PERTH (miningweekly.com) – The Australian Petroleum Production and Exploration Association (Appea) has blasted the Western Australian government’s decision to revise policy in order to secure domestic gas supply.

The state government this week unveiled the changes to the Western Australian Domestic Gas Policy, preventing the export of local gas to the eastern states or overseas, with gas used to power ships not to be considered as domestic gas.

The current Domestic Gas Policy required liquefied natural gas (LNG) project developers to make 15% of exports available to the domestic market.

Premier Mark McGowan said that the updated policy would ensure that the state could continue to access reliable and affordable gas.

"These amendments ensure the policy remains fit for purpose by clarifying that the state government will not agree to exports of local gas to the eastern states or overseas.

"There will be no change to traditional LNG projects like Browse and Scarborough, where they must reserve 15% of exported gas volumes for domestic use.

"For the domestic gas policy to work, the market also needs to know how much gas is available to it, and when the gas is available. We've listened to Western Australian industry's calls for this transparency and the amended policy will ensure it happens.

"We have seen what's happened on the east coast with local gas supplies being prioritised for export and we won't let that happen here.”

McGowan said that the Waitsia gas project Stage 2 in the Mid-West would be an exception to the policy.

“Once sanctioned, it will provide urgently needed jobs, royalties and economic stimulus for the region and the state,” the Premier added, noting that the project would create about 200 construction jobs and would deliver large volumes of gas to the Western Australian market.

Appea Western Australian director Clair Wilkinson said that the state government’s decision to place restrictions on the development of a potential new energy resource ran counter to the government’s Covid-19 recovery plans to stimulate the economy and create jobs.

“As we look to the post-Covid-19 recovery, all responsible development, including of Western Australia’s onshore natural gas resources and the economic activity and jobs it provides, should be encouraged, not stifled,” she said.

Wilkinson pointed to a recent Appea survey which showed that 89% of members surveyed had deferred project investment as a result of the pandemic, with the Western Australian government’s decision serving only to reduce investment confidence further.

“Development of gas resources takes many years to assess, explore and appraise, costing many millions of dollars in investment before it is even clear if a resource is commercially viable to develop.

“Cutting off a potential market for any gas developed is a sure way to signal that Western Australia is not open for business. Worryingly, there was no industry consultation on this sudden change to the domestic gas reservation policy.

Wilkinson said that the state’s domestic gas market had been well supplied for many years, with locally focused developments bringing significant gas supplies into the Western Australian market. 

“At the same time, export-focused projects have brought significant economic wealth to the state, and the country, and underpinned further domestic gas development.

“The policy settings were already bringing gas to market that Western Australia needs, so this added restriction may actually do the opposite to what the government expects and will reduce future gas developments. In short, a project that could be viable if developed for both the domestic and export market may not be commercially viable if developed for the domestic market only.

“One of Western Australia’s advantages is its abundant natural gas resources – which have underpinned much of our economic growth and prosperity in recent decades and provide over half of Western Australia’s energy requirements. 

“Natural gas provides electricity for our schools and hospitals and powers mines to develop the mineral resources that contribute hundreds of millions of dollars a year in royalties to the state.

“It is extremely concerning that with a flick of a pen, and not as much as a discussion with industry, that the future prosperity natural gas can provide would be put at risk,” she said.