Western Australia has a long association with the world of energy, specifically natural gas and petroleum. One of the major success stories has been the State’s LNG industry which is likely to expand significantly with eight LNG projects currently proposed for development.

History of LNG in Western Australia
The discovery of vast quantities of oil and gas off the coast of Western Australia in the 1970s led to the establishment and construction of Australia’s first LNG project, the North West Shelf Venture (NWSV). For approximately the next 40 years, prior to exports of LNG from Darwin in 2006, the NWSV was the only LNG project in Australia.

The first seeds of LNG development in Western Australia were sown with the awarding of the North West Shelf permits to Woodside in 1963. In 1967, the NWSV drilled the Ashmore Reef-1 well and in 1971 the first gas and condensate discoveries were found at the Scott Reef, North Rankin and Goodwyn fields. A year later in 1972, further gas and condensate resources were found at the Angel field.

Combined with crucial support from the Western Australian Government, Woodside Petroleum (now Woodside Energy) led its venture partners in the development of North West Shelf infrastructure in the 1980s, with the construction of an onshore domestic gas plant at Karratha. With a strong vision in mind that the project would compete on the global stage, two LNG processing trains and four LNG storage tanks were constructed. To enable development of the fields, the North Rankin A offshore production platform and a 135 kilometre subsea pipeline to shore were also constructed.

The second phase of construction of NWSV facilities was completed in 1989, facilitating the first shipment of LNG from Western Australia to Japan. Japan was a foundation customer of the NWS and remains a significant partner in Australia’s LNG industry. Completion of a third LNG train occurred during the NWSV’s third major phase in the early-to-mid 1990s, followed by a fourth LNG train which was completed in 2004.

Not long after construction of train four was completed, construction began on a fifth LNG train in 2005. By 2008, train five had begun production and had lifted annual NWS production to a total of 16.3 million tonnes.

Further cementing its international significance, the NWSV broke new ground in 2006 with the delivery of the first Australian LNG cargo to China. This marked the start of a 25 year, $25 billion contract with Guangdong Dapeng LNG. At the time, this was Australia’s single largest export contract.

With an investment of approximately $27 billion over 25 years, the NWSV has been able to deliver 2,800 cargoes of LNG to customers across the globe and currently accounts for more than 40 per cent of Australia’s oil and gas production. In terms of reinvestment into Australia, production from the NWSV contributes significantly to the Australian economy through taxes, royalties and employment.

Growing Regional Demand
The Asia Pacific region is the world’s largest LNG market, accounting for more than 68 per cent of global trade. In 2009, Australia produced 42.3 billion cubic metres of natural gas and exported nearly 60 per cent of this to the Asia Pacific region. The significant demand in the Asia Pacific region for energy supplies has resulted from unprecedented economic growth. This growth has required secure and reliable energy suppliers and the Australian LNG industry has stepped up to the challenge, placing Australia at the forefront of desired trading partners to deliver energy supplies.

However, global growth in energy demand continues to increase each year. Natural gas demand in South-East Asia is predicted to increase by 18 per cent by 2015 and global demand for LNG is forecast to triple by 2030. Western Australia is well positioned to meet this growing demand with LNG output increasing by almost 13 per cent in 2009- 10. In addition, there are currently eight LNG developments proposed for Western Australia, which if delivered will also ensure that Western Australia’s energy future matches the NWSV’s illustrious past. These projects include the Browse LNG development, Pluto LNG project, Scarborough gas project, Prelude Floating LNG project, Bonaparte LNG project, Wheatstone LNG project, Julimar project and Gorgon project.

Western Australia: An Energy Supply Hub
The Woodside operated $12 billion Pluto LNG project is expected to become the world’s fastest developed LNG project, from discovery of the field in 2005 to the delivery of first gas in 2011. The ability of the project to proceed through the approvals process so quickly was the result of significant support from the Western Australian Government. The project is expected to increase Australia’s LNG output by between five and six million tonnes per annum.

The Gorgon Project is operated by Chevron and is a joint venture of the Australian subsidiaries of Chevron, ExxonMobil and Shell, Osaka Gas, Tokyo Gas and Chubu Electric Power Company.

The project, in the Greater Gorgon Area gas fields, will initially comprise three LNG trains on Barrow Island capable of producing a combined 15 million tonnes per annum. The project’s joint venture partners are Chevron, Shell and Exxon. It is anticipated that the project will also supply 300 terajoules per day of gas into Western Australia’s domestic market.

Woodside has proposed the Browse LNG development with joint venture partners BHP Billiton, BP, Chevron and Shell. The development is seeking to target the Torosa, Brecknock and Calliance fields located 425 kilometres offshore Broome in the Browse Basin. The fields contain an estimated 14 trillion cubic feet of dry gas, which would predominately be used for LNG exports, and 370 million barrels of condensate.

The Wheatstone development, located 200 kilometres north of Onslow and operated by Chevron, was originally going to supply third party gas to the Pluto LNG project. However, significant additional gas discoveries in 2010 have already bolstered the foundation project’s two LNG trains, which will have an estimated combined capacity of 8.9 million tonnes per annum. Final investment decision is expected for the second half of 2011. Apache Corporation and Kuwait Foreign Petroleum Exploration Company have signed deals to become equity participants in the Wheatstone Project. The first two LNG trains will be supplied with gas from the Chevron operated Wheatstone and Iago fields. Apache and KUFPEC will bring gas to Wheatstone from their Julimar and Brunello fields.

The Julimar development is Apache Energy’s largest gas project and consists of three gas condensate fields, which lie 80km northwest of Varanus Island. The three fields have combined estimated gas reserves of 2.1 trillion cubic feet and the first phase of the project is expected to be completed by October 2011.

The Ichthys Project is a joint venture between INPEX and Total focusing on the Ichthys Field in the Browse Basin. The field first demonstrated its potential to be a world-class gas project in 2000. Resource estimates are currently 12.8 trillion cubic feet of gas and 527 million barrels of condensate.

If deployed as planned, Shell’s Floating LNG (FLNG) development of the Prelude field in the Browse Basin will be among the world’s first deployment of FLNG technology. It will aim to produce approximately 3.5 million tonnes per annum of LNG, with an expected start-up of 2016.

Discovered in 1979, the Scarborough gas field holds significant resources which are yet to be developed. Located approximately 280km offshore in the Carnarvon Basin, BHP Billiton and ExxonMobil’s Scarborough gas project is anticipated to produce 5.8 to 6.7 million tonnes of LNG annually.

The Bonaparte LNG project will be located in the Bonaparte Basin and has a planned capacity of two million tonnes per annum of LNG. Under a joint venture partnership with Santos, GDF SUEZ will export LNG from Bonaparte to markets in the Asia- Pacific region. Final Investment Decision is expected in 2014 with potential LNG production in 2018.

The Role of the Western Australian Government
The success of Western Australia’s LNG industry could not have been achieved without the significant support and vision of the Western Australian Government. From 1974 to 1982, former Western Australian Premier Sir Charles Court paid particular attention to the promotion of gas exploration and development of the NWSV. Sir Charles Court’s vision for Western Australia and support for the development of the NWSV, laid the foundations for the consequent resources boom and the enormous growth that transformed Western Australia’s economy, which the State continues to enjoy today.

With a similar long term vision of Western Australia’s future, the Western Australian Government is supporting further development of the industry through the Ashburton North Strategic Industrial Area and the Browse LNG Precinct at James Price Point.

The Browse LNG precinct in the Kimberley, 60 kilometres north of Broome, will facilitate processing of natural gas from the offshore Browse Basin. The precinct will be a multiuser hub, able to accommodate processing and shipping facilities for at least two proponents to explore and develop Browse Basin resources.

Similar to the Browse LNG Precinct, the Strategic Industrial Area (SIA) at Ashburton North is being developed facilitate natural gas projects and associated industries in the State’s North-West. The SIA is located 11 kilometres south-west of Onslow and covers up to 8,000 hectares in size, making it large enough to accommodate major LNG developments such as Chevron’s Wheatstone. It is also ideally located to facilitate development of gas reserves in the Carnarvon Basin and Exmouth Gulf. The development is part of the Western Australian Government’s Heavy Use Industrial Land Strategy, which aims to bring key new industrial estates toward ‘project ready’ status.

However, State Government support has not just been confined to ensuring appropriate allocations of land. The Gorgon Project will be the first major commercial development in the world to utilise Carbon Capture and Storage technology to separate carbon dioxide from extracted natural gas. The project plans to reinject carbon dioxide separated from natural gas approximately two kilometres into a reservoir under Barrow Island known as the Dupuy Formation.

Carbon Capture and Storage is the only technology currently available to significantly reduce greenhouse gas emissions from fossil fuels. It will also allow the development of oil and gas fields in Western Australia that were previously considered non-commercial due to high levels of naturally occurring CO2. The development of CCS technology has been supported by both the Australian and Western Australian Governments. This includes $5 billion of funding through the Federal Government’s clean energy initiative.

The Western Australian Government is working closely with proponents examining the technological aspects of CCS and is represented on the National Carbon Capture and Storage Council. The State Government has provided the legislative framework for CCS in Western Australia and has adopted a project-specific approach to CCS regulation.

The Western Australian Government has also been working to streamline its approvals processes. The delivery of online lodgements has enabled more efficient processing of applications, which has reduced timelines. The State Government has also increased the visibility of the approvals process through the implementation of an online tracking system.

The Western Australian Government continues to work closely with the Federal Government on issues such as skills shortages and has actively participated in the National Resources Sector Employment Taskforce and the Western Australian Workforce Development Plan. Meeting these challenges continues to be important for ensuring that the State and its industries fulfil their potential.

Funding of $53 million has also been allocated for petroleum exploration under the Exploration Incentive Scheme, which is funded by Royalties for Regions. This includes co-funding for drilling, upgrades to information management, funding for stratigraphic drilling, funding for precompetitive data, airborne magnetic and radiometric surveys and funding for the development of Indigenous Land Use Agreements.

Growing regional demand is expected to drive the delivery of a number of new LNG projects into Western Australia. A strong and cooperative relationship between the State Government and industry will continue to enable the State’s LNG industry to maintain a significant foothold in the global LNG market. This will assist with delivering a shared vision of Western Australia as a reliable and strategic energy supply hub.

The State Government will continue to support the LNG industry’s growth, which will bolster our economic strength, contribute to energy security and through CCS, play a large role in responding to the challenge of climate change.

The Department of Mines and Petroleum (DMP) is the State’s lead agency in attracting private investment in resources exploration and development through the provision of geoscientific information on minerals and energy resources, and management of an equitable and secure titles systems for the mining, petroleum and geothermal industries.

It also carries prime responsibility for regulating these extractive industries and dangerous goods in Western Australia, including the collection of royalties, and ensuring that safety, health and environmental standards are consistent with relevant State and Commonwealth legislation, regulations and policies.

1 The six participants in the North West Shelf Venture gas interests are BHP Billiton Petroleum (North West Shelf) Pty Ltd, BP Developments Australia Pty Ltd, Chevron Australian Pty Ltd, Japan Australia LNG (MIMI) Pty Ltd, Shell Development (Australia) Pty Ltd and Woodside Energy Ltd, who is also Operator of the North West Shelf Venture’s facilities