Australian energy group AGL has taken a strategic decision that exploration and production of natural gas assets will no longer be a core business for the company due to the volatility of commodity prices and long development lead times.
Primarily due to the fall in long-term Queensland price forecasts, AGL has impaired its Queensland natural gas assets at Moranbah, Silver Springs and Spring Gully. Apart from gas storage and related plant at Silver Springs, AGL expects to sell these assets. In New South Wales, AGL will not proceed with the Gloucester Gas Project and will cease production at the Camden Gas Project in South West Sydney in 2023, twelve years earlier than previously proposed. The group will relinquish its Petroleum Exploration Licence for the Gloucester region (PEL 285) to the NSW Government and will now commence a comprehensive decommissioning and rehabilitation program for its well sites and other infrastructure in the Gloucester region.
AGL is confident that it has sufficient gas for its residential and small business customers following the recent contract with the Gippsland Basin Joint Venture and the planned expansion of the Eastern Gas Pipeline. Incremental future gas requirements are likely to be sourced from the southern markets.