Premier Roger Cook has conceded not all businesses will be happy with his government’s decision to ease gas export restrictions, but insists it is the right move for the state.
Premier Roger Cook has conceded not all businesses will be happy with his government’s decision to ease gas export restrictions, but insists it is the right move for the state.
Mr Cook this morning confirmed the move to free up exports for 20 per cent of new and expanded production from onshore projects in the Perth Basin through to the end of 2030.
The move will allow project developers to tap more lucrative international LNG markets through to the end of 2030, before requiring them to supply 100 per cent of their output domestically.
The domestic deadline will coincide with the state’s plan to lean more heavily on gas as an electricity source, following the retirement of coal-fired power.
Mr Cook said the change would be a win for the state, allowing greater certainty for developers to push ahead with investment decisions in the lucrative onshore basin near Dongara.
He said government modeling indicated the state would remain in gas balance for the coming five years, despite projections from the Australian Energy Market Operator in December that WA would enter shortfall from 2026.
“By allowing new gas projects to export a reasonable proportion over the next five years only, we will help to stimulate development while WA’s gas market is in balance,” he said.
“It will mean from 2031 onwards, WA retains 100 per cent of the gas we need to power our economy and keep energy prices affordable.”
The 80 per cent reservation policy will be applied to output on an ongoing basis, in contrast with the life-of-project model which is used for offshore developments.
A contentious exemption granted to the Waitsia joint venture – part owned by Kerry Stokes-backed Beach Energy – will remain in place.
That agreement allows Beach and JV partner Mitsui to export 50 per cent of its output from Waitsia until 2028. Mr Cook said the state would explore the use of Waitsia's infrastructure by other gas developers in an effort to expediate the LNG development pipeline.
The policy tweak is a win for Perth basin developers like Mineral Resources and Strike Energy.
In a statement to the ASX, Strike, which entered production as a 100 per cent domestic supplier at its Walyering project late last year and has grand ambitions in the region, said the move was a strong positive for its projects where final investment decision is yet to be taken.
That includes its West Erregulla joint venture with Hancock Prospecting.
Walyering, where gas is fully contracted to the domestic market, will continue to supply locally.
“Strike will now engage with the WA government on the mechanics of these policy updates to determine how this may immediately augment its operations and gas marketing activities,” it said in its announcement.
The announcement comes a week after Mineral Resources detailed the reserves at its Lockyer project, where it has held off a final investment decision pending regulatory certainty.
Former premier Mark McGowan – the architect of Waitsia’s 2020 export exemption at the height of the COVID pandemic – is now an advisor to MinRes.
The gas sector’s enthusiasm for the policy change is unlikely to be matched by that of domestic manufacturers, many of whom rely on gas as a feedstock and energy source.
The DomGas Alliance, which has a membership base making up 60 per cent of the state's gas consumers, has been pushing for onshore domestic gas production to remain in WA.
“We understand the decision today will be welcomed largely by industry, not so much by their customers, but we believe that it’s an important way that we can continue to make sure that we have a supply of gas,” Mr Cook said.
The DomGas Alliance issued a statement in support of the policy - provided it led basin producers to fast-track developments in support of the local market and was not changed further.
"The government must make it absolutely clear that this new policy is now set in stone, with no future reviews or amendments, and we need bipartisan support to ensure that the idnustry can move forward without the uncertainty of further reviews," Alliance spokesperson Richard Harris said.
A new annual reporting mechanism would be introduced to make the domestic contributions of producers publicly available.
That comes as the state’s domestic gas inquiry revealed Woodside was falling short of meeting its domestic obligations at Pluto, in part because of a policy quirk which requires offshore producers to supply 15 per cent of production over the life of a project – rather than annually.
Earlier this year, Woodside doubled domestic gas output from Pluto.
Mr Cook said he was confident increased transparency would lead producers to lift their contributions.
“We will have that [transparency] from here in in and as a result of that, I’m confident Woodside will meet their domestic gas obligation,” he said.
The domestic gas policy is not legislated. Mr Cook said the government would move to legislate “if we are in a position where we need to”.
A use-it-or-lose-it policy for onshore projects will be tightened.
This morning’s announcement was pre-empted by the WA Liberals, who claimed the premier was playing politics.
