AWE joins gas policy critics
AWE, the Perth Basin explorer which hopes to supply almost 10 per cent of WA's domestic gas needs, has added its voice to opposition to the State's reservation policy as it emerged the controversial policy had played a part in Inpex taking its $US34 billion Ichthys project to Darwin.
"I am not big on regulatory interference in industry," AWE chief executive Bruce Clement said.
"I don't think a domestic gas reservation policy is entirely necessary.
"What it does it is doesn't encourage a lot of onshore gas."
Mr Clement's comments yesterday, on the sidelines of the Australian Petroleum Production & Exploration conference in Melbourne, came as Inpex Australia president Seiya Ito said WA's gas reservation policy, coupled with an inability to secure a site for its LNG plant, was the trigger for the shift to Darwin in 2007.
Ichthys' construction of the mega-project, which should have been built in WA and created thousands of jobs, is now 68 per cent complete.
Asked during a panel session at APPEA yesterday on Inpex's move to the NT, Mr Ito said: "(It was) not possible to comply with the (WA domestic gas reservation policy) and we had no land. In the NT there was no policy and land (was) available."
WA's domestic gas reservation policy attracted a fresh round of criticism at APPEA including yesterday from Federal opposition resources spokeman Gary Gray.
"I am not in favour of introducing policies that impose costs on buyers and sellers and introduce inefficient regulation," Mr Gray told the conference.
"I do not believe in making matters worse by increasing costs and discouraging new gas projects — all of which reduces the availability of new gas supplies."
The comments from AWE, which has made a string of discoveries in the onshore Perth Basin around Gingin and hopes to be supplying about 100 terajoules a day - the current market is about 1000Tj/d - and similar remarks from BHP Billiton's petroleum head Tim Cutt on Monday are telling because both companies are among the biggest gas suppliers to the WA market.
Mr Cutt revealed the preferred development option for BHP's Tallaganda field, containing about one trillion cubic feet of gas, through a tie-back to the Macedon project was on hold because of the impact on price caused by the State's reservation policy.
Their concern is that the mega-LNG projects such as Gorgon, Wheatstone and Browse FLNG are being forced to reserve about 15 per cent of their gas resource into the local market, which they say undermines the viability of smaller field developments.
Mr Clement did not buy into the debate further but said onshore producers like AWE "will be paying (State) royalties unlike the offshore players".
"We will be employing a lot of people onshore and investing a lot in the local communities," he said.
The WA gas spot price had dropped to as low as $3 per million British thermal units largely because some contracted supplies had been returned the market.
Chevron is also yet to start marketing Wheatstone's domestic gas component and the second 150Tj/d tranche of Gorgon gas while the Woodside Browse project is close to striking a deal with the WA Government to stipulate domestic gas reservation covering the Torosa field.
