THE release this week of the state government’s long-awaited Strategic Energy Initiative has been welcomed by industry groups, with most commentary focusing on the 15 per cent domestic gas reservation policy.
The policy remains a point of contention among Western Australian businesses, with local industrial users claiming a small but significant victory from the latest policy intended to provide a guide to the state government’s position.
The ‘Energy2031’ paper, released by Energy Minister Peter Collier, was one for the aficionados of energy policy, despite the massive implications for the state as energy prices rise rapidly.
Major gas consumers, represented by the DomGas Alliance, and gas producers, which mainly fall under the banner of the Australian Petroleum Production & Exploration Association, were most excited by what they called clarifications in the gas reservation policy.
Their views were presented against a backdrop of a rapidly changing energy market.
The producers and local users both recognise the impact of sudden North American domestic gas supplies on the price of energy – with the advent of huge amounts of unconventional gas production potentially turning the US into a net energy exporter.
Unconventional gas – from shale and coal-seam projects – has pushed US domestic prices to a fraction of what they were just two to three years ago. The US is weighing up whether to allow the gas to be exported due to the boon the cheap energy provides to its recession-hit economy.
WA has significant potential to develop similar unconventional gas fields onshore, a point recognised by industry and the Energy2031 document. APPEA suggests onshore fields might hold twice as much gas as those offshore.
WA LNG exporters are warily watching this development and the potential it has to hit their markets. However, they are also opposed to being forced to supply gas to domestic users, especially if they might find themselves competing against a flood of local unconventional gas in the medium term.