WA quietly shuts door on more exports of onshore gas
By Peter Milne
The WA government has quietly announced that no onshore gas fields will receive the economic advantage of access to international markets that the Waitsia field owned by Japan’s Mitsui and Kerry Stokes-backed Beach Energy gained in 2020.
There was no government media announcement for the policy change, just a low-profile “public notice” on Tuesday by the Department of Jobs, Tourism, Science and Innovation led by Premier Roger Cook in his role as state development minister.
Mitsui and Beach Energy’s Waitsia gas project in WA was hit hard by the collapse of its construction contractor Clough.
Now new gas production from the booming Perth Basin cannot be sold internationally or to other states, giving WA gas buyers a stronger position in gas purchase negotiations.
The decision prompted concern from oil and gas lobby group APPEA, which said preempted an ongoing parliamentary inquiry into WA’s domestic gas policies.
APPEA WA director Caroline Cherry said the move would make it harder for onshore gas projects to attract investment.
“This is a disappointing outcome, particularly given there is a Parliamentary Inquiry currently taking place into the effectiveness of the domestic gas policy and Government has preempted any recommendations,” she said.
The move also takes some shine off the heated battle last summer for Perth Basin gas aspirant Warrego Energy, eventually won by Gina Rinehart’s Hancock Prospecting.
At different stages, Stokes’ Beach Energy, Chris Ellison’s Mineral Resources and Strike Energy chaired by prominent Perth businesswoman John Poynton all vied to increase their exposure to gas reserves in the Perth Basin.
The basin is touted as having low production costs, close to existing pipelines and customers, with no need to employ controversial fracking techniques.
Spare processing capacity as a result of declining production from Woodside’s North West Shelf gas export plant opened the prospect of using the facility to export gas from other companies.
In 2020 then Premier and state development minister Mark McGowan announced a ban on the export of onshore gas.
The exception was the Waitsia field, half owned by Beach Energy, which counts media proprietor Stokes as a major shareholder.
Waitsia was permitted to export gas during its first five years of production.
At the time, McGowan justified the decision as a necessary economic boost amid pandemic uncertainty, but side-stepped queries about why the company received such favourable treatment.
“I’m not going into any private conversation I have about commercial matters,” he said at the time.
Exports of gas from Waitsia are expected to start within the next 12 months.
Until this week, the government’s position was that other projects could apply for an exemption.
In December 2022, the Australian Energy Market Operator predicted a gas shortfall in WA for the next three years, a rude awakening for a state that uses the prospect of cheap and plentiful gas to lure investment in the downstream processing of its minerals.
The inability to sell onshore gas outside WA could be viewed as increasing the supply of gas that otherwise would be exported, or reducing supply by lower prices making economically marginal projects unviable.
The parliamentary inquiry was established less than two months ago, public submission closed last week and it is due to report in November.
“WA needs to bring more gas supply to the market to power WA’s growing resources sector and support the South West electricity system as coal-fired power is phased out,” Cherry said.
Any future producers of gas from the remote Canning Basin, regarded by many as unlikely to ever be economically viable, can still apply for an exception from the gas export ban on the basis that the reserves are not located near the existing pipeline network.