Risk of WA facing gas crisis warned
WA could be hit with a domestic gas supply crunch within two years if there are delays to a processing plant at Chevron’s $45 billion Wheatstone LNG project near Onslow.
In a snapshot of the WA gas market released last Thursday, the Australian Energy Market Operator said there was uncertainty about the security of domestic gas supplies despite a seeming abundance of providers.
Key to AEMO’s concerns is the construction of Wheatstone’s domestic gas plant, which is supposed to come on stream in 2018, a year after first LNG exports from the project.
Up to 200 terajoules a day — the equivalent of about 20 per cent of current demand — are supposed to be provided by the plant when it begins production.
“Should there be delays in the commencement of the Wheatstone domestic gas production facility, the domestic market could become tight in 2017 or 2018,” AEMO’s boss in WA Cameron Parrotte said.
Longer term, AEMO said there was even more uncertainty about where the domestic market would get its gas from 2021.
According to the report, several gas-processing facilities, such as the North West Shelf’s Karratha gas plant, would no longer be legally required to supply the local market.
It said those providers would only continue to supply domestic consumers if they could secure viable prices, which are expected to fall as production from Wheatstone and Gorgon weighs on the market.
Adding to the uncertainty was the fact some companies, including the partners behind the Karratha gas plant, would need to invest in bringing new gas fields on line as older ones became exhausted.
“There is a risk to supply after 2021 if there is no continued investment expenditure into the development of gas reserves,” the report said.
“Several domestic production facilities may not have sufficient developed reserves to continue operating beyond 2021.
“From 2022, the level of supply is subject to the continued expenditure to develop gas reserves supplying the WA domestic market.”
Despite the uncertainty, AEMO noted there were opportunities to boost demand for domestic gas in WA, including by “fuel-switching” diesel-fired trucks and minesites to gas and increasing its use for electricity generation.