WA gas export ban putsBrowse at risk, Woodside warnsJosh...

WA gas export ban putsBrowse at risk, Woodside warns

Josh ZimmermanThe West Australian

Tue, 19 September 2023 7:17AM

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The Karratha Gas Plant, partof the NWS gas project. Credit: Woodside Petroleum/TheWest

Maintaining a ban on the export of onshore gas threatens thecommercial viability of Browse — the biggest undeveloped gas field in Australia— posing a severe risk to WA’s future energy security.

The stark warning is contained in Woodside’s submission to aparliamentary inquiry into the effectiveness of WA’s signature domestic gasreservation policy.

The global energy giant’s argument is based around dwindlingthroughput from the Karratha Gas Plant it operates as part of the North WestShelf joint venture alongside fellow multinationals BP, Chevron, Shell andJapan Australia LNG.

Browse — by far the biggest untapped gas resource in Australia —looms as “the most credible large backfill” for the Karratha Gas Plant when,and if, it is developed beyond 2030.

But prior to that, Woodside executive vice-president AustraliaOperations Liz Westcott wrote the NWS joint venture was consideringprogressively stripping production capacity from the Karratha Gas Plant — theoldest such facility in Australia — beginning as soon as next year.

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“With NWS reserves in decline, and without additional third-partygas supply, it will no longer be economic to continue operating all domesticgas and LNG processing infrastructure at KGP,” the submission said.

“The NWS JV continues to evaluate opportunities to optimise itsdomestic gas infrastructure so it remains available for the requirements of theJV participants, and can be operated in an efficient, cost-effective andlower-carbon manner.

“As ullage (unused capacity) increases, the NWS JV will need toassess taking an LNG train offline in 2024.

“In the absence of new third-party gas, staged infrastructureretirements would follow, with only two of five LNG trains at KGP to remainoperational by 2030.

“Without the ability to utilise existing infrastructure at KGP,Browse becomes commercially challenged and no longer presents as a long-termpotential domestic supply opportunity for WA.”

To prevent that, Woodside advocates for an overhaul of WA’sreservation policy “to allow onshore gas developments to export a limitedportion of production”.

Woodside believes the changed policy setting would act as anincentive for onshore proponents — including those in the heavily contestedPerth Basin — to bring their projects online quicker because of the moreattractive commercial returns available through access to the internationalmarket.

The new gas could then be processed through the KGP, maintainingits full capacity through to the early 2030s when Browse, which has not yetreached a final investment decision.

“Woodside also supports flexibility to enable the (domestic gasreservation policy) to evolve in line with the State’s changing energyrequirements,” the submission said.

“This includes updating the policy to allow onshore gasdevelopments to export a limited portion of production, thus incentivising newgas resources to be developed and alleviating the significant forecast supplyshortfall in the WA gas market following the retirement of coal-fired powergeneration.”

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BP, one of Woodside’s JV partners in the NWS, also lodged asubmission with the inquiry advocating for lifting the onshore gas export ban.

“Allowing a portion of onshore gas resource to be exported couldfacilitate the development of these resources, increasing supply into thedomestic market while at the same time continuing the utilisation of LNGinfrastructure that will otherwise cease to operate and deliver value to theState,” BP wrote.

Many of the companies with stakes in the Perth Basin onshore gasreserve — including Mineral Resources, Strike Energy and Beach Energy — havealso made submissions advocating for the removal of the export ban.

That domestic reservation policy requires offshore gas projects toprovide 15 per cent of their total reservoir volume to the local market.

Onshore gas ventures are banned from exporting LNG altogether, astance the Cook Government reinforced through the quiet release of a “publicnotice” in August.

In its latest assessment released last December, the AustralianEnergy Market Operator warned WA was facing a small but manageable gap betweenthe supply and demand of gas between now and 2026 but major shortfalls beyond2030.

That forecast also assumed Woodside’s Scarborough gas project —currently held up by a Federal Court challenged — would come online by 2027.