The record low price is part of a pattern of falling prices all along the east coast as ramp gas for BG-operated QCLNG begins flooding the market.

Brisbane is experiencing the biggest price falls, with spot prices in the past week averaging less than $1/GJ compared to $3/GJ in the June 2014 quarter and $5/GJ at the start of 2014.

Spot prices are also down in Sydney, Melbourne and Adelaide to about $3/GJ, representing a decrease of up to 35% compared to the start of the year.

The immediate future of domestic gas prices is highly uncertain, with analysts in the dark and without a precedent anywhere in the world to guide them.

CSG to LNG is a world first that presents operators with the challenge of bringing hundreds of wells on stream simultaneously.

Project operators have built-in a number of buffers to help them meet this challenge, including underground gas storage and conventional gas supply from the Cooper Basin and elsewhere. But bringing CSG-to-LNG into production remains a difficult balancing act.

Making the situation even more interesting for gas buyers is the fact the LNG projects in Gladstone are embedded in a large domestic market.

The recent price falls have cheered some east coast consumers, who are bracing for a price shock after all three Gladstone projects are commissioned next year.

There is even speculation that ramp gas will keep prices down for the next six to nine months as the three Gladstone projects come on stream in succession.

But one source told Energy News yesterday the honeymoon was likely to be short-lived.

“It’s not widely understood the LNG tanks must be filled before any cargoes leave for Asia. There’s ramp gas now flooding the market as the operators test production capacity of many wells, but that gas will very soon be filling these huge LNG tanks,” the source said.

“The low prices will likely be around for a week or two, not the months that many people are assuming.”

The only way the honeymoon could continue for domestic customers is if BG encounters problems during the complex commissioning phase.

If the LNG plant cannot process the gas to match the upstream production schedule, BG could be forced to flood the domestic market. Flaring would be a last resort that would create a public relations disaster.

Production statistics from the National Gas Market Bulletin Board give some indication of the heaving dynamics of gas supply on the east coast.

BG has stated the main supply for train 1 of QCLNG is the Ruby Jo upstream development area, which was commissioned as recently as a couple of months ago.

Located at the southern end of the Surat Basin, Ruby Jo is a large complex of six field compression stations (each servicing 100 wells) and a central processing station.

According to the Bulletin Board, Ruby Jo was producing 180 terrajoules of gas per day last week.

The new facility is rapidly building towards its production capacity of more than 300 TJ/day, which represents about 15% of the daily supply of the entire east coast market.

The new volumes of processed gas flowing into the east coast are so large they have some analysts speculating where it could all be going, given LNG production is still in the earliest stages at QCLNG and underground storage is mostly full.

One analyst told Energy News industrial users with capacity to store gas could be buying at the very low spot market prices and averaging down the effective cost of their contract gas.

He also suggested the upstream facilities might take a lot of filling, especially the 540km, 42 inch-diameter pipeline that connects the gas processing centres to Gladstone.

The ructions in the east coast market could continue after all three plants have reached full production in 2015 and 2016.

There is a possibility of not enough CSG gas for operators to meet their contracts without drawing on gas that would otherwise be supplied to domestic customers.

As previously reported in Energy News, the gap could be as large as 100 TJ/day in some scenarios.

East coast customers, who are bracing for prices at the upper end of a range of $6 to $9/GJ, could be shocked with even higher costs.

Against this backdrop, support for a new pipeline from the Northern Territory to the Cooper Basin gained strong momentum this week, with Federal resources minister Ian Macfarlane apparently getting behind the idea.

The $1.2 billion plan, driven by NT Chief Minister Adam Giles would create a new supply source for the east coast market.

Until this week, the idea was greeted with scepticism and seen as a poor alternative to opening up NSW to coal seam gas exploration and Victoria to onshore drilling for gas of any kind.

But with the mighty LNG plants in Gladstone starting to exert their powerful forces over the east coast market, any proposal that might protect millions of gas consumers and industry from market mayhem is sounding good.