Chevron Australia has told a parliamentary inquiry into the domestic gas reservation policy that it would willingly open its books to the public to demonstrate it is meeting local commitments.
Chevron Australia has told a parliamentary inquiry into the domestic gas reservation policy that it would willingly open its books to the public to demonstrate it is meeting its local gas commitments.
Representatives for the LNG producer appeared before the Peter Tinley-chaired independent inquiry this morning, telling the committee the producer was committed to meeting its obligations in WA.
Chevron general manager gas supply & trading Patrick Beashel said the company was supportive of volume transparency on an operator basis and called for policy stability in the state.
Mr Beashel said the existing domestic gas policy, enacted under state agreements and requiring offshore LNG producers to contribute 15 per cent of a project’s output domestically, had worked well for Chevron.
“We’re supportive of policy stability, and we think the policy has worked very well over the previous couple of decades,” he said.
“The 15 per cent reservation, which came into effect in 2006, has facilitated some significant investment into both LNG and domestic gas.”
Mr Beashel said he felt the policy had assisted to bring more diversity into the market, and that Chevron was comfortable to the point it was willing to open the books on its domestic supply.
He stopped short of commenting on the contributions of other producers but said all players would be compliant “with the rules of engagement” in an efficient market.
Chevron used its appearance before the inquiry to urge the importance of policy stability in investment decisions and encourage changes to allow the acceleration of approvals for new fields which would backfill existing facilities.
That came as the LNG producer revealed its forecasts for a shortfall in the gas market into the 2030s largely matched those of the Australian Energy Market Operator.
Mr Beashel pointed out that 80 per cent of WA’s domestic gas volumes currently came from Gorgon and Wheatstone, as well as Santos’ Varanus Island and Woodside’s Macedon gas projects.
“Anything to diversify additional supply into the market will reduce some of that potential tightness in forecasts through to the end of the decade,” he said.
Mr Beashel said Chevron’s gas supply plans from Wheatstone and Gorgon extended beyond the 2040s.
Chevron’s appearance came shortly following that of the state’s largest natural gas user Alcoa, with Australian energy director Nicholas Eaton telling the committee that a 15 per cent reservation policy was enough if all proponents met their domestic gas obligation.
Mr Eaton suggested transparency in reporting, and called for new agreements to introduce elements of consequence for those who don’t meet their obligations.
He was critical of the lack of timeliness in the supply information published on an annual basis by the Department of Jobs, Tourism, Science and Innovation, and said quarterly reporting would be more appropriate.
Domgas Alliance – an entity representing the state’s largest gas users including Alcoa – previously called for the Economic Regulation Authority to monitor the state’s gas supply.
Alcoa said it was ambivalent to which organisation did the job, but that it was important the mechanism was improved.
Alcoa was impacted in January supply tightness which led it to instead burn diesel at a higher cost. Mr Eaton said government intervention in such circumstances to support the local market could be appropriate.
“We think the right thing for the marketplace is that on a very short term basis, spot cargoes are suspended and that the domestic market is supported,” he said.
On a supply basis, Alcoa took the view that new gas field supply would be vitally important to the state as coal was phased out.
Mr Eaton said Alcoa supported a requirement for domestic gas producers on the existing pipeline to meet domestic needs rather than tapping export markets.
The policy has been a point of contention for onshore operators in the Perth Basin particularly, where the ability to apply for an LNG export exemption was recently removed.
