A review into Western Australia’s gas sector has highlighted the competitive advantage of the State’s gas supply, showing it directly supports billions of dollars of mining projects and heavy manufacturing, while making electricity cheaper and more reliable.
The review undertaken on behalf of CCIWA and developed with input from independent consulting firm Australian Venture Consultants, paints a bleak picture if WA’s gas supplies are jeopardised, finding a “worst-case scenario” of reduced gas supply would slash the state’s economic activity by up to A$42 billion.
It predicts a A$2.9b cut to government revenue and foreshadows job losses for up to 45,000 workers.
The review included a survey of 853 WA businesses and found that more than half (51%) directly relied on gas to operate, beyond the use of grid electricity.
CCIWA Chief Executive, Peter Cock, said the work highlights the need for a regulatory regime and political consensus which supports investment in gas developments.
“We simply cannot afford to sleepwalk into a gas crisis,” he said.
“Natural gas is the lynchpin of our economy, so it’s time for a fact-based debate on the essential role it plays in WA’s economy today and what the impacts would be if we don’t support further investment in gas supplies for the future.”
This review shows the critical role gas plays in WA’s mining sector, from powering the machinery that extracts minerals, to processing, milling and smelting.
“Without affordable and reliable gas supplies, WA’s mining sector would simply not be able to operate as it does today,” Dr Cock said.
“Even a modest drop in gas supplies would put significant pressure on mining operations, which would make it more difficult for Australia to maintain its world leading status as a reliable supplier as well as compete with emerging mineral markets.”
It also highlights the critical role gas plays as a direct feedstock in chemical manufacturing for things like fertilisers, as well as in the creation of construction materials like bricks and cement, and in food and beverage production.
“A reduction in gas supply for WA wouldn’t just be an inconvenience – it would cause significant economic and social damage,” Dr Cock said.
“If WA’s gas supply is jeopardised, the impacts would be felt right through the WA economy, impacting the job security and prosperity so many of us enjoy today.”
Critical role of gas in supporting key infrastructure
The review underlines the critical role gas plays in supporting key infrastructure relied upon by Western Australians, including electricity and drinking water.
“It’s well established that gas helps to keep the lights on in WA by supporting our electricity grid,” Dr Cock said.
“What many people might not know is that the desalination plants that supply 40% of WA’s drinking water are largely powered by gas.
“There’s simply not another viable source of energy available at the moment that can deliver the energy security that gas does.”
Dr Cock said the work supports the important role WA gas could play in helping our regional neighbours to decarbonise.
“Countries in Asia are looking to reduce their reliance on coal but, at the same time, their economies are growing and so are their energy requirements, which increases their appetite for gas,” he said.
“WA is in the box seat to capitalise on this demand, while at the same time contributing to global emissions reductions given gas has around half the lifecycle carbon emissions of coal when producing electricity.”
Alcoa Australia President Elsabe Muller said: “We welcome this collaborative work with gas producers and today’s findings, which highlight the risks and opportunities for the future role of natural gas within WA. Alcoa will continue to be an active market participant, relying on an affordable and consistent supply of natural gas to process bauxite into alumina. This energy source is crucial for our operational competitiveness and sustainability, helping to maintain thousands of jobs in Western Australia and making our refineries among the lowest carbon emitting in the world.”
Chevron Australia Director of Operations Danny Woodall said: “The report released by CCIWA clearly outlines the essential role natural gas plays in Western Australia, from supporting our everyday lives to driving the state’s powerhouse mining and minerals sector. With the right regulatory and policy settings in place, which support ongoing investment in gas development, Western Australia can continue benefiting from its abundant resources for many decades to come.”
Woodside Energy’s Chief Operating Officer in Australia, Liz Westcott said: “The work recently undertaken on behalf of CCIWA confirmed the important role of gas in supporting Western Australia’s prosperity through the energy transition. This work is unique as gas consumers and gas producers have come together to understand gas supply needs in WA. The findings confirm gas has an important role today and for decades to come. We all want WA to continue to prosper in a lower-emissions future. As the engine room of the nation’s economy, WA will always need affordable and reliable supplies of energy and that’s where gas comes into its own.”
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