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APPEA argued on Friday that the plan did not promote a “robust and viable” gas industry and the state should be focusing on developing more gas supply capacity.
“The gas industry understands the Government’s desire to ensure Western Australia has long-term supplies of gas at competitive prices,” APPEA WA director Richard Ellis said.
“However, APPEA and the gas industry do have a concern that proposals to quarantine 15% of WA’s gas reserves could, in the long run, reduce supply competition and long-term supply security.”
Ellis said the Government would be better off looking at how to promote the development of more onshore and offshore gas fields.
“There is plenty of gas in Western Australia and in the adjacent offshore waters under Commonwealth jurisdiction – in fact more than 100 years at current production rates,” he said.
“However, many of the large offshore fields have remained undeveloped since their discovery 20 or 30 years ago.”
He said APPEA believed the best way to promote more gas supply was through a competitive market as occurs in most other parts of the world.
“Rather than putting new impediments in the way of future LNG and domestic gas projects, the WA Government needs to adopt policies which address some of the State’s disadvantages and encourage oil and gas companies to invest in the state,” he said.
“Quarantining a major portion of our gas reserves, increasing sovereign risk and making the economics of developing remote, high cost, offshore gas fields even less attractive and disadvantaging those that can supply the WA market, is not the way to achieve long-term supply security.”
Ellis also called on the Government to report on its review of submissions by the industry and other stakeholders and seek further comment on the options being considered before a policy position is finalised.
Last Thursday, WA Premier Alan Carpenter confirmed to the West Australian newspaper that the Government would ask gas producers in the state to reserve 15% of their gas for domestic use, rather than be exported as liquefied natural gas to markets in Asia and North America.
The announcement followed six months of heated public clashes between Carpenter, Federal Minister for Resources Ian Macfarlane and Woodside chief executive Don Voelte.
Macfarlane has argued that the plan would deter investment and exploration, while Carpenter has said reserving a portion of gas from LNG projects for the domestic market was not a new concept.