Opinion article in The West Australian by Caroline Cherry, WA Director of Australian Energy Producers.
After a year of debate over WA’s domestic gas policy, a parliamentary inquiry has reaffirmed that the gas industry is fulfilling its commitment to this State.
“To date, 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,” the report by the Economics and Industry Standing Committee report reads.
The findings underscore the track record of WA’s oil and gas industry and its unyielding commitment to delivering reliable and affordable energy supply to the State’s homes and businesses.
There has been much debate during the inquiry about the balance between exports and domestic supply and how WA’s key gas reservation policy will look in the future.
The fact is that gas companies have been complying with their domestic gas commitment agreements to supply the domestic market.
Over decades, our industry has helped power the mining sector to its extraordinary highs while providing lower prices for industrial use such as manufacturing and domestic use in households.
In late 2022, WA had the lowest gas prices in the OECD.
Recently, as supply tightened amid growing gas demand, gas producers such as Woodside Energy and Chevron Australia have stepped up and provided additional supply into the domestic market.
The inquiry was right to call, as the industry has for some time, for “substantial new development of gas resources” to meet rising demand for gas.
As the energy transition progresses, gas will increasingly become a valuable partner to renewables as coal is phased out of the electricity grid while the mining and minerals processing sector will continue to call on gas for power.
The committee recommended some government interventions, but the industry considers these would be counter-productive – creating uncertainty that would only diminish its aim of securing new gas supply.
These included a proposal to renegotiate existing domestic gas commitment agreements while another recommendation proposed implementing a “use it or lose it” measure for retention leases.
Both recommendations would undermine the investment environment by changing the rules companies entered into in good faith and based investment decisions on.
Yet the committee expressed the view market-led responses are preferred.
The industry agrees and stands ready to invest billions of dollars in new supply projects – but this can only be done if the investment settings are right.
Encouragingly, the committee said there was “some merit” in industry’s call to allow onshore projects to export LNG.
It ultimately recommended the State allow onshore gas projects to export LNG only if the domestic market was adequately supplied.
The gas industry has argued for this because more WA gas projects become viable if onshore projects are allowed to export, with LNG sales underpinning the numbers behind domestic gas production and supply.
While the Cook Government considers its response to the inquiry, it should be recognised for separately streamlining approval processes through the introduction of the Environment Protection Act Amendment Bill 2024 into Parliament, which will assist in bringing new gas supply to the market sooner.
The Government has shown political maturity in its attitude to the energy transition, such as explaining that the State’s emissions may rise as local manufacturing capacity grows and WA’s gas exports help lower emissions in Asia.
The domestic supply versus exports debate requires similar maturity.
Exports should be celebrated for their global emissions reduction role, switching power uses from coal to gas in Asia.
And then there is their extraordinary domestic economic contribution.
LNG exports underpin domestic energy security by supplying the domestic market, supporting tens of thousands of jobs and delivering billions of dollars of financial benefits to Australians.
Gas supplied under domestic market obligations – from LNG-linked projects – account for 54 per cent of WA’s domestic gas supply.
In direct financial contribution, the gas industry tipped more than $17 billion into government coffers around the nation last year while spending $41 billion with Australian businesses.
There are not too many sectors that can detail such an economic contribution and exports are a big part of that financial stimulus.
And there is no reason why domestic and global gas production shouldn’t both continue to propel WA’s economy to a stronger position after so much success to date.
