Federal Government policy driven by East Coast issues
Protecting Western Australia’s competitive advantage is a key issue for the near future.
West-east gas pipeline pre-feasibility study
The Federal Government announced measures in the 2017–18 budget to make more gas available for domestic users on the east coast of Australia, including funding for feasibility studies to consider the viability of constructing a new gas transmission pipeline to connect WA gas markets to the east of Australia.
The development of the pipeline could have negative impacts for the Western Australian market.
Upstream barriers to entry and competition/Liquidity and transparency of wholesale market
Smaller producers have no avenue at present to get their gas to market, therefore the creation of a spot market to encourage short term trading should be investigated. Opportunities for common use gas gathering and processing infrastructure to reduce development costs and facilitate domestic gas developments need to be identified. Done together, this could help create a healthier and more efficient market and drive more small gas operators and discoveries off shore.
“Use it or lose it” approach
The Federal Government is pushing for more Government direction of LNG investment off the WA coast under a “use it or lose it” approach.
The retention lease system has been criticised for allowing big LNG players to sit on gas reserves that others could develop earlier. The renewal of each lease is normally considered every five years by industry regulator the National Offshore Petroleum Titles Administrator. If a lease is likely to be commercially viable within 15 years, it can be retained for a further five years. If operators did not have credible plans to use gas from a lease, it could be returned to the market.