Both major WA political parties fear Shell's Prelude floating liquefied natural gas project will trigger a departure from onshore processing, slashing state royalties and denying local jobs.
The WA parliament decided yesterday to hold an inquiry on the impact of floating LNG on the state economy.
Specifically, the inquiry by the Legislative Assembly Economics and Industry Standing Committee will probe floating LNG's effect on the engineering and design, fabrication and manufacturing, and construction and ancillary services sectors, and on domestic gas supply.
Liberal MLA for Geraldton Ian Blayney, who is chairing the inquiry, said the Prelude field was far offshore in Commonwealth waters, so there was no alternative to floating processing.
"It's only economic to develop that field using floating LNG but the worry we've got is they're going to want to extend it right down the coast, if you like, and make it a substitute for building plants onshore," Mr Blayney told Fairfax radio today.
"Nearly all of the fields off the coast there are in Commonwealth waters. The State Government doesn't get much say as to what they're doing up there.
"But for the government and opposition, it's very much their preference that the facilities be onshore."
Premier Colin Barnett is staunchly opposed to the possibility Woodside will turn to floating LNG after backing out of an onshore plant at James Price Point for its Browse project, which is one-third in state waters.
Mr Barnett wanted the royalties and jobs that a land-based project would bring, but recently emphasised the potential for environmental damage in the event of an industrial mishap at sea.
The inquiry is expected to report in a year but could be extended, Mr Blayney said.
The terms of reference could also change, he said.