The Gorgon deal that could up the stakes on WA’s looming gas shortage

Gas producers and consumers are lobbying the WA government about whether onshore gas should be exported to address a predicted shortage over the next decade. However, there's a looming risk that Chevron's Gorgon gas export project, which supplies 25% of WA's gas, could cease supplying by 2037 due to a 2003 deal. This potential shortfall impacts current long-term investment decisions in gas-consuming projects and plant life extensions.

The WA government has highlighted its policy requiring gas exporters to reserve 15% of gas for local use, but Gorgon, under a 2003 agreement, reserved a fixed 2000 petajoules for domestic use, amounting to less than 7% of its total gas. DomGas Alliance, representing large gas consumers, believes the policy should enforce the 15% local supply intent. While Chevron plans to operate Gorgon into the 2060s, it may not supply WA post-2037 unless the price matches international returns, undermining the domestic gas reservation policy's effectiveness.

The Australian Energy Market Operator predicts a gas supply-demand gap by 2033, and Gorgon's potential exit in 2037 could leave 45% of state gas demand unmet, affecting investor confidence in gas-dependent projects. This issue remains underexplored in the parliamentary inquiry into WA’s domestic gas policy, which focuses on the short to medium term.

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