Renewed plan for multibillion-dollar transcontinental gas pipeline linking Australia’s west and east coasts has split the industry.
Renewed plan for multibillion-dollar transcontinental gas pipeline linking Australia’s west and east coasts has split the industry.

Renewed gas pipeline plan causing controversy

A multibillion-dollar transcontinental gas pipeline linking Australia's west and east coasts has been revived to ease projected shortfalls in NSW and Victoria, but the renewed plan has split the industry over whether it can deliver supplies at affordable prices.

The privately-held Perth company Western Gas - which owns the Equus gas venture offshore WA - has teamed up with pipeline giant APA Group for a joint feasibility study as it seeks to develop a new source of supply for domestic markets.

The Equus resource could supply 350 terajoules a day of gas for more than 15 years, marking the equivalent of 35 per cent of WA gas demand, three-quarters of NSW gas demand or just over a third of the combined gas demand of NSW and Victoria.

A timeline wasn't provided for the study but Western Gas said it could meet market needs by the mid-2020s.

The long-mooted plan, originally costing $6bn, has been heavily promoted by former WA premier Colin Barnett and backed by ex-Dow boss Andrew Liveris in an early National COVID-19 Coordination Commission report as a solution to high gas prices and a looming supply shortfall due 2024.

However, MST Marquee analyst Mark Samter said he could already predict the outcome of the joint feasibility study.

"I can pre-write the study for them. If Equus doesn't make economic sense into the LNG projects that are a few hundred kilometres away then it is farcical to think that it makes sense to spend $5-6 a gigajoule (plus in reality) sending it through onshore pipeline infrastructure across a bloody big country," Mr Samter told The Australian.

"There are sensible solutions to the supply shortage, in the shape of LNG imports and progressing frontier basins such as the Beetaloo, sending not wildly high quality offshore WA gas through the pipeline network is not one of them."

Former WA Premier Colin Barnett, who has backed the pipeline concept, disagreed and said it was a big chance to boost supply to the east coast gas market.

"It's just fundamentally a ridiculous situation for Australia to have a shortage of gas on the east coast, and yet be up there with Qatar as the world's largest gas exporter. This is a Goldilocks project - it's not big enough to support an LNG project, and yet it's too big to fit in the Western Australian market by itself," Mr Barnett said.

"It's a very high quality resource, it's rich in liquids and it is low CO2. It's good to see the private sector standing up and doing it. It's important that some of the regulatory arrangements are conducive and supportive, and I just hope the federal government doesn't tie it up in bureaucracy."

The plan may clash with the WA government, given it declared in August 2020 a transcontinental gas pipeline would not proceed after it banned local gas being sent to the nation's east coast amid concern insufficient supplies would be available for the state's users.

However, it could sidestep that restriction given Equus is an offshore gas resource and may not be subject to WA's updated domestic gas policy. Energy Minister Bill Johnston has previously rubbished the proposal, arguing that the project would fail without the introduction of gas reservation policies in other states.

APA first entered into the pact with Western Gas in October 2020, according to a note in its results released on Wednesday.

A 2019 study found that while the $5.8bn pipeline was technically feasible, "commercial and market risks present major challenges for the project".

Western Gas said the scope of the study "comprises a detailed assessment of development, commercial, marketing and regulatory aspects of the project, which will form the basis of an integrated bankable feasibility study."

Under the plan, gas from the offshore Equus fields would be piped 210km to Ashburton, just south of Onslow, with gas then sent to the east coast through a transcontinental pipeline. A route for the pipeline was not provided.

Originally published as Renewed gas pipeline plan causing controversy