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Gas Reform In Western Australia Including Upstream

Gas Reform In Western Australia Including Upstream. Centre for Mining and Energy Upstream Gas Regulation and Competition Reform Sydney 14-15 October 1998 K Peter Kolf Office of Energy - Western Australia. Overview. History of Gas Reform in WA Gas Industry in WA

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Gas Reform In Western Australia Including Upstream

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  1. Gas Reform In Western Australia Including Upstream Centre for Mining and Energy Upstream Gas Regulation and Competition Reform Sydney 14-15 October 1998 K Peter Kolf Office of Energy - Western Australia

  2. Overview • History of Gas Reform in WA • Gas Industry in WA • Downstream Access Arrangements • Upstream Access Issues • Benefits to Western Australia and Australia

  3. History of Gas Reform in Western Australia • Gas has been top on the agenda in WA • WA - an early leader in gas reform • Bipartisan support for gas reform • Encouraged recovery of associated gas - since the early 90’s

  4. Gas Reform in WA • Diversified WA gas market not accident • Disaggregation of NWS contract • Deregulation of Pilbara market • $2.4 billion privatisation of DBNGP • Totally open market by 1 July 2002 • Sale of AlintaGas under consideration

  5. Natural Gas in Western Australia • > 75% of Australian natural gas resources • 700 PJ natural gas produced in 1996/7 • 281 PJ natural gas used in WA in 1996/7 • Gas resources - approx 100 years left • LNG from NW Shelf - 10% of world trade

  6. Domestic Gas Supplies1997 (TJ/d) Carnarvon Basin BHP Petroleum (Australia) Pty Ltd Griffin Gas Gathering 17 Boral Energy Resources Ltd Tubridgi 21 West Australian Petroleum Ltd Thevenard Island Gas Gathering 12 50 East Spar Joint Venture East Spar 40 Harriet Joint Venture Harriet Gas Gathering 79 119 North West Shelf Gas JV NWSG Project 428 428 Perth Basin Boral Energy Resources Ltd Beharra Springs 29 CMS Gas Transmission of Aust. Dongara 11 Phoenix Energy Pty Ltd Woodada 4 44

  7. North West Shelf Gas Largest Australian resource development project • Total capital outlay $12 billion • Sale of natural gas to the domestic market • Export of LNG and LPG (primarily to Japan) • Sale of condensate to the local and international oil market.

  8. Gas Pipelines Access (WA) Bill 1998 • Makes the National Access Law a law of WA • Gives legal effect to the Code • Formalises derogations & transitional arrangements • Expected to commence in WA end of November 1998 • Derogations for DBNGP, GGP & SWDS to 1/1/2000

  9. WA’s Code Bodies • State-based Independent Gas Pipeline Access Regulator • State-based Gas Disputes Arbitrator • State-based Gas Review Board • The Supreme Court of Western Australia • Designated State Minister

  10. Natural Gas Upstream Issues • The Upstream Issues Working Group (GRIG) • Consultation paper - submissions by 25 September • Key Issues: (impact on downstream competition) 1. Acreage Management Systems 2. Third Party Access to Upstream Facilities 3. Marketing Arrangements

  11. Access To UpstreamInfrastructure • No restrictions on entry to upstream • Market access available • Access to sales gas pipelines available • Government not involved commercially • Market becoming more mature • Is anything more needed ?

  12. The Varanus HubWA Domestic Gas Harriet & East Spar Joint Ventures: • Have sold 220 TJ/d to South West and Goldfields industrial markets; • Are increasing capacity to eventually supply 500 TJ/d • Export in excess of 3 mmbbls pa of crude and condensate • Have negotiated access to Harriet’s Varanus Island facilities and the sales gas pipeline.

  13. The Varanus HubUpstream Access in WA • A negotiated, commercial arrangement • Harriet provided access to leases, crude storage and load out and sales gas pipeline • East Spar constructed its plant and pays tolls to Harriet for use of infrastructure • Each Joint Venture supports the other increasing customer’s supply reliability • Both Joint Ventures funding a share of a second gas pipeline to shore

  14. Benefits To Western Australia • Competitive gas prices • Diversification in gas supply • World competitive gas industry • World class oil & gas expertise • Competitive resource development • Downstream processing & development • High export earnings

  15. Natural Gas DemandWestern Australia

  16. Environmental Outcome In 1996-97: • Primary energy demand decreased by 1% • Final energy demand increased by 2.6% • Carbon dioxide emissions decreased by 1.7% Why? • decrease in primary energy use • change in the mix of primary energy i.e. (i) increase in the contribution of gas (ii) decrease in coal, oil and condensate

  17. Conclusions • Access by commercial negotiation working in WA • Access assisted by Government open market approach • Fundamentals support efficient outcomes & international competitiveness • Environmental benefits from sharing facilities • WA not seeking to impose new mandatory access regulations • WA would support a voluntary code that states commercially realistic principles

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