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Report finds gas-rich Western Australia may be unable to keep up with demand

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By Colin Hay - 
Australian Energy Market Operator AEMO Western Australia Gas statement opportunities energy

Despite being home to some of the world’s biggest liquefied natural gas (LNG) projects and a significant amount of untapped reserves, a new report suggests Western Australia will struggle to keep up with demand for the fuel in the near future.

The results support continuing calls from industry for government to back its push for new investment into the local gas industry.

The 2023 WA Gas Statement of Opportunities (GSOO) forecasts domestic natural gas demand in the state to increase by an average of 2.2% annually between 2024 and 2033, while supply is expected to decline 0.9% on average each year over the same period.

Ten-year forecast

Published annually by the Australian Energy Market Operator (AEMO), the WA GSOO provides a ten-year forecast of demand and supply within WA’s domestic gas market.

AEMO executive general manager WA & Strategy Kate Ryan said the results of the report reaffirm both the opportunity for investment in additional gas supplies and the critical role of gas in supporting the state’s energy transition to net zero.

“The 2023 WA GSOO identifies an increasing need for investment in additional gas supply into the state’s domestic market,” Ms Ryan said.

“While there are many offshore and onshore undeveloped projects that could supply the WA domestic market, these projects are currently too speculative to include in the potential supply forecasts.”

Australian petroleum industry agrees

Industry lobby group Australian Energy Producers (AEP, formerly APPEA) said the report has confirmed that the need for new gas supply in WA is becoming increasingly urgent and pushed state and federal governments to unlock the state’s abundant reserves or face blackouts and higher prices.

AEP WA director Caroline Cherry said the new report reveals growing demand for gas for at least a decade and reaffirms its critical role in supplying WA’s energy needs, including supporting the transition to net zero.

“However, supply shortages loom as soon as next year – risking energy shortfalls and upward pressure on prices for WA households and businesses,” Ms Cherry said.

“Governments must unlock new gas to avoid blackouts and higher prices. WA has an abundance of gas reserves but the state needs the political will to help unlock more of it – and quickly.”

Increasingly dire warnings

AEP said increasingly dire warnings strengthen the case for urgent policies to support new supply development.

“The State Government must rethink its ban on onshore projects from accessing export markets.”

“As Rystad Energy recently found, allowing onshore gas projects to export expands the number of viable projects – unlocking new domestic supply and reducing the domestic price.”

“The Australian Government also needs to urgently fix the broken offshore approvals system impacting major energy supply projects and threatening our economic security.”

“It is simply bewildering that WA could potentially be relying on diverting LNG exports when there is so much untapped gas and so many economic benefits from developing new supply.”

Lack of new projects on the horizon

The AEMO report found that the only new supply that is expected to come online in this year’s outlook is Strike Energy’s (ASX: STX) South Erregulla development in mid-2026, Woodside Energy’s (ASX: WDS) Scarborough project (2027), Mineral Resources’ (ASX: MIN) Lockyer Deep asset (2028) and Beach Energy (ASX: BPT) and Mitsui’s Waitsia stage two joint venture (2029).

“Despite these new projects coming online, AEMO has identified the need for new gas supply to meet forecast demand under all scenarios,” Ms Ryan said.

“The expected supply shortfalls are underpinned by declining production from existing WA gas fields and the increasing use of gas for industrial processing as well as electricity generation in the state’s major power system as the energy transition progresses.”

She said that, as a result, from 2031 onwards the WA domestic gas market is anticipated to experience a deficit exceeding 100 terajoules per day, which equates to more than 10% of annual demand.