how Queensland prices have not risen above $40/MWh for more than a week, and were sub-$25 at the time of the snapshot:
Powering up NEM-Review and looking back over the past 13 months, we see a definite trend towards higher gas usage in generation . Even taking into account that not all these stations are supplied from the STTM, we can see the significance of these gas burn numbers in relation to the quantities shown in GasWatch above for the Brisbane hub:
(a) 174TJ ex-ante supplied yesterday; compared to
(b) 369TJ burnt yesterday in QLD gas-fired stations.
We can also see spot prices fall away with the abandonment of the carbon tax.
Using ez2view to look back at bidding behaviour for the 6 units of Braemar A and Braemar B (two particular stations impacted by the STTM price) we see significant volumes offered below $0, and another large chunk of volume offered between $10/MWh and $30/MWh – which more than half of that amount bid below $20/MWh
With this type of behaviour, it’s easy to see (one reason) why electricity spot prices are so low in Queensland!