WA government lifts export ban on onshore gas, opening door for Perth Basin LNG

The Australian oil and gas industry has welcomed changes to the controversial Western Australia Domestic Gas policy, opening the door for gas to be exported as LNG from Perth Basin fields.

The WA government has removed the export ban for onshore gas production by allowing the export of up to 20% of total production volumes until the end of 2030.

The export allowance covers all projects yet to reach final investment decision (FID).

Sustaining production

Leading petroleum industry lobby group the Australian Energy Producers (AEP) said today that the government’s changes will provide affordable and reliable energy for homes and businesses.

AEP WA director Caroline Cherry said the industry welcomed the decision to open up onshore production for export to make more projects viable and sustain domestic supply.

“More gas will be needed to serve rising demand supporting renewables in electricity generation as coal is phased out, while underpinning the economic benefits produced by the mining sector as a key power source.”

Ms Cherry said the amendments are a sign that the government understands the importance of new gas development and how to extract the economic benefits of this cleaner fuel on the journey to net zero.

She also called on the government to undertake a review in a few years to determine the adequacy of domestic market supply to continue providing the right investment signals for new gas developments and access to export markets.

Refreshed framework

Strike Energy (ASX: STX), one of the major players in the onshore Perth Basin, said the updated policy has provided a refreshed export framework for its gas assets.

“This evolution in the policy is a strong positive for Strike, where export markets provide premium pricing and a deeper market,” the company told shareholders.

“Strike stands to benefit through its substantial uncontracted gas reserves and resources position across its suite of pre-FID projects.”

“Strike also has some of the most prospective exploration acreage in the Basin, which was recently demonstrated by the Erregulla Deep gas discovery and this policy may increase the rate of Strike’s exploration activities and investment.”

Limited eligibility

The revised policy will apply to new onshore gas projects or existing projects seeking to expand production.

An exemption will remain in place for the ‘first mover’ in the Canning Basin to encourage development in the state’s north.

While the large Waitsia project in the Perth Basin will retain its domestic gas reservation obligations and export permit, the state will consider options to facilitate other gas producers sharing their infrastructure—providing faster access to the market for new projects.

WA’s 15% reservation for offshore LNG projects remains unchanged.

Secure gas supply

“As we phase out coal-fired power and transition to a renewable energy future, WA needs a secure supply of gas as firming fuel in our system and to help us to become a global renewable energy powerhouse,” WA Premier Roger Cook said.

“Labor’s Domestic Gas policy has underpinned WA’s economic success over the past decade and, under my government, the policy will set up our state for our clean energy future.”

“This update provides certainty for gas producers and users, helping to facilitate new onshore gas projects [and] creating local jobs while ensuring our energy needs are met.”