09/04/2008 - 22:00

Gas sector set for growth

09/04/2008 - 22:00

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Petroleum is WA's biggest export earner and if the discussions at this week’s Australian Petroleum Production and Exploration Association conference are any guide, oil and gas projects are set to make an even bigger contribution in the future.

Gas sector set for growth

Petroleum is Western Australia’s biggest export earner and if the discussions at this week’s Australian Petroleum Production and Exploration Association conference in Perth are any guide, oil and gas projects are set to make an even bigger contribution in future.

The APPEA conference attracted more than 2,200 delegates from Australia and internationally, making it one of the biggest conferences in Perth this year.

The large turnout also reflected Perth’s emergence as a major regional centre for the oil and gas industry, driven mainly by current and planned projects off the state’s northern coast.

Australia as a whole has more than $100 billion of petroleum projects under development or in planning stages, APPEA chief executive Belinda Robinson said.

"The investment being considered is almost eight times the original investment in Australia’s biggest ever resource project, the North West Shelf gas project based at Karratha," Ms Robinson said.

Many of the proposed projects are in WA, including Chevron’s Gorgon and Wheatstone projects, Woodside’s Browse project, Inpex’s Ichthys project and Shell’s Prelude project.

Exploration spending on these and other projects in WA and nearby Commonwealth waters reached a record $1.9 billion in 2007, state development minister Eric Ripper told the conference.

He added that $4 billion in exploration spending is already committed over the next six years.

The proposed projects follow several major projects already under development, notably Woodside’s $12 billion Pluto project.

And just this week, Apache Energy and its partner Santos gave final approval for their $842 million Reindeer project, which includes development of a new onshore gas processing plant to supply the WA market.

Most of the projects are focused on production of liquefied natural gas (LNG) for export markets.

New projects will add to WA’s petroleum exports, which rose by eight per cent to $16.7 billion in 2007, according to data released by the state government.

This contributed to a seven per cent increase in the state’s resources exports to $53 billion.

Other big contributors were iron ore, with a sales increase of nine per cent to $16.1 billion, and nickel, up 19 per cent to be worth $7 billion.

The rise in gas exports has contributed to a sharp increase in gas prices.

The DomGas Alliance, which represents major gas users in WA, has repeated its claim that gas supply shortages and escalating prices represent a serious threat to government and industry plans for increasing gas use in future years.

"Over the last 12-18 months, prices for domestic gas supply in Western Australia have almost tripled," DomGas chairman Stuart Hohnen said in a statement.

"At current price levels in Western Australia, natural gas is no longer competitive with coal for base-load power generation and resource processing."

Gas producers like Woodside have previously argued that gas users have to recognize the changed market conditions and accept higher prices.

For its part, APPEA has a target of 70 per cent of new power stations being gas fired by 2017.

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