Newly opened pipeline can unlock WA gas market, says APA Group

APA Group has opened its 580km pipeline in Western Australia, which it says could unlock that state’s gas market.

APA Group chief executive Adam Watson.

APA Group has opened its 580km pipeline in Western Australia that the country’s largest listed infrastructure company said could unlock the state’s gas market.

The Northern Goldfields Interconnect (NGI) positions APA to capitalise on the surging interest to tap gas supplies from the Perth Basin and hopes to drastically bolster critical minerals production in WA.

WA has abundant supplies of almost all of the government’s critical minerals list, including alumina, cobalt, lithium, graphite – much needed amid global efforts to produce batteries and renewable energy projects to wean from fossil fuels.

Without supplies of gas, these critical mineral mines would have to use diesel for their energy needs, which would contribute to Australia’s emissions.

APA chief executive Adam Watson said the NGI would be vital to supporting the long-term growth of the state’s resource sector.

“This infrastructure is the missing link in WA’s gas network. For years an interconnected gas grid on the east coast market has helped manage supply and demand challenges across key markets,” Mr Watson said.

“The NGI also demonstrates that we are backing the WA resources sector. We are investing ahead of demand, supporting the government’s long-term growth plan in areas like critical minerals and providing confidence to project owners that reliable energy is available to bring new projects to market.”

Some of Australia’s most prominent investors such as Gina Hancock and Kerry Stokes have sought exposure to the Perth Basin amid expectations that the domestic gas market will tighten in the coming years.

WA’s vaunted domestic gas reservation policy bans exports from onshore projects and requires big offshore players to place 15 per cent of their gas into the local market.

The WA domestic reserve has been credited with keeping WA gas prices for big industrial users at levels far lower than their east coast counterparts.

But in recent months, WA has endured a chaotic period as it suffers a spate of coal power station outages and an uptick in demand.

With coal playing a smaller part of electricity generation, the Australian Energy Market Operator said this week a total of 100 PJ of gas was consumed in the WA domestic gas market in Q2 2023, a drastic increase from the previous three months earlier when just 7.6 PJ was consumed.

AEMO said as a result the average wholesale electricity price in WA during the three months ended June 30 hit a record high.

The surging cost threatens the viability of Australia’s proposed new critical mineral projects, which would struggle to proceed without security of affordable and reliable gas.

Heavy users also fret about WA’s aggressive transition timetable. The WA government plans to cease coal-fired power generation by 2029, representing a huge transformation ahead in the fuel mix for electricity in the state, where coal powered 42 per cent of generation in 2021. AEMO is forecasting demand for gas for power generation in the state is set to more than double in 10 years, from 127 TJ/d in 2023 to 304 TJ/d in 2032.

The reporter travelled as a guest of APA Group

Originally published as Newly opened pipeline can unlock WA gas market, says APA Group