A new report suggests a fast-growing natural gas industry in Australia will be enough to offset the fall in oil production and aid the nation’s economic revival.

The global financial crisis has caused a major fall in oil prices in Australia and this, combined with five years of rapid increases in industry costs, has squeezed margins and industry profitability, therefore reducing oil and gas demand.

A new report, put together by the Australian Petroleum Production and Exploration Association (APPEA), suggests liquefied natural gas (LNG) could drastically improve the situation, and states a target LNG production capacity of at least 50m tpy has been set for the decade leading up to 2017 – a huge leap from the 2008 figure of 20m tpy.

In order to meet this target, the report claims a further 26 mtpa of capacity will need to be constructed and commissioned by 2017.

The North West Shelf Venture’s (NWS) 5th LNG train, commissioned in August 2008, and the expected commencement of production from the Pluto project in 2010, will increase the nation’s LNG production capacity to23.6m tpy.

If granted, expansions of the NWS, Pluto and Darwin projects, combined with at least 11 greenfields project with initial capacity totalling more than 60mtpa, will move the country closer to its goal.