Inquiry pipes ‘more uncertainty’ into tight gas market

[Pelican Press 0]

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Inquiry pipes ‘more uncertainty’ into tight gas market

An overhaul of Western Australia’s gas market is needed but the state’s policy to reserve 15 per cent of offshore production for domestic use should remain unchanged, an inquiry has found.

Gas reserved under the policy contributes around half of the state’s domestic supply and holding producers to what were previously “good ******” agreements will be vital for ensuring energy security, according to its final report released on Thursday.

However, the WA parliament economics and industry committee stopped short of recommending the state government allow onshore gas projects to export LNG via the existing pipeline.

“Ultimately, the committee has determined that until the domestic gas market is well-supplied, no onshore gas should be exported using this infrastructure,” its report said.

Industry and government were urged to work together as the state faces a worsening gas supply deficit from 2030 onwards.

The domestic gas policy was initially lauded during the 2022 energy crisis for sparing the state from the price spikes that hit homes, businesses and industry on the east coast.

The committee inquiry was sparked by fears a domestic gas shortfall was imminent, and that producers would default on their commitments because it was more profitable to export LNG.

From 2032, the domestic gas shortfall is forecast to exceed 350 terajoules per day and will need substantial new sources of gas to meet its requirements over the coming decades, according to the report.

The committee found the core objective to secure WA’s energy needs and ongoing economic development “******** relevant and appropriate but needs expanding and clarifying”.

The committee recommended the state government negotiate with industry on limitations of existing domestic gas agreements, transparency, the marketing of domestic gas, and the timeliness of gas delivery.

New laws were needed for where the gas reservation policy falls short to cover how it interacts with the electricity system, domestic-only gas projects, and to allow for better forecasting of supply and demand, it said.

WA opposition energy spokesman Steve Thomas said most of the state supported the recommendation to retain the 15 per cent offshore reservation policy.

But he accused Labor Premier Roger Cook of “backpedalling” on allowing onshore gas producers the opportunity to export and achieve higher prices for their product.

“There will simply be more uncertainty for an industry that needs long term certainty,” Dr Thomas said.

“It is essential that those industries that use gas in Western Australia can access adequate supplies. This underpins thousands of jobs.”

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