Richard Harris: WA needs its gas, in our homes and well as in export

Natural gas is the lifeblood of WA’s economy.

It powers our manufacturing, mining, and minerals processing sectors, which employ over 400,000 people and generate seven times more economic activity in WA than gas that is exported.

Without gas, WA would lose its competitive edge, its jobs, and affordable energy.

That’s why we have a longstanding policy of reserving 15 per cent of all exported LNG for domestic use and keeping 100 per cent of onshore WA gas in WA, which has served us well for decades.

The policy is under review by both the Government and the Economics Standing Committee of the WA Parliament’s Legislative Assembly. The Government is focused on the question of continuing the export ban for onshore gas, while the parliamentary inquiry is looking at all facets of the policy — onshore and offshore gas.

In June the committee advised its report will be delayed by two months and will now be released in August, allowing members time over the winter break to consider the detailed submissions made by stakeholders.

This is a good thing, as it signals that the committee is being thorough and making sure its findings and recommendations deliver practical improvements to the policy, strengthening the compliance mechanisms so that gas producers abide by the policy’s intent.

WA’s domestic gas policy is designed to ensure that we have enough gas to meet our domestic needs, while still allowing for a vibrant export industry that contributes to our region.

WA’s thriving economy rests on our domestic gas policy, which has been the envy of the nation, enabling businesses to develop our plentiful resources and provide high quality jobs in the knowledge there is a good supply of gas at competitive prices.

A quick look at some recent media stories on the disastrous impacts of the east coast gas shortage shows what can happen when governments get it wrong on a critical policy.

Eastern States governments in the early 2000s made a serious policy mistake that they came to regret in allowing onshore gas to be exported. Despite promises from gas developers that allowing exports would lead to more gas for domestic use, the opposite occurred, resulting in gas shortages for Australian industry and households that has led to business failures, sky-rocketing energy prices, and severe cost of living pressures on households.

An opinion piece by Australian Energy Producers WA director Caroline Cherry in The West Australian last month echoed the same arguments that were made in the east coast over a decade ago — essentially that allowing exports of onshore gas would encourage further investment in gas exploration leading to more domestic gas supply.

The evidence just doesn’t back that up. There are now severe gas shortages in the east coast, causing increased costs for households and businesses, severely hurting our manufacturing industries and threatening jobs.

The irony is that there is no shortage of gas — just that it is being exported at the expense of the domestic market.

The energy crisis that hit the Eastern States and is still being felt today was self-inflicted, caused by the short-sightedness of policy makers who gave in to the intense lobbying of gas developers.

We can’t let that happen in WA.

It was pleasing to hear the Premier say recently that he was now less inclined to agree to exports of onshore domestic gas. The current policy is for a ban on exports of onshore gas, and it is a sensible policy, because it gives certainty to both gas developers and consumers.

The argument that gas developers need to be able to export in order to finance their projects just doesn’t stack up. The Walyering field in the Perth Basin has been developed, financed and is under production based on domestic sales, and the West Erregulla field is likely to follow suit shortly.

Large domestic gas consumers — which employ thousands of West Australian workers in quality jobs — are more than willing to underwrite the development of these projects through long term contracts and even equity participation.

The attraction of sky high LNG prices for exports is fast fading as the world recovers from the impact of Russia’s invasion of Ukraine and more exporters in the Middle East and the US increase capacity to make up for Russian gas which is under sanctions.

Energy policy is now front and centre in the political debate in Australia, and indeed around the world, as we grapple with reducing emissions while keeping our industries going, and minimising impacts on households. All serious commentators and experts agree that gas will play a critical role going forward, especially as we begin to move away from coal.

So, getting our policy right is important, not just for short-term politics, but for our long-term economic and environmental wellbeing.

On the broader WA domestic gas policy, which leans heavily on reserving 15 per cent of exported LNG for domestic use, there is a need for significant reform — essentially to make the policy work as it was intended and to put in place compliance measures to ensure exporters make that 15 per cent available year on year.

The interim report of the parliamentary inquiry into WA’s domestic gas policy has said the policy is in need of reform to make it fit for purpose and do what it was intended to do — deliver sustainable supplies of gas to industry and households for the long term, so businesses can invest and plan knowing there is a secure supply of energy at competitive prices.

In response to the two reviews, we need the State Government to enforce the intent of WA’s 15 per cent gas reservation policy and emphatically state that the ban on exporting onshore gas will never be lifted.

Importantly, this must be bipartisan. A major reason for the success of the policy to date has been its support from all major parties, which makes clear to industry that the policy is there for the long haul, to ensure certainty and give comfort to those investing in energy intensive industries that create high quality jobs in manufacturing.

Both WA and Federal governments want our economies to diversify and invest more in “made in Australia” manufacturing and minerals processing, especially for the high-tech world which needs our critical minerals.

These industries are energy intensive, and while all businesses in WA are striving to reach net zero emissions, gas will continue to play a vital role in the next few decades in supporting manufacturing industries and in complementing renewable energy as we decarbonise.

This is not only a matter of economic security, but also of social justice and environmental responsibility.

Keeping and strengthening WA’s reservation policy means ensuring that our gas resources are used for the benefit of Western Australians, to power our industries that employ thousands of workers in quality jobs and to enable us to transition away from coal and begin to decarbonise.

We cannot afford to lose this policy, which protects our jobs, our industries, and our future.

Richard Harris is a spokesman for DomGas Alliance.