FMG calls for use it or lose it

Fortescue Metals Group is expected to use its transition from a reliance on diesel power to becoming one of the State's biggest gas users by urging the Federal Government to enforce a 'use it or lose it' approach to owners of undeveloped gas resources.

Already a member of the DomGas Alliance lobby, Fortescue will today take its campaign for cheap gas to another level when it launches a Deloitte Access Economics report into WA's gas market. Fortescue yesterday would not comment on the thrust of the report, which it commissioned and will be launched by chief executive Nev Power and Deloitte Access Economics partner Chris Richardson in Perth.

It is understood a key plank of Fortescue's push is a call for the enforcement of the Commonwealth's retention lease regime, which already has contributed to the development of the Chevron-led Wheatstone LNG venture.

The key target for Fortescue is likely to be the Woodside Petroleum-led Browse floating LNG project, which includes gas in State waters and still requires WA Government support.

The Woodside consortium is haggling with the State over a domestic gas solution without having to build a pipeline to shore. It is likely the project proponent will suggest a swap, using gas from other projects with existing onshore infrastructure such as Woodside's Pluto to cover any Browse commitment.

Fortescue, WA's third biggest iron ore producer, is one of the State's largest energy users and transitioning from easily installed diesel generators to gas power, which is cheaper to run.

In January, Fortescue underwrote construction of the 270km Fortescue River gas pipeline, starting from near Karratha to a 125 megawatt power station at its Solomon hub. It also plans to run its Chichester hub on gas.

Fortescue's push will revive memories of past campaigns by Pankaj Oswal's Burrup Fertilisers and Multiplex founder John Roberts for enforcement of the retention lease regime.

The West Australian

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