How Turrum Phase 3 project aims to avert Australia gas shortage

ExxonMobil’s Australian subsidiary has announced a significant development in its Gippsland Basin joint venture with Woodside Energy. 

The two companies have reached a final investment decision to proceed with the Turrum Phase 3 project, according to a Reuters report. 

This project focuses on tapping into previously underdeveloped gas resources within the Gippsland Basin.

The decision marks a crucial step in expanding gas production and ensuring energy security in the Australian region.

The Australian government has granted approval for a substantial A$350 million (equivalent to $221.31 million USD) project. 

This project is centered around expanding gas production capabilities within the Turrum and North Turrum gas fields and involves the drilling of five new wells.

Gas shortage warning

Earlier this year, Australia’s competition regulator issued a warning that the east coast of the country could face a significant gas shortage as early as 2027. 

This looming shortfall is expected to necessitate the import of gas to meet domestic demand. 

The underlying causes of this anticipated shortage are multifaceted, but they primarily stem from a structural decline in the domestic gas industry and a pervasive uncertainty surrounding future investments in the sector.

The structural decline in the gas industry is a complex issue with several contributing factors. 

These include the depletion of existing gas fields, the high cost of developing new fields, and the increasing competition from renewable energy sources.

Uncertain future

The uncertainty surrounding future investments in the gas sector is also a major concern for investors. 

This uncertainty is driven by a number of factors, including volatile gas prices, changing government policies, and the growing social and environmental opposition to gas development.

While the Gippsland Basin’s resources are finite and will eventually be depleted, new projects like Turrum are crucial to extending the lifespan of Bass Strait’s gas production. 

This will ensure that the domestic market continues to have a reliable supply of gas beyond 2030. 

Simon Younger, Chair of ExxonMobil Australia, emphasised this point in an emailed response to Reuters, highlighting the importance of such projects in maintaining Australia’s energy security.

Gippsland Basin

The Gippsland Basin joint venture, a collaborative endeavor with a 50-50 ownership split between Esso Australia Resources and Woodside Energy (Bass Strait), focuses on the exploration and development of hydrocarbon resources within the Gippsland Basin, located offshore Victoria, Australia. 

This joint venture, with Esso Australia at the helm as the operator, leverages the combined expertise and resources of both companies to maximise the potential of this prolific hydrocarbon province.

“The Turrum Phase 3 project, and the recently approved Kipper 1B project, will unlock additional gas that is needed to avoid future shortfalls,” Liz Westcott, Woodside’s executive vice president and chief operating officer for its Australian operations was quoted in the report.

Every molecule of gas Woodside supplies from the Bass Strait fields is sold into the Australian domestic market for local manufacturers, power generators and homes.