Companies looking to extract gas from onshore reserves and export them will be given a six-year window to do so under sweeping changes to WA’s domestic gas policy.
Under the new policy, companies like Mineral Resources and Strike Energy with onshore gas tenements will be allowed to export 20 per cent of the commodity extracted until the end of 2030. The offshore gas reservation that covers producers like Woodside and Chevron remains unchanged at 15 per cent.
Onshore gas companies will be able to sell 20 per cent of their product overseas.Credit: Justin McManus
Currently, the policy does not allow any onshore gas to be exported except for a controversial exemption secured by Beach Energy and Mitsui in 2020 that allowed its Waitsia joint venture to export 50 per cent of that project’s reserves through Woodside’s Karratha Gas Plant.
Premier Roger Cook said the policy would make onshore projects viable while still retaining gas to power the state over the energy transition.
“WA Labor’s domestic gas policy has underpinned WA’s economic success over the past decade, and under my government, the policy will set up our state for our clean energy future,” he said.
“This update provides certainty for gas producers and users, helping to facilitate new onshore gas projects – creating local jobs while ensuring our energy needs are met.”
The changes are in response to a parliamentary inquiry into the state’s domestic gas policy that pitted gas producers against the state’s biggest gas users in the mining and manufacturing industries over attempts to lift the onshore gas ban.
Companies like Strike and Mineral Resources, who were attempting to get gas projects off the ground, argued that domestic-only projects could not attract the capital required.
Gas users argued that opening onshore projects to global markets would increase the volatility of prices in the market and threaten the state’s energy security.
The state will also introduce an annual WA domestic gas statement which shows how gas producers are meeting their domestic gas obligations.
However, the government will not legislate reservation policies, meaning it is still relying on the goodwill of companies to meet their obligations despite offshore producers only having provided 8 per cent for the domestic market rather than the 15 per cent under the current policy.
The new policy was broadly supported by opposition energy spokesman Steve Thomas who said it provided a greater level of certainty for onshore projects, but he questioned the time frame offered.
“I am not sure what measure the government used to determine that new onshore gas projects would need access to the more lucrative export market from 2025 to 2030 but would not need the same access from 2030 onwards,” he said.
“It looks like a short-term political fix.”
A Mineral Resources spokesman said certainty in domestic gas policy was welcome, and the company would continue to assess all options to maximise value from its Perth Basin interests.
The policy was also welcomed by industry, with Australian Energy Producers WA director Caroline Cherry saying it would make more projects viable while underpinning domestic supply.
“The Cook government has listened to the concerns of industry about ensuring reliable and affordable energy for the state and pulled the levers to bring on more new gas supply to serve rising demand for gas in coming years,” she said.
“More gas will be needed to serve rising demand supporting renewables in electricity generation as coal is phased out while underpinning the economic benefits produced by the mining sector as a key power source.”
WA Greens MP Brad Pettitt said the policy demonstrated the government’s reliance on gas at the expense of renewables uptake.
“The Cook government’s gas fanaticism is proving to be a self-fulfilling prophecy that is driving future reliance on gas and, unsurprisingly, failing to facilitate the rapid transition to renewable energy the climate science calls for,” he said.
“Wind and solar are the cheapest ways to generate electricity - much cheaper than building new gas-fired power stations - but extraordinarily there’s not a single large-scale renewable energy generation project under construction on WA’s new grid.
“Without a plan to invest in renewables as the closure of coal-fired power stations in Collie looms, Western Australia is sleepwalking into long-term reliance on new gas.”
Lock the Gate Alliance WA Coordinator Claire McKinnon said the state had just experienced its hottest summer in history but was throwing more fuel on the fire.
“Parts of the Kimberley are at risk of becoming unlivable as the climate crisis intensifies. Yet the Cook Government is sacrificing this amazing region, home to stunning landscapes, intact nature and the world’s oldest living culture to the dirty, polluting fracking industry,” she said.