What you are suggesting doesn't make sense in a gas rich country such as Australia. LNG regasification means we are buying LNG on market - now production costs alone and regasification costs mean that the price would be north of $8 a mmbtu (long term contract prices because spot market prices can vary but you need long term supply to run power stations/manufacturing facilities powered by gas not buying on spot market). Now raw gas costs around $2 mmbtu with pipeline costs around $2 mmbtu - the reason why domestic gas prices are high is because States, apart from WA do not have a reservation policy, therefore the gas is destined for further processing with none left for the State meaning shortage.
In the US domestic gas is around $3 - $4 mmbtu as it was in WA until recently but extracting gas from Gorgon will reduce the cost - that is what Henry Hub pricing is.
To put it another way when you look at LNG pricing - in terms of costs - 25% is in the field (gas platform plus pipeline), 50% is in the LNG facility) and 25% in transport/regasification.
By way of comparison the transmission cost on the Dampier to Bunbury pipeline (900 km) is around $1.50 - $2 per mmbtu after it does through the domestic gas facility at Dampier - ie the gas just goes down the pipeline rather than been converted to LNG for domestic use. Hence if have a reservation policy should bet gas less than $5 an mmbtu. But the gas lobby and free marketeers don't like that hence the chaos on the East Coast because can't get gas at any price.
What is market failure - best way to explain it is the Gorgon project at 15 mtpa has export capacity at 2 1/2 times the total domestic gas demand in WA, hence why if you don't mandate gas for domestic use it ends up in the export market. We shouldn't be taking LNG cargos when the gas is owned by all Australians. If you look at the US - you know the land of the free - they do not allow exports of LNG until local demand is met.
