Andrew Forrest wants to supply water from his Minderoo cattle station to Onslow, replacing a Chevron-backed desalination plant designed to allow the expansion of a town that is struggling to cope with the influx of oil and gas workers.
A document on the website of the Forrest family's Minderoo Foundation declares that Mr Forrest has established a new company, H2Onslow, as the vehicle for the project, and says he promises to supply Onslow with drinking water from bores sunk near the Minderoo Station homestead.
The scheme would see a series of below-ground weirs built along the Ashburton River.
They would recharge the alluvial aquifer from which the bore water would be drawn before being processed to potable standards and pumped to Onslow.
A similar weir was built at Minderoo three years ago as part of a station irrigation project, the document says.
Mr Forrest's proposal would replace a requirement under the Wheatstone State Agreement for Chevron to build a desalination plant for Onslow.
Mr Forrest wants Chevron to instead build the new Minderoo weirs, with H2Onslow contracting to sell at least 2000 kilolitres a day of water for 45 years to the Water Corp.
It is unclear how Mr Forrest's proposal has been received.
The Department of State Development declined to comment and Chevron said only it was discussing the idea with Minderoo.
But it is likely to spark opposition from exploration companies, including Tony Sage's Cauldron Energy, fighting Mr Forrest for access to Minderoo.
One of Mr Forrest's major arguments against exploration on the station has been the potential impact on water used for pastoral purposes.
The H2Onslow proposal could quarantine the station from further exploration.
Mr Forrest's spokeswoman said the proposal was "completely sustainable" and cost effective and the best option for the region.
H2Onslow's operating costs would be lower than a desalination plant, saving the State Government money.