Turning ullage into opportunity: the next chapter in Australia’s LNG story

Whilst domestic supply shortages capture media attention, a potential second supply shortage has gone under-reported. Australia’s liquefied natural gas (LNG) industry faces an under-recognised but critical inflection point: many Australian LNG facilities now require systematic backfill planning as foundation fields deplete. Currently, we forecast most plants will begin to experience upstream supply shortfalls in the 2030s, with several approaching end-of-life in the 2040s, under current reserves development scenarios. Securing resources, creating development plans, obtaining approvals, and completing construction in less than a decade presents unprecedented operational and commercial challenges. Further, proposed projects such as Ichthys Train 3, DLNG Train 2, and NTLNG demonstrate continued investment appetite, but will also increase the pressure on existing resource bases required to fill plant capacities. These supply transitions coincide with significant market uncertainties, including potential global LNG oversupply scenarios and depressed pricing. Additionally, Australia’s Safeguard Mechanism demands enhanced CO2 emissions management, with requirements becoming more stringent, and thus more costly, as Australia progresses towards net-zero by 2050. Backfilling existing infrastructure can either offer compelling economics, with improved capital efficiency and reduced risk compared to greenfield developments. Or, if operators are forced to develop lower quality and disadvantaged resource to backfill, this will only intensify decarbonisation pressures and costs. Our analysis comprehensively evaluates ullage opportunities across Australia’s LNG portfolio, examining backfill gas sources, optimal timing for operator decision-making, key challenges, and potential wildcards. We assess whether Australian backfill projects can maintain competitiveness within global investment portfolios, providing strategic insights for increasingly time-sensitive decisions that will determine the industry’s long-term viability.