Australia’s energy producers have issued another emphatic warning that shoring up new gas supplies will be critical if the State is to become a minerals processing hub.
Oil and gas body Australian Energy Producers is due to roll out findings from industry research house Rystad Energy this week backing in an “extremely strong” case for new projects in WA amid some forecast shortfalls.
It comes as the country’s biggest producers ready to gather at the Australian Energy Producers 2024 conference in Perth, months after a Parliamentary inquiry found WA’s domestic gas settings were “no longer fit-for-purpose”.
The policy requires LNG exporters to provide 15 per cent of the total volume of their projects to the local market.
In the new paper Rystad Energy has estimated the State will need 8 to 10 trillion cubic feet (TCF) of gas to see it through to 2050, but the current pipeline would only cover about 5 TCF. It also claims that the shortage could “reduce the competitiveness of WA’s gas intensive industries”, such as mining and downstream processing.
“In the absence of further supply, this will challenge WA’s ambitions to become a minerals processing hub,” Rystad Energy said.
“The attempt to ensure supply security could lead to coal generation phase-outs in WA being pushed back, which would jeopardise the state and Australia’s interim emissions reduction targets.”
Perth Basin will also be a crucial battleground for new supply, according to the report, with almost all of WA’s domestic gas supplies due to come from the region in the coming years, except for Woodside’s Scarborough project.
Australian Energy Producers WA director Caroline Cherry said the right policy settings would be crucial in developing WA reserves.
“The state must explore for and develop new gas supplies if it wants to avoid energy market turmoil,” she said.
“Streamlining approvals processes is one of the fastest ways to get new gas to market. Lifting the export ban for onshore projects will make more ventures viable and supply more gas to the domestic market.”
It comes less than a week after listed producer Santos revealed it would be sacking 200 workers, most of whom based in Perth, and blamed the decision on slow project approvals.
Chief executive Kevin Gallagher had only the week before questioned the “fit” of Santos’ domestic gas business in WA at the Macquarie Australia Conference.
At the other end of the spectrum, Contractor Baker Hughes last week said it would be relaunching an offshore drilling services business in WA within weeks to work on a big pipeline of oil and gas activity.
In December 2023 the Australian Energy Market Operator (AEMO) predicted WA would face a gas deficit this year.
AEMO also suggested WA customers may be forced to buy or redirect gas from the global LNG spot market to help cover the shortfall in the near-term.
Federal Resources Minister Madeleine King earlier this month tabled the Future Gas Strategy backing in gas until 2050 and beyond, a move welcomed by industry broadly, but criticised by environmental groups.
Greenpeace Australia chief David Ritter said the plan was a “betrayal” of Government climate action.