Western Australia to allow some onshore gas exports

Western Australia's (WA) state government will allow onshore developers of gas fields to export about 20pc of their output as LNG during a five-year window, in response to a growing failure to bring on new supplies for the domestic market.

WA previously banned onshore gas exports, except in the case of Australian independent Beach Energy's 250 TJ/d (6.7mn m³/d) Waitsia stage 2 project. Beach may be required to share its infrastructure with fellow Perth basin firms, the WA government said, to expedite market access for new projects.

Australian mining firm Mineral Resources, which has argued for permission to export 85pc of the gas from its Lockyer project as LNG and fellow WA-based firm Strike Energy may benefit from the changes, as both hold significant reserves in the Perth basin.

The changes apply to new onshore developments or existing projects seeking to expand production. Developers are required to reserve 80pc of gas produced for WA, with this rising to 100pc from 2031 onwards.

The policy shift follows dire outlooks for WA's gas supplies as the state attempts to wean itself off coal-fired power generation. It currently contributes about a third of the electricity into the state's largest power grid. A parliamentary report last month warned WA cannot rely on sporadic appeals for more gas to meet demand.

"These policy changes are sensible responses that balance the need for Western Australia to secure its energy future while encouraging onshore producers to bring on more gas supply as and when it is needed," mines and petroleum Minister David Michael said on 19 September.

The 15pc reservation for offshore LNG projects will continue, while WA has promised more transparency on the policy with the publication of a yearly WA Domestic Gas Statement to reveal how producers are meeting obligations, with a review to take place after two years.

An interim parliamentary report tabled earlier this year showed about 8pc of the state's offshore gas output has reached WA consumers since 2006, representing just over half the required volumes.

Following public criticism of LNG producers' contributions, Australian independent Woodside Energy has since pledged an extra 32PJ (854mn m³) of domestic supplies by the end of 2025.

WA will also seek to strengthen laws designed to prevent companies banking prospective onshore oil and gas tenements, with a review into the "use it or lose it" policy to be led by the state's energy department.

By Tom Major