Industry backs onshore gas move but warns Karratha trains may still need to shut

A modest loosening of export rules for WA’s onshore gas producers likely won’t slow the closure of LNG trains in Karratha, industry expert Saul Kavonic says. The State Government will allow companies to export 20 per cent of their gas from projects until the end of the decade. It’s the latest update in the four years since the Government introduced an export ban. Premier Roger Cook touted the move as providing certainty for investment and facilitating new onshore projects amid a looming shortage of the fuel. But he reiterated his position that the “gas belongs to Western Australians”. Mr Kavonic — senior analyst at MST Marquee — said Perth Basin companies would likely ship up to 0.5 million tonnes per year of gas under the policy. He said that would “do nothing to prevent the North West Shelf Venture from shutting trains” at the Karratha Gas Plant. The huge export hub has been run by Woodside Energy since 1984 but one of five LNG processing trains will be switched off before mid-2025, the company said in August. “20 per cent is such a small export allowance that it won’t move the needle to encourage more exploration,” Mr Kavonic said. “(It) may be too small for producers to even bother with the administrative burden involved in negotiating and managing export toll agreements. “This policy is almost the same as leaving the export ban in place, and won’t achieve the desired outcomes to encourage exploration or materially assist financing of projects.” Shares in Perth Basin play Strike Energy surged nearly 10 per cent on Thursday following the news. Strike boss Stuart Nicholls has been among the biggest critics of the export ban and he welcomed the change —claiming the company would be Australia’s next LNG producer. It’s believed Strike has been in talks with Woodside to fill unused Karratha capacity for months. “The lifting of the export ban will improve the economics of Strike’s suite of pre-final investment decision projects and incentivise further exploration,” Mr Nicholls said. “Strike will always be WA first, but this is a welcomed change to a policy that was unfairly applied and is timely with Strike recently making a new discovery in the Perth Basin.” Mineral Resources wants to develop the Lockyer gas project in the Perth Basin and has been arguing the case for export access. “Certainty in the domestic gas policy is welcome. MinRes will continue assessing all options to maximise value from our Perth Basin exploration success,” a spokesman said. DomGas Alliance spokesman Richard Harris said he expected Perth Basin producers would now fast-track projects and offer gas to local users in lock step with exports. The Alliance — which successfully agitated for a major parliamentary inquiry — also welcomed extra pressure on Woodside Energy to fulfil local gas obligations at the Pluto project. The Government retained a 15 per cent reservation rule for offshore projects and has pledged to report annually whether producers are meeting commitments. Woodside Energy boss Meg O’Neill said the company had delivered gas for four decades and would build on that with the $US12.5 billion Scarborough development. “We agree it’s important that producers, customers and the community have clarity on how the WA Domgas Policy agreements function and deliver benefits to the State,” she said. “Woodside has already committed to make up to an additional 50 terajoules per day of domestic gas available in WA for the next two years.”