Big gas users including Alcoa and Wesfarmers have called for the federal government to intervene in the West Australian gas market ahead of concerns about a looming shortage.
The DomGas Alliance wants the federal government to apply to WA its Australian Domestic Gas Security Mechanism designed for the east coast market, where gas prices have surged due to demand from export plants in Queensland.
Woodside’s Pluto LNG project has to date sold little of its gas reserved for the WA market.Credit:Woodside
The WA market has escaped disruption from LNG exports due to a much-lauded policy for liquefied natural gas projects to reserve 15 per cent of their gas for domestic use.
Industry consultancy EnergyQuest recently labelled gas in WA as the cheapest in major industrialised countries, however a shortage between 2025 and 2027 predicted by the Australian Energy Market Operator in 2021 could cause prices to jump.
On Wednesday, the DomGas Alliance – which includes South West alumina producer Alcoa, Pilbara fertiliser and explosives manufacturer Yara, Wesfarmers’ chemical and fertiliser operations and Coogee Chemicals – called for the reserved gas to be offered to market instead of staying in the ground.
It is understood that gas supply from Woodside’s Pluto LNG project is a particular concern of the gas buyers. While former WA Labor Premier Alan Carpenter’s 2006 deal with Woodside has been held up as what should have been done on the east coast, it has delivered little gas.
Woodside had no obligation for the first five years of gas exports and there is doubt the deal was legally enforceable.
The current Labor government worsened the gas supply outlook when it exempted for five years Beach Energy’s Waitsia gas project in the Perth Basin from its ban on the export of onshore gas. Otherwise, Waitsia’s gas from 2023 to 2028 would have more than covered the predicted shortfall.
DomGas Alliance spokesman Richard Harris said the ADGSM could require an acceleration of the delivery of already committed domestic gas volumes under the WA gas reservation policy.
Harris said the predicted shortfall did not allow for the June announcement from the WA government that two of WA’s three coal-fired power stations would close in 2027 and 2029.
“While renewable project developments are planned to fill the gap, power supply security will need to be guaranteed by gas-fired generation,” he said.
“We certainly wouldn’t want to see the situation where the widely praised domestic gas policy leaves WA with a false sense of security.”
Chevron Australia managing director Mark Hatfield told the Australian Financial Review last week that the ADGSM should not be extended to cover WA.
“Any threat of export controls puts at risk the reputation of Western Australia and the nation as a reliable supplier of energy,” Hatfield said.
The chief executive of oil and gas lobby group APPEA, Samantha McCulloch, said her members had worked within the WA domestic gas reservation policy for more than 15 years and were committed to serving domestic customers.
“Adding additional layers of regulation will only impact investment and our global reputation among trading partners,” she said.
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