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Coal Seam Gas Headed For a Bumper Year

coal seam gasCoal seam gas extraction is headed for a bumper year in 2015 with IBISWorld analysts predicting the sector will grow by an impressive 148 per cent this year.

On the flip side, Petroleum is headed for a stinker with oil prices predicted to plunge. The year also looks grim for manufacturers of mining and construction machinery with a dearth of new resources projects in the pipeline.

Coal seam gas industry revenue is forecast to rise by 148.0% over the next year, to reach $1.83 billion. While coal seam gas projects have become more viable due to new and improving extraction techniques, it is the development of export capabilities that is expected to drive rapid industry growth.

According to IBISWorld senior industry analyst David Whytcross, “The opening of the domestic east coast gas market to the international market is expected to push gas prices higher – particularly as Australia is well-positioned to meet strong demand from Japan, China and South Korea, which are the world’s three largest natural gas importers.”

Whytcross said, supply to these markets from considerable coal seam reserves in Queensland will be boosted in 2015 with the Curtis Island LNG plant coming online.

However the world price of crude oil is plummeting, according to Whytcross, due to an enormous supply glut spurred by overproduction from members of OPEC, the United States and Russia. The severe crash in oil prices means that the investment returns available from petroleum exploration activities are drastically reduced.

Exploration projects have therefore become far less viable for Australian firms, particularly as the stock prices of
such firms have begun to dive. These conditions are projected to result in an 18.9% decline in industry revenue in

“High oil prices have acted as an incentive for global companies to invest in petroleum exploration over the past five
years. However, the subsequent oversupply is going to hamper exploration in 2015, as Australian firms are unable to
compete with the low production costs and high production volumes from the world’s major oil producers,” Mr
Whytcross said.

“The best-performing segment in the industry is expected to be natural gas exploration – but investment has already
peaked for the segment, and additional gas extraction capacity will not be needed until export facilities become fully
operational,” added Mr Whytcross.

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