Canberra has been speaking of a "gas-fired recovery" with a focus on the eastern states, but the most realistic place in Australia for a new manufacturing boom underpinned by cheap and abundant gas is the one place it remains cheap and abundant: Western Australia. 

 

Unlike the eastern states we have ong had a domestic gas reservation policy for the large LNG projects in the north. The WA policy is bipartisan, and its success is a result of this high level of acceptance at the political, community and business level. 

 

Our resources sector has been the shining light during the pandemic, protecting the economy to an extent from the worst of the financial shock, and will continue to be a strong driver of growth in our recovery. 

 

The fact that the Australian Bureau of Statistics reported 85% of mines have stayed open during the crisis and EnergyQuest that our LNG exports to China actually rose last month is evidence of this. 

 

For Western Australia and its low-priced gas this presents opportunities. 

 

The policy enables LNG producers to explore and develop gas fields and invest in infrastructure - for both domestic consumption and export - knowing the rules in place and how best to operate within them.

 

The domestic component is not just an "add on" or an obligation reluctantly agreed to, it has proved beneficial to producers and consumers alike, providing a ready-made market to complement LNG exports.

 

The pandemic has shown Australia needs to be more than just a producer of raw materials and importer of manufactured or processed goods. 

 

We need to have the capability of making things critical to our wellbeing, particularly when those things are vulnerable to supply chain disruption.

 

While the resource sector will continue to be a strong driver of growth, competitively priced energy via natural gas is vital to having vibrant manufacturing and minerals processing industries, as well as downstream processing and refining technologies, like those for lithium hydroxide. 

 

This isn't lost on Premier Mark McGowan who has been hard at work since last year trying to convince Australian manufacturers to up sticks and move west, reasoning that it is better for them to remain in Australia than follow through on threats to head to the US instead. 

 

He has even made a pitch to re-headquarter Australia's second-largest oil company Santos, after it expanded its west coast footprint with the 2018 Quadrant acquisition and a buy of ConocoPhillips' North Australia portfolio last year. 

 

The role of the government in setting the framework for the recovery is critical.

 

Just as the correct policy in regard to domestic gas reservation has helped underpin WA's economic development over the last two decades, the government can again set the pathway for recovery through promoting domestic gas to take us into a more broad-based economy with downstream processing of our minerals and manufacturing.

 

Now a great opportunity to implement long-lasting policies that use gas to broaden the economic base in WA as well as transitioning to a cleaner energy system. 

 

WA is already heading down this path through its Energy Transformation Taskforce, established by the government to deliver policy and a regulatory framework to integrate renewable energy properly within the grid while ensuring reliability and striving for affordability. 

 

The DomGas Alliance has been leading discussions with government and the industry in WA about our need to understand how gas will be used as we move towards a different energy system and how it can underpin future economic development in the recovery phase of the pandemic.

 

Australia's east coast is stymied in this regard through lack of policy direction for transitioning to a cleaner energy system, but also in not harnessing its gas resources to provide domestic benefits. 

 

Manufacturing is suffering, and even if some form of a national domestic gas reservation policy was introduced, it would be a long time before sufficient gas was available in the eastern states to help bring down the cost of energy as an input to manufacturing.

 

WA, on the other hand, is very well placed to drive recovery using its ready supply of gas reserved under the domestic reservation policy, to underpin investments in projects such as fertiliser production, petrochemicals, and downstream processing of iron ore, lithium and alumina.

 

It may be that the COVID-19 pandemic will provide an unforeseen boon to WA if we can take advantage of our natural resources and good policy. 

 

It won't happen on its own, it requires the government to drive the domestic gas reservation policy a bit harder to ensure the reserved gas is readily brought to the domestic market, and that there is appropriate infrastructure in place for processing and transmission.

 

The private sector will do the rest, and experience shows that WA businesses and investors can move quickly to fund and build projects and start employing people again.

 

 

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