Article by Josh Zimmerman courtesy of the West Australian.
WA’s domestic gas settings are a “live issue” for Premier Roger Cook, who wants to have a “conversation with industry” about changes to bring supply online quicker — including potentially lifting the onshore export ban.
The Cook Government’s shift in approach on gas comes in the face of looming shortages that threaten to push up energy prices for families and businesses.
While insisting there would be no change to the fundamental principle underpinning the State’s signature domestic reservation — that West Australians should benefit from WA gas — the Premier said it was “not a set and forget policy” and needed to evolve over time.
“What some (companies) are telling us is that in order to make sure that their facilities are commercial, they need early cash flows, which can be brought on by early exports to the international market where they enjoy a higher price,” he said. “And so we need to obviously have a conversation with them about what those dynamics look like.”
The comments will delight gas developers in the Perth Basin who are currently prohibited from exporting any of their product, a condition they insist is discouraging vital investment in new projects.
Mineral Resources boss Chris Ellison has repeatedly said construction of a $1 billion processing plant at his Lockyer Field is contingent on the Government granting him a five-year exemption to the onshore export ban, which would improve the commercial viability of the project.
Just last week he floated also handing the Government the right to redirect gas into the local market in the event of a domestic shortage.
Mr Cook said the MinRes proposal “does combine those important elements of bringing their gas to market” while making sure it remained available for domestic use through the call-in provision.
“But that’s just one example,” Mr Cook added.
“I’m just signalling that I’m open to having that conversation with the industry to understand the challenges and their opportunities.
“At the end of the day, the fundamental principle is it’s WA gas so West Australians should benefit from it. That means we get lower power bills, it means we get more industries and more jobs that come from that.
“But it’s no use having a domestic gas reservation policy if it means domestic gas does not come to the market — and if that means that we have to continue to review that policy, we will.”
Asked whether he was considering export exemptions for onshore gas producers, Mr Cook replied: “What I’m saying is that we’re open to the conversation with all players, understanding the principles involved.”
Mounting concerns about WA’s energy security were driven home through the December release of an Australian Energy Market Operator report warning demand for gas would outstrip supply by about 8 per cent over the next three years — with the shortfall blowing out to 27 per cent within a decade.
The alarm was sounded just months after the Government in August quietly doubled down on its ban on the export of onshore gas through the release of a public notice confirming no further exemptions would be provided.
It also came amid a parliamentary inquiry into the continuing effectiveness of WA’s reservation policy, which requires all offshore projects to supply 15 per cent of their total production to the domestic market.
The existing settings have been lashed by major industrial gas users. But energy companies claim blanket export bans for onshore gas are stifling investment in the hotly contested Perth Basin.
