Gas industry

Supply areas

There are eight reticulated  gas supply areas in Western Australia as set out in the Energy Coordination Act 1994. The supply areas are: 

• Kimberly
• Pilbara
• Gascoyne
• Wheatbelt
• Mid-West
• Goldfields-Esperance
• Great Southern
• Coastal

Gas distributors

The Economic Regulation Authority licenses gas distribution systems that operate at a pressure of less than 1.9 megapascals within these gas supply areas.

• Economic Regulation Authority website: List of gas licence holders includes licensed gas distributors.

The Economic Regulation Authority is also responsible for regulating third party access to regulated or ‘covered’ gas distribution systems in Western Australia, in accordance with the National Gas Law. Further information on access arrangements for gas pipelines available from the Economic Regulation Authority website, including a list of covered distribution systems.

• Economic Regulation Authority website: Gas Access

Storage

The Mondarra gas storage facility currently services the domestic gas market and is located near Dongara on the Parmelia Gas Pipeline.  More information is available at the APA website.

Information on the Tubridgi Gas Storage Facility near Onslow is available at the DBP website.

The Australian Energy Market Operator (AEMO) operates the Gas Bulletin Board (GBB) and Gas Statement of Opportunities (GSOO) in Western Australia. The purpose of the GBB and GSOO is to improve the flow of information across the gas supply–demand chain for existing and potential market participants. 

• GBB – a website with near-term system and market information on gas production, transmission, storage capacity and demand. It also provides an Emergency Management Facility to give government and industry additional assistance in managing gas supply disruptions.
• GSOO – a comprehensive document produced by AEMO each year. It contains a medium to long-term outlook of gas supply and demand in Western Australia, and highlights potential future commodity shortfalls or transportation constraints. 

Objectives

Objectives of the GBB and GSOO are to: 

• improve the security, reliability and availability of natural gas supplies in WA
• promote the efficient operation and use of natural gas services
• provide information to allow efficient investment in natural gas services
• encourage competition in the natural gas services supply chain. 

Background

After two major gas disruptions in 2008, Western Australia’s Gas Supply and Emergency Management Committee reviewed the security of gas supplies and how future disruptions might be managed or mitigated. The Minister for Energy at that time agreed with the Committee’s recommendations to establish the GBB and GSOO.

Regulations

The GBB and GSOO were established under the Gas Services Information Act 2012.  Subsidiary legislation facilitating the design and operation of Western Australia’s gas information services include the Gas Services Information Regulations 2012 and Gas Services Information Rules.

The Gas Market Moratorium prevents Synergy from supplying gas to customers who consume less than 0.18 terajoules (180 gigajoules) per year (this equates to an annual gas bill of approximately $6,000).

The purpose of the Moratorium is to provide competitive neutrality for participants in the small use electricity and gas retail markets. The Moratorium achieves this by preventing Synergy from fully accessing the gas market while other electricity are denied full access to the electricity market.

When a customer’s annual consumption goes above the Moratorium threshold, the customer remains above the Moratorium threshold into the future. This is for practical reasons and is consistent with the existing arrangements for electricity contestability.

Legislation has been developed to allow gas producers to supply broader quality gas in Western Australia. The Gas Supply (Gas Quality Specifications) Act 2009 encourages the development of gas fields that did not meet the previous specifications. 

• Gas Supply (Gas Quality Specifications) Act 2009

Background

Natural gas is made up of a mixture of gases. The percentage of each gas type in natural gas affects its overall quality. Natural gas quality varies between gas reservoirs.

Gas specifications are the outer limits of each component of gas allowed in Western Australia’s pipelines. Broadening the gas specification means changing the outer limit of some of the components, while still meeting safety standards 

Pipeline declarations

The Dampier to Bunbury Natural Gas Pipeline was declared a PIA pipeline on 14 June 2012. The Goldfields Gas Pipeline was confirmed as a PIA pipeline on 2 December 2015.

• Dampier to Bunbury Natural Gas Pipeline declaration (PDF)
• Goldfields Gas Pipeline declaration (PDF)

Gas producers seeking to deliver broad specification gas into the Dampier to Bunbury Natural Gas Pipeline or the Goldfields Gas Pipeline will need to enter into a Pipeline Impact Agreement with the pipeline operator.

• Pipeline Impact Agreement 

Macedon Pipeline Impact Agreement

BHP Billiton (Macedon) and the Dampier to Bunbury Natural Gas Pipeline entered into a Pipeline Impact Agreement in 2011. The agreement facilitates the transport of broad specification gas from the Macedon gas field on the Dampier to Bunbury Natural Gas Pipeline.

• Summary of Macedon Pipeline Impact Agreement (PDF)

Information provision

The new legislation requires that PIA pipeline operators provide to Energy Policy WA the average higher heating value of the gas stream in the pipeline for each day. Information is provided for the Dampier to Bunbury Natural Gas Pipeline (PDF) and for the Goldfields Gas Pipeline (PDF).

Current information is available on the Gas Bulletin Board (WA) website [external] (the following steps will take you there: Accept, Reports tab, Gas Specification).

Western Australia is a large producer of gas compared to other states. Around 90% of Australia’s estimated recoverable reserves of conventional gas are in the Carnarvon Basin on WA’s North West Shelf. These gas fields support Western Australia’s liquefied natural gas (LNG) export industry, as well as the major domestic gas market in the South West.

Reserving gas for Western Australia use

The Western Australian Government promotes long-term supplies of natural gas for WA consumers through its Domestic Gas Reservation Policy. The policy seeks commitments for the equivalent of 15% of gas available from new offshore gas developments for domestic use. The WA Government applies the policy as part of the negotiating process with export gas producers, with flexibility built in to allow for each project to be negotiated on a case-by-case basis.

Find out more

• Department of Energy, Mines, Industry Regulation and Safety – Western Australia’s lead agency in attracting private investment in resources exploration and development. Its website includes key statistical information on petroleum exploration and production
• Department of Jobs, Tourism, Science and Innovation – develops and coordinates significant Western Australian projects, including LNG export and associated domestic gas projects. Its website includes information about major petroleum projects, including State Agreements (contracts between the government and producers, which are ratified by an Act of the State Parliament) 

Retail market

The Western Australian retail gas market became fully contestable in 2004. This means that gas companies can compete in the marketplace for all Western Australia gas customers, including residential customers.

A number of gas trading and retail companies operate across the regional and metropolitan areas, servicing industrial and residential customers.

Gas trading licences

Gas retailers need a gas trading licence from the Economic Regulation Authority to sell gas to small use customers (residential and small business customers using less than 1 terajoule of gas a year). 

• Economic Regulation Authority: List of licensed gas retailers

The Western Australian retail gas market became fully contestable in 2004. This means gas companies can compete in the marketplace for all Western Australian gas customers, including residential customers.

Multiple gas trading and retail companies operate across the regional and metropolitan areas, servicing industrial and residential customers.Gas trading licences

Gas retailers need a gas trading licence from the Economic Regulation Authority to sell gas to small use customers (residential and small business customers using less than 1 terajoule of gas a year).

• Economic Regulation Authority: List of gas licence holders

Retail Market Scheme

A Retail Market Scheme enables a retail market administrator to manage the gas market.

A gas retailer must be a member of an approved Retail Market Scheme to sell gas to customers through a gas distribution system, when there are already one or more companies selling gas through that system.

In Western Australia, there is one Retail Market Scheme that covers all of ATCO Gas Australia’s distribution systems. The Australian Energy Market Operator is the scheme administrator. The Economic Regulation Authority has regulatory oversight of this scheme as well as any future Western Australian schemes. 

• ATCO Gas Australia
• Australian Energy Market Operator

Pipeline operators have invested extensively in natural gas transmission pipelines in Western Australia. This is because the State’s gas fields are so distant from major domestic gas customers in the South West.

Major pipelines

There are four major natural gas transmission pipelines supplying the Western Australian gas market: 

• Dampier to Bunbury Natural Gas Pipeline – transports gas from the North West Shelf area to customers in the Geraldton, Perth, Mandurah and Bunbury areas
• Goldfields Gas Pipeline – transports gas from the North West Shelf to customers in the Pilbara and Eastern Goldfields regions
• Parmelia Pipeline – transports gas from various fields in the Perth Basin to customers in the South West
• Pilbara Energy Pipeline – transports gas from the North West Shelf area to Port Hedland 

Other major transmission pipelines include the Kambalda to Esperance Gas Pipeline, the Mid West Pipeline and the Telfer Gas Pipeline.

Regulation and licensing

In Western Australia, the Department of Energy, Mines, Industry Regulation and Safety licenses major gas transmission pipelines (pipeline systems operated at a pressure of 1.9 megapascals and above). It maintains a register with details on licensed petroleum pipeline operators in Western Australia.

• The Department of Energy, Mines, Industry Regulation and Safety: Petroleum and Geothermal Register

Third-party Access

The Economic Regulation Authority regulates third party access to both ‘covered’ gas transmission pipelines and non-covered pipelines in Western Australia, in accordance with the National Gas Law and National Gas Rules. The Economic Regulation Authority website provides further details on gas access arrangements, including a list of pipelines covered under the National Gas Law.

For “non-covered” pipelines, regulatory changes were made in December 2017 to promote greater transparency and efficiency in the negotiation of third-party access in Western Australia. The changes impose requirements on pipeline operators to disclose information on pipeline service pricing and contractual terms and conditions to parties seeking pipeline services. Where efforts to agree the terms of access through commercial negotiations fail, a binding arbitration process will apply.

The Western Australian National Gas Access (WA) Act Amendment Regulations 2017 and the related National Gas Access (WA) Adoption of Amendments Order 2017, were gazetted on 22 December 2017, and commenced on 23 December 2017. These instruments gave effect in Western Australia to recent changes to the National Gas Law and National Gas Rules, with application from five months after the commencement date. Certain classes of natural gas pipeline will be exempt from the requirements.

The Economic Regulation Authority will administer the new rules in Western Australia and further information.

The National Gas (South Australia) (Pipelines Access-Arbitration) Act 2017 was proclaimed on 1 August 2017 to give effect to the changes to the National Gas Law and National Gas Rules in jurisdictions other than Western Australia, with application in those jurisdictions from 1 January 2018.

The national changes implemented recommendations made by a review led by Dr Michael Vertigan AC, reporting to the Energy Council of the Council of Australian Governments.

The new rules also apply to a pipeline for hauling gas other than natural gas, only if the pipeline constitutes or is part of a system for which a licence is in force under Part 2A of the Energy Coordination Act 1994 (that is, a licenced gas distribution network).