Australia moved to stop warehousing of gas reserves

The next wave of LNG investment off WA will be subject to more government direction under a “use it or lose it” approach.

Australia moved to stop warehousing of gas reserves
Woodside is looking for new gas for its North West Shelf plant as the original fields dry up. Source: Woodside.

This story was originally published in The West Australian on 15 March 2018 with the headline "Lose it or use it rules to crack down on gas fields." © Peter Milne.

The next wave of LNG investment off WA will be subject to more government direction under a “use it or lose it” approach, starting with a report due soon on leases that could supply gas to the North West Shelf project.

The retention lease system has been criticised for allowing big LNG players to sit on gas reserves that others could develop earlier. The best-known example is a 27-year-old retention lease for the West Tryal Rocks, owned by the Chevron led Gorgon joint venture.

The renewal of each lease is normally considered every five years by industry regulator the National Offshore Petroleum Titles Administrator. If a lease is likely to be commercially viable within 15 years, it can be retained for a further five years.

Capacity at the North West Shelf’s Karratha gas plant becoming available early next decade prompted NOPTA to kick off a combined review of 10 retention leases last year.

The report will go to Federal Resources Minister Matt Canavan within weeks.

Titles administrator Graeme Waters told a Senate estimates hearing this month the leases had sufficient technical development and access to infrastructure to be brought online.

He said viewing the leases collectively instead of piecemeal allowed a more strategic approach to managing the resources.

Chevron Australia managing director Nigel Hearne told the Australasian Oil and Gas Conference in Perth yesterday it was time for LNG producers to drop the go-it-alone culture of the past and collaborate to deliver the best outcome for the country.

Senator Canavan told the committee that if operators did not have credible plans to use gas from a lease, it could be returned to the market.

The Woodside-led Browse project has five leases under review. Woodside last year flipped back to a plan to pipe the gas 800km to the Karratha plant.

Since the review started, plans for two of the leases have changed, with Woodside proposing to pipe gas from the Scarborough field to the Pluto LNG plant and Western Gas acquiring the Equus project from Hess.

Chevron did not answer questions about plans for Gorgon’s Orthrus, Geryon and Chandon leases under review or West Tryal Rocks. A spokeswoman said the next effort was additional wells at the existing Gorgon and Jansz-Io fields.