Beach Energy has confirmed a gas discovery off the coast of Port Campbell, but its chief executive said levels were lower than pre-drill expectations.
The well 30 kilometres offshore in the Otway Basin, the Artisan 1, struck success after a more than 2200-metre drill.
The Artisan 1 is a joint venture well with O.G. Energy and marks the beginning of the company's offshore drilling campaign.
The well is now being cased and suspended as a future producer for the offshore pipeline, which currently delivers gas from the offshore Thylacine and Geographe gas fields to the Otway Gas Plant.
Beach managing director and chief executive officer Matt Kay said the result, which follows the success of the Enterprise well in November 2020, provided the company with further gas extraction options in the Otway Basin.
"Beginning our Otway campaign with two exploration successes is a good result for Beach," Mr Kay said.
"While the Artisan discovery is at the lower end of pre-drill expectations, it is being cased as a future producer.
"Drilling operations have gone to plan and I want to commend the teams working on the Ocean Onyx for the successful start to the campaign."
The rig will now move to the Geographe field after the casing operations and commence the first of two in-field development wells before moving to the Thylacine field for an additional four in-field wells.
First gas from the new Geographe wells is expected to commence in the 2022 financial year.
The Artisan 1 well was drilled to 2205 metres and penetrated the primary Upper Waarre Formation at 1921 metres.
It intersected a gross gas column of 69.5 metres, including 62.9 metres of net gas pay, with a gaswater contact intersected at 1990 metres.
A gas column of 20.9 metres was also intersected in the secondary target of the Flaxman Formation, with net gas pay of 4.6 metres.
New report ignites criticism of Morrison's 'gas-fired' recovery plan
The east coast's gas supply is expected to be secure for at least another five years, according to a new report which has prompted renewed attacks on the Morrison government's plan to lean on the energy source to help power the nation's economic recovery.
The Australian Energy Market Operator's [AEMO] latest report said the forecast for gas supply had improved, and it now wasn't expecting shortages until at least 2026.
The expectation does hinge on the Port Kembla import terminal being up and running before mid-2023, and other planned projects, including pipeline expansions, proceeding as planned.
The report, published on Monday, said the sector was on the "cusp of transformation", with demand for natural gas poised to fall in the coming decades.
Direct consumption of natural gas could decline by as much as 20 per cent by 2040 as hydrogen becomes more economic, the report found. Industrial demand is not expected to grow in the next 20 years and could reduce "significantly" as big users start to decarbonise.
The Climate Council said the report had "put a major dent" in the federal government's contentious plan to use investment in gas to help fuel Australia's recovery from the coronavirus-induced recession.
The Morrison government's "gas-fired recovery" strategy, unveiled in September, flagged plans to unlock new supply opportunities, create an Australian gas trading hub and even build a taxpayer funded plant if the private market didn't step up.
Climate groups, experts and various think tanks have condemned the strategy, arguing it would increase greenhouse gas emissions while not delivering cheaper energy prices.
Climate Council senior researcher Tim Baxter said AEMO's report undermined the case for supporting new gas projects.
"The Morrison Government's 'gas-fired recovery' fantasy is just that - an expensive, dangerous, and unnecessary fantasy," Mr Baxter said.
"There will be no shortfall, and in the electricity sector, gas is already being out-competed by clean, affordable renewable energy. In the next few years, electrification and efficiency will also lead to a decline in gas use in other areas such as manufacturing and industry."
In a statement in which he talked up the gas-fire recovery plan, Minister for Energy and Emissions Reduction Angus Taylor drew attention to AEMO's warning of potential supply shortages if the Port Kembla plant wasn't delivered by in 2023.
The report also found that gas would continue to perform a "critical role" in the electricity sector at times when wind and solar weren't producing and coal-fired generators suffered prolonged outages.
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This story New report ignites criticism of Morrison's 'gas-fired' recovery plan first appeared on The Canberra Times.