gas reform in western australia including upstream centre for mining and energy upstream gas...
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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 KolfOffice of Energy - Western Australia
Overview
History of Gas Reform in WA
Gas Industry in WA
Downstream Access Arrangements
Upstream Access Issues
Benefits to Western Australia and Australia
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
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
> 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
Natural Gas inWestern Australia
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
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.
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
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
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
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 ?
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.
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
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
Natural Gas DemandWestern Australia
0
50
100
150
200
250
300
1974 1977 1980 1983 1986 1989 1992 1995
PJ
Independent
Govt Utilities
Upstream Use
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
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