In 2011, WA gas transmission pipelines had an annual throughput of 387 petajoules (PJ). Gas distribution pipelines had an annual throughput of 28 PJ.
The main pipelines in WA are the Dampier to Bunbury Pipeline, the Parmelia pipeline and the Goldfields Pipeline. Pipelines delivering natural gas to processing plants from offshore LNG facilities off WA's coastline were not included in the Audit.
The DEC from gas pipelines in WA in 2011 was estimated at $622 million - made up of $528 million from transmission and $94 million from distribution.
The Audit projects an increase of 50 per cent in the DEC of gas pipeline infrastructure to $931 million by 2031. This $308 million increase is made up of $247 million from transmission and $63 million from distribution pipelines. This increase projected in DEC is considerably slower than expected economic growth of 131 per cent for WA over the period.
In its latest Statement of Opportunities,415 the IMO identified an increase in domestic gas demand from 980 terajoules (TJ) per day in 2014 to 1,055 TJ per day in 2024.
As with electricity, there are several reasons why it is difficult to make a direct comparison between the Audit's forecast rise in DEC in the gas sector, and IMO's demand forecast. In particular, the DEC analysis was finalised before the latest IMO gas market forecasts were published. Also, IMO reports and forecasts gas consumption in TJ per day, whereas DEC is a measure of the value-add provided by gas infrastructure, in dollars. The two are not necessarily perfectly correlated.
Unlike eastern Australia, WA has historically exported a significant proportion of its gas production to Asia via LNG terminals. In fact, the North West joint venture located off the north-west coast of Australia is one of the largest LNG producers in the world. The ability to export gas has meant that the gas price in WA has been more aligned with international gas prices than the market in eastern Australia, if not fully so due to a requirement to sell a share to the domestic market.
The domestic and international gas prices are likely to be more aligned in the future as spare capacity in the North West Shelf means that previously domestic-only producers may use the North West Shelf plants to export their gas as LNG.
The WA gas market is self-contained and is not connected with other jurisdictions. WA has the largest source of conventional gas reserves in Australia, with the main gas fields located in the Carnarvon Basin, with 71,855 PJ of proven and probable of conventional gas reserves, and the Browse Basin, with 17,384 PJ of proven and probable of conventional gas reserves.416
There is wide acknowledgement of an ongoing structural shift in the gas market as Australia significantly expands its ability to export gas. There is also uncertainty about whether existing gas market and regulatory frameworks are well suited to handle the shift. Within this context, the AEMC recently conducted a gas market scoping study, which recommended Australia conduct a strategic review of the gas sector, including a review of future market developments over the next 10 to 15 years and a review of the short-term trading market and the declared wholesale gas market.
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415. Independent Market Operator (2014b)
416. National Australia Bank (2014), p. 4