Delays at Mitsui and Beach Energy’s Waitsia gas project is one of many factors tightening the WA gas market.
AEMO WA manager Kate Ryan said there was an increasing need for investment in additional gas production.
“While there are many offshore and onshore undeveloped projects that could supply the WA domestic market,these projects are currently too speculative to include in the potential supply forecasts,” she said.
Without those fields,supply is predicted to decline by about 1 per cent a year over the next decade while demand grows at a rate of 2 per cent.
Just five years ago,then-premier Mark McGowan called on east coast gas-consuming industries to move west for a cheap and plentiful supply of their major input.
Now AEMO is warning that demand destruction – the closing down of existing plants – could start when the gas price reaches $9.50 a gigajoule. The average spot price in WA reached this point in September,but almost all gas in WA is sold on longer-term contracts at prices currently much cheaper than this. The challenge will come when those contracts are renewed.
In the near term,AEMO identified the use of gas stored underground and exporters switching to the domestic market as possible solution to the supply-demand gap.
However,a domestic gas price high enough to tempt an exporter to forgo a shipment of liquefied natural gas overseas would be economically prohibitive to most industrial customers in WA.