Gas users flare on east coast demands

WA’s DomGas Alliance has hit out at suggestions the state’s gas should be used to fix an east coast energy crisis.

Yesterday, The Australian reported New South Wales Treasurer Matt Kean had floated a national reservation scheme for gas and coal production.

That would supersede Western Australia’s own regulation requiring exporters to save 15 per cent of their gas for local customers.

Those customers include manufacturers such as Alcoa and Yara Pilbara, power generators, and households.

Gas would head east to fill a shortfall looming in that market, but reducing availability in WA.

The DomGas Alliance represents five of the biggest corporate gas users, and spokesperson Richard Harris told Business News the group would oppose the plan.

Mr Harris said NSW could put in place its own reservation policy.

“It might have been a good idea some time ago before (the NSW government) had a moratorium on gas exploration and allowed all onshore gas to be exported,” Mr Harris said.

East coast states have introduced heavy restrictions over onshore oil and gas projects, which have curtailed development of new fields.

“There is nothing stopping our LNG producers shipping to NSW, but our policy says that is to be treated as an export, and subject to a further 15 per cent coming into the WA market,” Mr Harris said. 

“Fair enough too.

“Also, a number of parties have looked at building LNG terminals in NSW but can’t get enough customers to underwrite the cost of the infrastructure. 

“Maybe the NSW government might look at supporting the cost of LNG terminals instead of asking for WA to subsidise east coast energy costs?”

Energy Minister Bill Johnston appeared on ABC24 today to respond to demands for WA gas to head east.

Mr Johnston said there would be big logistical issues sending the gas across the country.

Building a pipeline to the east coast market could cost $10 billion, which would drive up gas bills for users permanently, he said.

LNG import terminals would risk linking the east coast price permanently to foreign markets, Mr Johnston said.

When asked his view on the stalled Narrabri gas development in New South Wales, he said the state could make its own decisions on the gas market.

But it would need to accept the consequences.

Mr Johnston confirmed WA’s coal miners were considering sourcing the fuel from New South Wales to keep local power stations supplied over summer.

However, Mr Johnston stressed a difference in approach.

WA users would be paying the market price to buy the coal, while NSW was lobbying for a national scheme to redirect the gas at a lower price.

The federal government was reportedly cool on the proposal, as was the opposition.

Shadow Treasurer Angus Taylor told the National Press Club the Narrabri project in NSW would need to move to production to supply new gas and ease the shortage.

It’s also not clear WA will have excess supply to ship.

In December 2021, the Australian Energy Market Operator’s annual gas market report warned WA would have a shortage between 2025 and 2027.

That would rise as high as 85 terajoules a day, about 8 per cent of WA’s consumption.