An independent report into Western Australia’s gas market has highlighted the growing importance of natural gas in WA’s energy mix and the need for investment in new supply.
Rystad Energy found policy and regulatory stability remained vital for the gas industry to invest $11 billion in new supply needed to meet demand in WA over the next decade.
The Western Australia Domestic Gas Policy Study, commissioned by the Australian Petroleum Production & Exploration Association (APPEA), found that new gas supply from the Perth Basin and Scarborough would be key to addressing near-term market tightness but significant new supply would be needed to meet growing demand after 2030.
“New gas supply is needed to offset declining production from legacy fields and meet growing demand,” Rystad Energy said.
“Gas demand will remain robust through to 2033, with new gas plants needed to support planned coal retirements and the expansion of renewables in the power sector alongside an almost doubling of industrial demand for gas.”
The Rystad Energy report also found that the LNG Domestic Market Obligation had supported gas supply and price stability in WA, delivering a gas price benefit to domestic customers of around $1.2 billion each year.
Allowing onshore gas projects to access export markets would expand the number of commercially viable projects, unlocking new supply and delivering benefits to the WA market.
According to Rystad Energy “Access to larger export markets reduces the domestic price required for fields to become commercial while improving access to capital and financing”.
In its submission to the Inquiry, APPEA has recommended the review should focus on promoting new gas supply, arguing timely and affordable delivery of gas to the domestic market could be helped by:
Removing the export prohibition for onshore gas projects.
Avoiding changes the current offshore domestic market obligations (DMO).
Establishing a regulatory framework for unconventional gas reserve development.
Faster approvals to unlock new gas supply.
A framework for price transparency developed in collaboration with industry.
APPEA WA Director Caroline Cherry said: “The industry is committed to providing a secure, reliable and affordable supply of natural gas to WA’s households and businesses.
“Gas is critical to WA’s cleaner energy future and net zero targets, powering WA’s growing resources sector and supporting the South West electricity system as coal-fired power exits.
“The development of WA’s world-leading LNG export industry has been a critical driver of the State’s energy security and underpins supply and lower prices while delivering substantial economic benefits to WA.
“Securing these benefits for WA in future years requires a stable policy and regulatory environment that provides certainty to natural gas sector participants and investors.”
Ms Cherry said recent changes to the Domestic Gas Policy in WA before the conclusion of the Inquiry were contrary to policy and regulatory stability and put at risk adequacy of future domestic gas supply in WA.
“Critical investment has been put at risk at a time when the state needs more gas supply to meet growing demands,” she said.
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17/05/2021
