Queensland gas prices plunge, and generators splurge

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.

GasWatch highlighting what we have not seen very often - gas prices at $1/GJ

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:

NEM-Watch snapshot showing low prices in Queensland today, in conjunction with high gas-fired production levels

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.

NEM-Review chart showing trended faily gas consumption by Queensland power 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

ez2view showing Bidding bevahiour for Braemar A and Braemar B stations over the past week

With this type of behaviour, it’s easy to see (one reason) why electricity spot prices are so low in Queensland!

About the Author

Paul McArdle
One of three founders of Global-Roam back in 2000, Paul has been CEO of the company since that time. As an author on WattClarity, Paul's focus has been to help make the electricity market more understandable.

1 Comment on "Queensland gas prices plunge, and generators splurge"

  1. Why was there a price difference of $3/GJ between Victoria and Queensland prices, when there was adequate pipeline capacity to move gas between the 2 markets ? Could it be that the pipeline owners charge this to shift gas south over this distance ? Once the LNG export plants start operation, could we expect a similar $3/GJ difference to move gas north from Victoria to Queensland, so perhaps we might see a $9/GJ price in Queensland and $6/GJ in Victoria ?

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