In the face of potential domestic gas shortfalls, a WA parliamentary inquiry has released its findings on the state’s domestic gas policy.
The inquiry, which commenced in June 2023, arose from concerns that some LNG producers would not meet their domestic gas commitments under the WA domestic gas policy by the time key projects reach end-of-field life.
An interim report from the inquiry, published in February, found that the state’s gas policy was not robust enough to ensure LNG producers were meeting these commitments.
Under the current policy, producers must reserve 15 per cent of LNG production to the domestic market from each export project.
“The committee is … aware that there is considerable variation in the amounts of domestic gas delivered by LNG producers relative to their LNG exports,” the interim report said.
Since the interim report, some producers, like Woodside Energy, have boosted domestic gas supply in the interest of the state’s energy security. The inquiry believes this boost will allow the market to stay tightly balanced (though with little room for volatility) through to 2030.
However, decreasing production, reserve downgrades, outages, development delays, coal generation issues, and other challenges, are expected to result in a gas deficit from 2032.
“By 2032 the domestic gas shortfall is forecast to exceed 350 terajoules per day—a substantial amount which according to current forecasts will continue to increase year on year,” the report said.
“Ultimately, the state faces increasing demand for gas and declining supply.”
As a solution, the committee called for the development of more gas projects, coupled with greater transparency of the domestic gas policy.
“The state appears likely to need substantial new sources of gas to meet its requirements over the coming decades,” the report said.
“Gas sourced from new fields will need to be brought to market in time and in sufficient volume.
“While the aim is to have renewable energy sources replace gas, coal and diesel, WA does not currently generate enough renewable energy to completely offset fossil fuels.”
An overhaul of the state’s domestic gas policy won’t take exports off the table completely. The inquiry recommended that onshore producers should be allowed to access international markets, but only so long as there is no shortfall in WA.
The latest report was welcomed by Strike Energy CEO Stuart Nicholls.
“The report is a resounding endorsement for the use of gas in power generation in WA, through the establishment of a strategic reserve to support gas-fired electricity through peak periods,” he told AFR.
“That may make the WA Government a new major buyer of gas in WA.”
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