Gray warns over gas strategy

The chances of a new liquefied natural gas project being built onshore in Australia are remote, former Federal resources minister Gary Gray will say today, meaning WA's enormous offshore gas reserves risk being stranded unless the State embraces floating extraction technology.

In a speech to the Australian Mines and Metals Association, Mr Gray will warn that soaring construction costs for onshore projects, intensifying competition for supply from the Americas and Russia, investor demands for capital restraint and agitation by Asia for better deals on price mean WA must embrace floating LNG or be left behind.

In his speech, Mr Gray acknowledges his views are not shared by all West Australians - his stance on LNG has attracted opposition from Liberal Premier Colin Barnett and within his own Labor Party.

But he says the LNG industry is facing "new price and productivity risks that threaten historically accepted truths".

"It would be a mistake, in my view, to obstinately prosecute the case for onshore LNG production while the immediate prospect of any new, onshore LNG project in Australia looks remote," Mr Gray will say.

"And the technology, jobs, trades and revenue from LNG is available if we have the courage."

Mr Gray will cite a recent deal between Russia and China to pipe 38 billion cubic metres of gas per year to China for the next three decades as evidence Australia faces a more competitive global outlook.

He will also point to reforms in Mexico that are expected to unleash a new wave of exploration and development from the major oil and gas players.

The increasing energy independence of the US and the widening of the Panama Canal means there will also be increased competition from Canada, which will look increasingly to export its LNG.

"Here in WA, much has been made of jobs that have gone to other countries in the relatively short five-year offshore construction phase of floating LNG," he will say. "But too little is made of the investment in creating jobs and skills in the relatively long, 25-year-plus operating phase.

"Too little is made of the fact that new onshore greenfield projects are receding in WA.

"Floating LNG is an opportunity for us to shine. Those companies that have an LNG future need to move fast."

The West Australian

Popular videos

Our Picks

Follow Us

More from The West