Policy changes and junior companies might have the answer to potential gas supply woes in the East Coast. Pic: Getty Images
* East Coast faces gas shortfalls despite Australia having abundant resources
* Policy reform needed to unlock investment in new domestic gas fields
* ASX juniors have the potential to supply gas to ease supply woes
Is Australia's East Coast facing a looming natural gas shortage? The short answer is probably yes while the more detailed deep dive says it doesn't have to be that way.
On the side of doom and gloom are the gas industry and the Australian Energy Market Operator - the federal government body charged with managing various gas retail markets and wholesale gas trading for different states.
For the past several years, the AEMO has warned in its annual Gas Statement of Opportunities that Australia's East Coast faced potential gas shortfalls with the latest in March 2025 flagging the risks of peak day shortfalls and structural supply gaps.
While it subsequently noted that additional reserves might become available that could impact its forecasts, this required Esso (ExxonMobil) and Woodside Energy to determine when any additional reserves from their southern Australia gas fields would be produced, a process that is not expected to be completed until late Q3 2025.
Gas industry executives have also warned about the shortfall, which stems from material declines in output from key production regions such as the Gippsland Basin, saying that urgent reforms to Australia's regulatory policies are required to remove barriers to new gas investment.
It is also worth noting at this point that gas isn't just used for electricity generation. Methane is also used for industrial processes - particularly for heating - and as feedstock.
This is highlighted by Australian Steel Institute chief executive Mark Cain telling the Australian federal government as part of the review of the domestic gas market that Australia's high cost of gas relative to its trading partners threatened the viability of local steel product manufacturers and their transition to lower emission steelmaking.
Manufacturing Australia adds that our energy transition is more expensive and risky than it should be due to a shortage of competitively priced gas to 'firm up' renewable electricity generation.
At the other end of the spectrum, the Australia Institute has highlighted that Australia's massive liquefied natural gas exports proves there is no shortage of gas in the country, it's just shipped away to countries such as Japan, South Korea and China.
Others have suggested a big of a compromise, which is to build LNG import terminals to bring said LNG into the East Coast market.
It's not so simple
So do we or do we not have a gas supply shortage?
It has been clearly determined that Australia does have gas, plenty of gas in fact.
The problem is that a lot of this gas - most of it in Queensland - is earmarked for the export market and withholding some of it for domestic use - as suggested by groups such as the Australia Institute and Manufacturing Australia - will damage Australia's reputation with its foreign partners.
Importing LNG might get around the issue of supply but does absolutely nothing in relation to cost.
Buying LNG on the market potentially exposes gas buyers to spot market pricing for the supercooled gas, which is significantly more than even the most expensive sources of domestic gas.
This means it is likely that calls to reform policy in order to encourage investment in exploring for and developing new sources of gas might just be the way forward.
Addressing infrastructure constraints will also be needed as some of the new sources of gas are located in Queensland, which has limited capacity in the pipeline leading south.
There are already a number of junior companies with existing resources that could help meet demand once the stars align and others with promising projects that need a little more work or policy changes to enable exploration to start.
Gas resources now
Some examples of companies with existing gas resources include QPM Energy (ASX:QPM) and Comet Ridge (ASX:COI) .
Unlike many other companies highlighted in this article, QPM Energy has significant gas reserves and existing revenues from its operations, which includes generating electricity from its Townsville and Moranbah gas-fired power stations.
As of the end of the June 2025 quarter, the company had proved and probable (2P) reserves totalling 435 petajoules and managed gas production of 27 to 30 terajoules of gas (11 petajoules or 10.4 billion cubic feet per annum).
Much of this gas is earmarked for the company's Townsville and Moranbah power stations, which have the capacity to generate up to 160 megawatts and 12.8MW of power respectively.
Electricity generated by these plants is dispatched into the National Electricity Market.
QPM's gas and electricity sales generated $75m in revenue during FY2024 and $76m in the nine months to March 2025.
While its economics are set to improve further in the current financial year due to the move to a much lower cost structure under the new contracts with Townsville Power Station and North Queensland Gas Pipeline, the company is also moving to develop a new power station.
The planned 112MW Issac power station represents the phase of its Issac Energy Hub that seeks to leverage its significant gas reserves.
It will increase the company's portfolio of dispatchable generation to 284MW and provide the platform for further expansion towards its target of 500MW.
QPM also has an accelerated well workover program underway to further increase its gas production.
Meanwhile, Comet Ridge is in joint venture with gas major Santos (ASX:STO) at the Mahalo Gas Project joint venture, which has proved and probable (2P) gas reserves of 266PJ and a further 315PJ in best estimate (2C) contingent gas resources.
Front-end engineering and design for the wells, compression and gathering system is being progressed by Santos, which owns 42.86% of the project.
Meanwhile, pipeline partner Jemena has been progressing FEED for a 10 inch pipeline over about 80km that will go initially into Jemena's pipeline for domestic supply before connecting to STO's GLNG line.
Comet Ridge also holds the Mahalo East and Mahalo North projects, the former of which recently received independent certification of 51.8PJ of 2P reserves, adding to the 43PJ in Mahalo North.
The two 100%-owned projects also benefit from their proximity to existing pipeline infrastructure, making them ideally suited for helping meet gas shortages.
Gas hopefuls
Not all gas juniors have established reserves though.
Some others have drilled successful wells and are working their way towards defining commercial reserves while others are still in the early stages of exploring their promising acreage.
Omega Oil & Gas (ASX:OMA) is one company in the former category.
Recent modelling found the wells intersecting a single Canyon Sandstone reservoir layer within its Taroom Trough acreage in Queensland could produce 950,000 barrels of oil equivalent or 5.72 billion cubic feet of gas equivalent over 10 years.
This also found that its acreage could support 418 wells with 2000m verticals at a 1000m spacing.
Adding further interest, there is scope for improved reservoir properties and additional reservoir levels containing oil and gas which are not included in the current model.
OMA has already proved that the Canyon Reservoir is capable of producing oil and gas with Diagnostic Fracture Injection Test results confirming that is heavily over pressured and compares very favourably to analogous "liquids rich" US unconventional basins such as the highly productive Eagle Ford, where the average EUR is about 600,000bbl of oil.
While the company will still need to establish commercial flow rates and drill more wells, the modelling certainly paints an encouraging picture.
Also operating in the Taroom Trough is Elixir Energy (ASX:EXR), which had achieved a peak flow of 2.6 million standard cubic feet of gas per day during testing of its Daydream-2 vertical appraisal well.
This allowed the company to book a best estimate (2C) contingent resource of 2.6 trillion cubic feet of gas equivalent for its ~2000km2 acreage.
It seeks to start gas production and convert more than 150Bcf of 2C resources into 2P reserves by the end of 2027.
To accomplish this, it will carry out a three-phase strategic plan with the first step being to secure long-term retention of its Taroom Trough acreage.
Elixir will then move to prove the presence of commercially viable reserves in a well defined and targeted area before it uses the same areas to collaborate on early production opportunities to drive small-scale development and initial cashflows.
Progress is also well advanced for early works required to drill the Lorelle-3 well in ATP205. This will be drilled to a total depth of 3600m with core and logs collected to facilitate a series of experiments and tests to prove that a basin centred gas play is present.
Over in the Galilee Basin, Galilee Energy (ASX:GLL) holds the Glenaras coal seam gas project that covers 3247km2 of ground in the highly prospective basin.
Extensive exploration carried out over the project includes more than 20 exploration wells and core holes, more than 700km of fully reprocessed 2D seismic and three multi-well production pilots with a detailed 3D seismic survey.
This has allowed the company to define a high estimate (3C) contingent resource of 5314PJ and start a pilot production program though this is currently shut as part of its rotation strategy to collect subsurface data to refine its model.
Standing at the early stage is BPH Energy (ASX:BPH), which holds a 36% stake in unlisted company Advent Energy.
Advent continues to maintain that its PEP 11 permit in the offshore Sydney Basin is in force with respect to matters such as reporting, payment of rents and the various provisions of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 and is seeking a judicial review.
PEP 11 could host multiple trillion cubic feet of gas with Advent having preciously interpreted significant seismically indicated gas features which was supported by a geochemical report.
This found the Baleen prospect appeared to be not only the best for hydrocarbon influence relative to background samples, but it also held the highest probability for success.
Should a gas accumulation be found in PEP 11, it could go a long way towards meeting east coast gas demand.
However, drilling will be required to determine if gas is actually present within the Permo-Triassic reservoirs.
One of the most moves might come from 3D Energi (ASX:TDO) which is poised to drill the highly prospective Essington-1 well in October 2025 before moving on to the Charlemont-1 well later in the year.
What makes this drilling in the offshore Otway Basin especially interesting is that the company is partnered with ConocoPhillips, which is carrying it for up to US$65m of the gross drilling costs.
That the US supermajor is putting so much into exploration has a clear indicator that it considers the wells to be potentially very lucrative.
This is backed by the wells targeting a combined mean prospective resource of 355Bcf - 71Bcf net to 3D Energi - and have very high estimated chance of success ranging from 68-76% at Essington-1 and 81% at Charlemont-1.
At Stockhead, we tell it like it is. While QPM Energy, BPH Energy and Omega Oil and Gas are Stockhead advertisers, they did not sponsor this article.