Australian Energy Producers (AEP), representing the country’s upstream oil and gas exploration and production industry, is set on working with the government of Western Australia (WA) to find the best way forward following an inquiry into the state’s domestic gas policy by the Western Australian Parliament’s Economics and Industry Standing Committee.
While the gas industry in WA delivers domestic supply at largely stable prices, the ‘ Inquiry into the WA Domestic Gas Policy: Final Report ’ found that additional supply would be needed to meet the rising demand in the face of what it calls imminent shortages, forecasted within 12 to 18 months
As the committee found that WA will “need substantial new sources of gas” in coming years – especially since it expects the domestic gas shortfall to exceed 350 TJ/day starting in 2032 – it recommended the state allow onshore gas projects to export liquefied natural gas (LNG) only if the domestic market was adequately supplied and was expected to remain so for a while.
The report noted recent additional domestic commitments from gas companies amid tightening demand: “WA has never experienced a substantial shortfall of domestic gas and has largely avoided the price and supply volatilities which have troubled Australia’s east coast.”
As explained in the report, the policy is designed to help ensure that the state’s domestic gas requirements are met. Under it, LNG project developers are required to reserve gas for the domestic market to maintain domestic supply infrastructure and market domestic gas to consumers, even when exports might be more profitable.
The inquiry into the WA domestic gas policy was launched because the committee had concerns that some LNG producers are not meeting their domestic gas commitments under the policy by end-of-field life. This gas is seen as important as it contributes around half of the state’s domestic gas supply and is expected to ensure energy security in the future.
AEP WA Director, Caroline Cherry, said gas companies were complying with their domestic gas commitment agreements to supply the domestic market. While the report recommended some government interventions, seen as counter-productive by the industry, AEP welcomed the committee favoring market-led responses.
“Gas companies are committed to producing reliable and affordable energy supply and the report has found they have delivered this for WA’s economy. As the committee acknowledges, industry has further demonstrated this commitment in recent months, with several companies ensuring extra supply to the domestic market,” said Cherry.
Cherry noted that allowing onshore projects to access export markets would help underpin domestic gas security as more projects could become commercially viable. Her organization also recently underlined the importance of Australian gas exports for energy security and emissions reductions in the context of Rystad Energy’s prediction that LNG demand in Asia could almost double by 2032.
On the other hand, she believes recommendations to renegotiate existing domestic gas commitment agreements and implement a ‘use it or lose it’ measure for retention leases would cause instability and uncertainty. “Any changes to the DGP objectives, as proposed, should be tested with stakeholders,” added Cherry.
Some of the prominent projects in the region that the committee thinks would benefit from a revised domestic gas policy are Woodside Energy’s Scarborough and Pluto LNG .
Located in the Carnarvon Basin, the Scarborough field is estimated to contain 11.1 trillion cubic feet of dry gas. It will feature up to 13 subsea production wells to be tied back to a floating platform unit (FPU) moored in a water depth of 900 meters. As a legal challenge with the Australian Conservation Foundation (AFC) has just been dropped, the first LNG is expected to be delivered in 2026.
Pluto LNG is an onshore facility under construction situated in Western Australia’s Karratha, meant for processing gas from the Scarborough development. Work is ongoing on the facility’s two trains, Pluto Train 1 and Train 2 , and a class dual-fuel LNG carrier , called Woodside Scarlet Ibis , recently reached the site, ending its journey from Hyundai Glovis’ South Korea shipyard.