Western Australia is a large producer of gas, with around 90 per cent of Australia’s estimated recoverable conventional gas reserves located in the Carnarvon and Browse basins in the state’s North West. These gas fields support WA’s liquefied natural gas (LNG) export industry, as well as the state’s domestic gas market.
The Western Australian Government’s domestic gas policy aims to secure the state’s long-term energy needs by ensuring that LNG export projects also make gas available to the domestic market. The policy seeks commitments for the equivalent of 15 per cent of gas from new offshore developments to be available for domestic use.
Since the 1970s, successive governments have maintained a domestic gas policy. In 2006, the government formalised the policy with the release of the WA Government Policy on Securing Gas Supplies.
In 2012, the application of the policy was clarified in the Strategic Energy Initiative’s Energy 2031 final paper. It stipulates that gas producers must demonstrate their ability to meet the Domestic Gas Policy as a condition of project approval. The state will apply the policy in a flexible manner in accordance with the following requirements:
- LNG producers will commit to make available domestic gas by:
- reserving domestic gas equivalent to 15 per cent of LNG production from each LNG export project
- developing and obtaining access to the necessary infrastructure (including a domestic gas plant, associated facilities and offshore pipelines) to meet their domestic gas commitments as part of the approvals process
- showing diligence and good faith in marketing gas to the domestic market.
- These efforts may be subject to independent review.
- Producers are required to undertake these actions such that domestic gas is available to coincide with the start of LNG production. The timing may vary depending on project circumstances.
- Prices and contracts for domestic gas will be determined by the market.
- Producers may propose to offset their domestic gas commitment by supplying gas or other energy from alternative sources, rather than supplying gas from their LNG projects. Offsets must provide a net addition to the state’s domestic energy supply.