Western Australia bars export of gas from onshore Perth basin
The Western Australian (WA) government has announced an updated domestic gas policy for the Perth and Canning basins, stating that it will prevent the export of future local onshore gas from the Perth basin to the eastern Australian states or overseas in order to ensure energy security. This decision, announced on August 16, builds upon the previous update to the policy in August 2020.
"To ensure domestic energy security, the WA government will not consider exemptions from the WA domestic gas policy for onshore gas developments on the existing pipeline network to export LNG, including those in the Perth basin. Gas from the existing pipeline is for Western Australian industry and consumers only," the government declared.
In the case of the Canning basin, the gas resources are not connected to the existing pipeline network, and therefore, the regular application of the WA domestic gas policy applies. This policy stipulates that gas project developers in the Canning basin are required to make 15% of their gas exports available for the domestic market.
Premier Mark McGowan in a separate statement issued on August 17 said these amendments are designed to uphold the policy's effectiveness by clarifying the government's stance against exporting local gas to other states or overseas. He confirmed that there will be no changes to traditional LNG projects like Browse and Scarborough, which are mandated to allocate 15% of exported gas volumes for domestic use.
However, due to exceptional economic circumstances resulting from the COVID-19 pandemic, the state government has provided provisional approval for Beach Energy's Waitsia project in the Mid-West. This project will be allowed to utilise available capacity at the Karratha gas plant and export some of its gas as LNG for a limited duration.
McGowan acknowledged that the Waitsia gas project stage 2 is an exception to the policy. Once sanctioned, this project is expected to generate essential employment opportunities, royalties, and economic stimulus for both the region and the state.
Beach Energy recently announced a delay in the timeline for the Waitsia Stage 2 project. The first gas from the project is now anticipated in mid-2024, rather than the previously projected end of 2023, due to labor shortages.
In response to the government's decision, Australia's peak oil and gas industry body, APPEA, expressed concerns. On August 16, APPEA stated that the WA government's move to preempt its own domestic gas inquiry and introduce changes would negatively impact investment in new onshore gas supply.
APPEA argued that these policy changes, which exclude any exemptions, could discourage investment at a crucial time when the state requires additional gas supply to meet rising demand, especially with the phasing out of coal and the emergence of new mineral processing industries.
“This is a disappointing outcome particularly given there is a parliamentary inquiry currently taking place into the effectiveness of the dom gas policy and government has pre-empted any recommendations out of the inquiry process,” APPEA WA director Caroline Cherry said.
“Part of the ongoing inquiry was looking at the government’s role itself in ensuring adequate supply into the future and yet these pre-emptive policy changes without consultation will undermine investor confidence,” she added.