Western Australia’s gas shortage
Since 2006, WA has been experiencing a serious gas shortage and sharply rising prices. Wholesale prices have risen from around $2.50 per gigajoule in 2005 to $8-9 currently.
Prices are now two to three times the price of new gas in Victoria. Business and households face sharply rising gas and electricity prices.
Industry cannot secure affordable long term gas contracts (> 5-7 years) that could support new investment in manufacturing or power generation.
Jobs and investment are being lost interstate and overseas because of the State’s gas shortage and prices.
At the same time, LNG producers continue to commit to 20-25 year contracts to export WA gas to overseas customers.
Impact on jobs and investment
- Alcoa suspended a multi-billion dollar expansion of its Wagerup alumina refinery with lack of certainty around long term gas supply a key factor
- Burrup Fertilisers reported it was unsuccessful in securing competitively-priced gas from the Gorgon Project for a proposed urea plant
- Prospective gas power generators ERM Power and Griffin were unable to source gas for proposed new power station developments
- DBP was forced to significantly downsize an expansion of the Dampier to Bunbury Natural Gas Pipeline in 2006 as a number of prospective projects were unable to secure gas supply
- Coogee Chemicals publicly stated that at current domestic gas prices of $8 - $15 per gigajoule, it was now uneconomic for any new onshore downstream processing in
- Coogee Chemicals shut a WA manufacturing plant in 2009 because of the cost
- DBP tenders for additional pipeline gas failed when the prospective supplier withdrew its offer
- Very high gas prices have forced major construction materials producer Adelaide Brighton to switch to coal and lock-in a long term coal supply agreement
- Dow Chemicals publicly declare in the Australian Financial Review that WA gas prices are now uneconomic for new chemical manufacturing investments in the State