By Peter Milne
Producers of onshore gas should not be allowed to export it unless the WA market is well supplied, according to a parliamentary committee calling for action to stem a looming shortage.
The politically contentious recommendation will rile investors in the Perth Basin, including media baron Kerry Stokes and miners Gina Rinehart and Chris Ellison – and gas giant Woodside that wants them to use its ageing North West Shelf gas plant near Karratha to process their gas.
WA’s economy is more dependent on gas than any other state.Credit: Adobe Stock
However, WA’s crucial mining sector has much to lose if gas becomes scarce or expensive. In July Laurent Trost, who manages the Pilbara ammonia and explosive plants owned by Norway’s Yara, called for the inquiry to protect existing industry.
“If we don’t have availability of long-term gas, we will fail, and we will have to close our operations,” he said
Yara consumes about 8 per cent of WA’s gas supply, allowing it to supply about 5 per cent of the world’s traded ammonia and produce 40 per cent of the ammonium nitrate WA’s mining giants use for blasting.
The lower house Economics and Industry Standing Committee began investigating WA’s domestic gas policy in mid-2023 in response to Australian Energy Market Operator forecasts of a tight gas market for much of this decade – before a much larger shortage begins in the 2030s.
It recommended the state government only allow Perth Basin gas to be exported “if the domestic gas market is adequately supplied and is expected to be well supplied for a period of time,” leaving the vital parameters of “adequately supplied” and “period of time” undefined.
Opposition energy spokesman Steve Thomas said the decision now lay with the Cook government, but he did not expect a decision before the March 2025 state election.
“As we wait for government policy there will simply be more uncertainty for an industry that needs long-term certainty,” he said.
The domestic gas inquiry has seen WA’s resources sector, which is normally united on what it wants from the WA government, divided between gas producers and consumers.
Caroline Cherry, WA director of oil and gas lobby group AEP, said her members had responded to concerns recently and increased the supply of gas to the market.
The report acknowledged this, but added, “WA cannot rely on sporadic appeals for more gas when the market appears to be tightly balanced.”
Cherry also opposed companies losing petroleum permits they were not producing from, and any renegotiation of current agreements with the government. She argued restrictions on exporting gas from onshore fields would make the projects less profitable, so less likely to proceed.
Yara energy manager Jai Coppen said some gas producers had not adhered to their agreement with the state, and the government should move quickly to overhaul arrangements.
The committee highlighted the poor performance of Woodside’s Pluto project, from which supply so far to WA is equivalent to about 2 per cent of the gas exported, not the 15 per cent expected, and recommended the government renegotiate the deal with Woodside.
The inquiry found “non-compliance with domestic gas commitment agreements is a serious threat to the state’s current and prospective performance.”
The committee also wants the domestic gas obligation for future projects to be set at whatever WA requires to be adequately supplied, not the standard 15 per cent in the current policy developed on 2006.
Current forecasts of the WA gas market extend out ten years, but the committee wants 20-year outlooks produced to help industry make investment decisions.
WA Greens upper house member Brad Pettitt said the inquiry failed to recognise the urgent need to decarbonise, and exaggerated the demand for gas over the next decade if emissions targets were to be met.
“The WA government should be putting in place policy and targets to drive down and phase out the use of gas in the domestic market in line with emissions reduction goals,” he said.
“We have the sun, wind and mineral resources to do this.”
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