Written by Lyn White Tuesday, 10 November 2009 00:00
“WA is the most energy and gas dependent economy in Australia”, according to Tony Petersen, Chairman of the DomGas Alliance, key speaker at a recent sustainability seminar at Murdoch University.
“Natural gas supplies half of WA’s primary energy and fuels 60 percent of the state’s electricity generation which underpins WA’s mining, minerals processing and power generation industries.
“The current WA consumption is over 1000 terrajoules per day (TJ/d) and we will require over 1000 TJ/d of new gas to meet new and replacement demand by 2015.”
“We have had a serious domestic gas shortage since 2004 with users unable to secure long term supply in a substantial quantity. Prices have risen dramatically to be around three times the price of new gas in Victoria. WA domestic gas prices are now among the highest of any gas producing or exporting economy in the world.”
At the same time, producers continue to expand LNG exports. In August 2009, ExxonMobil signed a 20 year contract to supply India and a 20 year contract to supply China. In September 2009, Chevron signed a 15 year contract to supply Korea and two 20 year contracts to supply Japan. By comparison, WA gas users are unable to secure long term contracts while there is already significant unfilled demand.
There is a perception that Australia has abundant gas reserves.
“But according to ABARE, Australia has only 1.4 percent of the world reserves, which represents around 50 years’ supply at current production rates,” Tony said.
The Reindeer Project will supply domestic gas up to 120 TJ/d from 2011 and the Macedon Project will supply domestic gas up to 200 TJ/d from late 2012. The Gorgon Project if “commercial” will supply domestic gas up to 150TJ/d from the end of 2015.This prospective new supply totals 470TJ/d which is at least a 500TJ/d shortfall from the current WA consumption rate.
“Rises in gas and electricity prices for business and households will lead to the loss or relocation of industry and employment overseas or interstate,” said Tony.
At current prices, natural gas is no longer competitive with coal for baseload power generation so gas shortage is potentially the single biggest contributor to WA emissions growth over the next decade. This is unlikely to change under the Emissions Trading Scheme when it costs $7/GJ for gas compared to $2/GJ for coal.
“We need to remove the anti-competitive joint selling arrangements and strengthen the WA gas reservation policy and implement a national reservation policy”, Tony said.
“We must stringently enforce retention leases to ensure producers do not warehouse gas resources. We need tax and royalty incentives for domestic gas and support for midstream infrastructure.
“The Egyptian policy is one third gas production for export, one third for domestic supply and one third left for future generations. We need mature debate on energy security in Australia rather than the current focus on exports.”
written by Ed Lister, November 12, 2009
written by ross dalrymple, November 13, 2009
written by David Karr, November 25, 2009
The present and previous WA Premiers have both demanded that WA get its fair share of gas(supply & price).
It pretty simple, if companies want to do business in WA, then as a condition of operating license, they have to supply X amount of gas at Y% of world price.
Otherwise WA competes with the world for its own resources. What next Water...
David Karr
