WA defends against shortage
WA has updated its domestic gas policy to protect its supply of onshore gas.
The new rules prevent gas extracted from WA from being sent to the eastern states or overseas.
WA Premier Mark McGowan has defended the decision, saying WA faces a gas shortage later this decade and needs to shore up supplies.
But the government has been questioned over its decision to give an exemption to one project located north of Perth.
The Waitsia project is owned by Japanese conglomerate Mitsui and Beach Energy, which is an ASX-listed company whose majority shareholder is Kerry Stokes's Seven Group Holdings.
Seven Group is WA's biggest media proprietor.
The exemption allows its operators to process gas from the Waitsia field through the North West Shelf for export to LNG markets.
Mr McGowan claims Waitsia was given an exemption because it is “shovel ready” and would deliver hundreds of jobs.
The state's former premier, Colin Barnett, has questioned Mr McGowan’s logic, saying one company in a major industry should not be singled out for special treatment.
“To give a discriminatory advantage like this, I cannot think of a precedent in resources and energy policy in Western Australia,” Mr Barnett said.
“Sure the big projects get treated by themselves, but Waitsia is onshore, it's not a deep-sea engineering project like the other LNG projects are.
“I find the policy really quite strange.
“To ban exports of gas from Western Australia to the east coast I just think is un-Australian.
“It's an appalling policy to adopt.
“why would we stop Australian gas going to the east coast?
“I just cannot believe a state government would do that — to discriminate against other Australians,” Mr Barnett said.
The Australian Petroleum Production and Exploration Association (APPEA) criticised what it sees as a lack of consultation.
“We would think that by cutting off a potential market for an onshore development, you could in fact end up in a situation where that development does not go ahead because it's not commercial,” APPEA director Claire Wilkinson said.
Energy advisory firm EnergyQuest says the clamp on gas exports destroys the chances of an east-west gas pipeline.
EnergyQuest chief Graeme Bethune predicts WA will indeed feel a supply crunch within a decade, but says it would be made worse if LNG projects such as Woodside's Scarborough and Browse fields are undeveloped and cannot provide to the local market.
“The issue for any of these good onshore finds at the moment is finding markets for them, and given that production from the North West Shelf is declining, a natural thing is to supply some of that gas into the North West Shelf, which is being proposed to Waitsia, but not for competing projects,” Mr Bethune said.
“Generally governments try to avoid doing that to maintain a level playing field.
“Singling out a project … is an unusual thing for a government to do.”