Domgas production growth highest in years

Western Australia's domestic gas production has recorded its first significant quarterly growth since 2008, helped by the opening of BHP Billiton's $1.5 billion Macedon project.

The state's domgas production increased by 5.7 per cent on the previous quarter to 95 petajoules (PJ), according to the latest report from energy economics group EnergyQuest.

Domgas production at the North West Shelf increased by 2.9 per cent on the previous quarter to 52 PJ, while Macedon contributed 6 PJ in its first quarter of production after opening in September.

Macedon is the state's fourth major operating domestic gas plant, alongside Woodside's Karratha gas plant and Apache Energy's plants at Varanus Island and Devil Creek. 

These will be joined in the coming years by two more plants at Chevron's massive Gorgon and Wheatstone projects.

BHP expects the Macedon project to eventually supply 20 per cent of the state's daily domestic gas supply for consumers and industry, with the plant expected to supply gas to the wholesale market until at least 2033.

The project, a joint venture between BHP Billiton (71 per cent) and Apache (29 per cent), has a production capacity of up to 200 terrajoules of gas per day.

Developers of gas projects are currently required to allocate 15 per cent of gas produced from WA projects to the domestic market under the state government's domestic gas reservation policy.

Nationally, petroleum, oil and gas production all fell in three months to 30 September, with Australian petroleum production down 5.9 per cent for the quarter.

EnergyQuest chief executive Graeme Bethune said governments had their work cut out for them in encouraging development of new high-cost oil and gas projects.

"New Australian greenfield projects are regarded as being too expensive, and while there is potential for brownfield expansion, there is nothing firm yet," he said.

"This is a major challenge for both the new federal government and the industry."