Gas will continue to power a 'cleaner and greener' WA

Natural gas will continue to be a major contributor to the WA economy and domestic demand for it will keep increasing in the foreseeable future, according to a new report by leading consultancy firm ACIL Allen.

The WA Gas Overview report looks at the historical importance of gas to the state and estimates its economic contribution in the 10 years to 2027.

Commissioned by the DomGas Alliance – members of which include Alcoa, FMG, Yara and CSBP – the study highlights not only the significant value generated by LNG exports but also the importance of the domestic gas supply chain.

Among the findings of note:

• In 2016-17, the domestic gas supply chain generated output to the value of $30.9 billion and accounted for almost 18,000 FTE jobs.
• $3.9 billion of this output was purchased as a key input by WA industries which generated $165 billion of economic activity and accounted for 39 per cent of total activity in the state.
• The largest consumers of domestic gas in WA are the mineral processing industry (32 per cent), electricity generation (28 per cent), mining (23 per cent) and other industrial users (11 per cent).
• Residential consumption in WA accounts for only 3 per cent of total gas use.

WA Premier Mark McGowan and Minister for Energy Bill Johnston welcomed the findings of the report.

“This report highlights the importance of a reliable, affordable and diverse supply of gas for industry and households in Western Australia,” Mr Johnston said.

“Part of our State’s success to date has been our access to domestic gas supply for our industry. The State Government will continue to support policies that protect WA’s gas supply and make sure there’s enough available for domestic use.”

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The report noted WA’s higher rate of consumption of natural gas, which – although rising significantly in price during the past 27 years – remains cheaper in Western Australia than in the eastern states.

DomGas spokesperson Richard Harris said the report would help with future planning around gas supplies.

“The Alliance will continue to push for producers to meet their domestic supply obligations and ensure that sufficient reserves of gas resources are set aside to address future supply shortages,” Mr Harris said.

ACIL Allen also drew attention to the potential for supply challenges in the near future.

The Australian Energy Market Operator predicts average growth in WA domestic gas demand of 0.3 per cent per year and ACIL Allen identified that it was crucial off-shore gas projects came on-shore to ensure a competitive advantage for the WA economy.

According to the report, demand for gas can only be met if new sources of domestic supply are developed to address any shortfalls that may occur as the North West Shelf reaches its end of life.

“Cleaner burning” gas was acknowledged by ACIL Allen as a key component of a greener energy landscape in WA, with demand for gas not expected to be materially impacted by the rising uptake of renewable energy generation.

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