Peter Tinley: Some ‘logic’ to lifting ban on onshore exports if it means more gas for WA

The chair of a parliamentary inquiry into WA’s domestic gas settings believes there is “logic” to arguments in favour of lifting the ban on exports from future onshore projects — but only if the result is a net increase in supply to the local market. WA’s blanket prohibition on exporting gas produced onshore has been placed under the microscope by Premier Roger Cook, who has said he wants to have a “conversation” with industry about potential changes. Speaking after handing down an interim report into the ongoing effectiveness of the State’s flagship gas reservation policy, Labor MP and Economics and Industry Standing Committee chair Peter Tinley signalled he too was open-minded about tinkering with the ban. “If (proponents) could prove that the domestic market is saturated, or that their capital investment will be significantly greater and therefore increase the volume of domestic gas, then there’s a case,” he said. “I get that logic. In the May report — the final report — we will be digging into that a lot more with a lot more detail. “I have sympathy and understand that issue because it takes a long time to build this infrastructure and a lot of capital upfront. “Giving them certainty over revenue in relation to where they market their gas could be an answer.” Mr Tinley cautioned he was not making any guarantees about what his committee would ultimately recommend on the issue of onshore gas, and that it was up the Cook Government to decide whether to adopt any future suggestions. The onshore gas debate comes amid Mineral Resources boss Chris Ellison’s pursuit of a five-year export licence for his Lockyer Deep field in the Perth Basin. Mr Ellison has claimed time-limited access to the international market would allow him to bankroll a plant of up to 250 terajoules-a-day — supplying enough gas to meet just under a quarter of WA’s daily demand. He has also floated a “call-in” mechanism allowing the WA Government to force Mineral Resources to divert additional gas to domestic customers in the event of a shortage. Without an export licence, Mineral Resources may instead opt for a much smaller 30 terajoule facility designed to meet the needs of its mining operations only. The committee report into WA’s domestic gas settings released on Thursday made a series of findings, including that the 15 per cent reservation requirement for offshore projects was “no longer fit-for-purpose” because some LNG exporters were not complying with the “spirit” of the policy. The reservation policy formalised by the Carpenter Government in 2006 requires LNG exporters to set aside 15 per cent of a project reservoir for the local market but the inquiry found “on average” just 8 per cent had been delivered. Formal recommendations to avoid a looming shortage of gas will follow in the committee’s final report in May. Mr Tinley told The West Australian there was no shortage of gas being extracted in WA and the inquiry would not have been necessary if exporters consistently diverted the required 15 per cent to the domestic market. “On the whole, the industry needs to understand the state’s getting gypped and we aren’t going to stand for it,” he said. Also reacting to the committee report, former Premier Colin Barnett agreed LNG exporters were short-changing WA but flat out rejected the suggestion the development of onshore gas fields was not commercially viable without export entitlements. “I just think that is nonsense,” Mr Barnett said. “These (onshore) companies went into it eyes wide open knowing there is a ban on exports. If they don’t develop it, they will lose it.” Mr Barnett added a reliable supply of cheap energy — in the form of gas — was one of two crucial requirements for private investment in further downstream processing in WA. The other was industrial land already connected to utilities and transport infrastructure, ideally with environmental approvals in place and ready access to labour.