Analysis accompanying the production and reserves; consumption; major infrastructure; and innovation maps the centre launched this week warned that future WA governments will need to consider how the international gas markets have evolved since the historic North West Shelf deal in the 1980s kicked off Australia's LNG export industry.

 

While the Australian Petroleum Production and Exploration Association's opposition to the state-wide frac ban implemented after Labor won office was predictable, the USAsia Centre went further.

 

The Australian Energy Market Operator's Gas Statement of Opportunities says WA's domgas market is oversupplied now, however that will change come the early 2020s once the NWS contracts roll off and questions abound as to where new supply will be sourced.

 

"With new, large LNG facilities unlikely, there may be potential to revisit the method of defining domestic gas reserves," the USAsia Centre's report warned.

 

"There is additional risk that WA will be caught in the federal goernment's domestic gas security mechanism."

 

Woodside Petroleum CEO Peter Coleman expressed such concerns at APPEA 2017 to Energy News, though the Commonwealth has since said WA and the Northern Territory's LNG projects are exempt from the ADGSM

 

This could change, however, once AGL Energy completes its planned LNG import terminal in Victoria.

 

The USAsia Centre also lamented how industry proponents are suffering under the "politisication" of its considerable shale gas resources which once drew ConocoPhillips but the US supermajor has long since gone, focusing its Australian attentions on backfilling Darwin LNG and operating Australia Pacific LNG.

 

"While offshore development has been the focus for WA, the act of restricting development of certain forms of gas may appear to company boards as the ‘thin edge of the wedge'," the report said.

 

Hope springs eternal, though.

 

The Chamber of Commerce and Industry WA, which produced the report with the University of Western Australia and the Perth USAsia Centre, sees cause for optimism on the horizon with economic analysis suggesting the state is nearing the bottom of declining business investment trends, while oil prices appear to be on an upward trend.

 

Joe Doleschal-Ridnell, who until September was CCIWA's national policy manager and is now director investment of the Agent General of South Australia's London office, produced the maps and analysis with USAsia Centre's Andrew Pickford and UWA innovation and industry engagement lead Mark Stickells.

 

WA's $40 billion per annum investment is expected to drop 15% in 2017-18 before returning to 3% growth in 2018-19, which the CCI attributes largely to the capital needed for the operations and maintenance of the state's major LNG projects.

 

While Wheatstone, the last project with onshore infrastructure, has sent its first cargo, Shell's Prelude is yet to start producing while Inpex's Ichthys off WA's coast which will pipe the gas to Darwin before export to Asian markets is also due soon.

 

This improvement in business investment should see WA's economy grow by about 2% in 2017-18 and 3% the following fiscal year.

 

The instability of global markets could also work in WA's favour, particularly if mature markets like Japan and South Korea, whose demand is declining with its ageing population, sees economic growth and government policy change rapidly.

 

This, or other "black swan" events could see gas demand growth kick-start the next wave of investment in WA, the USAsia Centre said.

 

Floating storage and regasification units, such as those through which AGL plans to import LNG into the east coast, are already altering the parameters of the LNG market, and other technological and business process innovations could also emerge.

 

 

While Australia has enough proven LNG reserves to capitalise on global consumption slated to rise from 120 trillion cubic feet in 2012 to 200Tcf by 2040, risks still abound, as the report said WA's economy "remains fragile".

 

The key, as Platts recently highlighted, will be to remain open and flexible enough to accommodate the inevitabilities of market instability, though the Perth USAsia Centre's report suggests floating LNG could help Australia on that front, though that prediction is likely to be influenced by the fact that Shell is sponsoring and adopting UWA's FLNG research globally.

 

Aside from the O&M opportunities, LNG and crude oil exports are in the top five of WA's exports, with resources collectively accounting for 90%, or $95.3 billion, of merchandise exports last year.