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					 Gas Reform In Western Australia
       Including Upstream

       Centre for Mining and Energy
Upstream Gas Regulation and Competition Reform

               14-15 October 1998

                  K Peter Kolf
         Office of Energy - Western Australia

   History of Gas Reform in WA
   Gas Industry in WA
   Downstream Access Arrangements
   Upstream Access Issues
   Benefits to Western Australia and Australia
       History of Gas Reform in
          Western Australia
   Gas has been top on the agenda in WA

   WA - an early leader in gas reform

   Bipartisan support for gas reform

   Encouraged recovery of associated gas -
    since the early 90’s
           Gas Reform in WA

   Diversified WA gas market not accident
   Disaggregation of NWS contract
   Deregulation of Pilbara market
   $2.4 billion privatisation of DBNGP
   Totally open market by 1 July 2002
   Sale of AlintaGas under consideration
               Natural Gas in
              Western Australia

   > 75% of Australian natural gas resources
   700 PJ natural gas produced in 1996/7
   281 PJ natural gas used in WA in 1996/7
   Gas resources - approx 100 years left
   LNG from NW Shelf - 10% of world trade
              Domestic Gas Supplies
                                    1997 (TJ/d)

Carnarvon Basin
BHP Petroleum (Australia) Pty Ltd    Griffin Gas Gathering            17
Boral Energy Resources Ltd           Tubridgi                         21
West Australian Petroleum Ltd        Thevenard Island Gas Gathering   12    50
East Spar Joint Venture              East Spar                        40
Harriet Joint Venture                Harriet Gas Gathering            79    119
North West Shelf Gas JV              NWSG Project                     428   428
Perth Basin
Boral Energy Resources Ltd           Beharra Springs                  29
CMS Gas Transmission of Aust.        Dongara                          11
Phoenix Energy Pty Ltd               Woodada                           4    44
        North West Shelf Gas

Largest Australian resource development project
  » Total capital outlay $12 billion
  » Sale of natural gas to the domestic market
  » Export of LNG and LPG (primarily to Japan)
  » Sale of condensate to the local and
    international oil market.
       Gas Pipelines Access (WA) Bill 1998

   Makes the National Access Law a law of WA

   Gives legal effect to the Code

   Formalises derogations & transitional arrangements
   Expected to commence in WA end of November
   Derogations for DBNGP, GGP & SWDS to 1/1/2000
        WA’s Code Bodies
» State-based Independent Gas Pipeline
  Access Regulator
» State-based Gas Disputes Arbitrator
» State-based Gas Review Board
» The Supreme Court of Western Australia
» Designated State Minister
      Natural Gas Upstream Issues

   The Upstream Issues Working Group (GRIG)
   Consultation paper - submissions by 25
   Key Issues:
     (impact on downstream competition)
       1. Acreage Management Systems
       2. Third Party Access to Upstream Facilities
       3. Marketing Arrangements
         Access To Upstream

 No restrictions on entry to upstream
 Market access available
 Access to sales gas pipelines available
 Government not involved commercially
 Market becoming more mature
 Is anything more needed ?
               The Varanus Hub
                 WA Domestic Gas

Harriet & East Spar Joint Ventures:
   Have sold 220 TJ/d to South West and Goldfields
    industrial markets;
   Are increasing capacity to eventually supply 500 TJ/d
   Export in excess of 3 mmbbls pa of crude and condensate
   Have negotiated access to Harriet’s Varanus Island
    facilities and the sales gas pipeline.
               The Varanus Hub
             Upstream Access in WA

   A negotiated, commercial arrangement
   Harriet provided access to leases, crude storage and load
    out and sales gas pipeline
   East Spar constructed its plant and pays tolls to Harriet for
    use of infrastructure
   Each Joint Venture supports the other increasing
    customer’s supply reliability
   Both Joint Ventures funding a share of a second gas
    pipeline to shore
    Benefits To Western Australia

 Competitive gas prices
 Diversification in gas supply
 World competitive gas industry
 World class oil & gas expertise
 Competitive resource development
 Downstream processing & development
 High export earnings
              Natural Gas Demand
               Western Australia



                     In d e p e n d e n t
                     G o v t U tilitie s

     100             U p s tr e a m U s e


       1974   1977         1980             1983   1986   1989   1992   1995
         Environmental Outcome
In 1996-97:
 Primary energy demand decreased by 1%
 Final energy demand increased by 2.6%
 Carbon dioxide emissions decreased by 1.7%
 decrease in primary energy use
 change in the mix of primary energy i.e.
  (i)     increase in the contribution of gas
  (ii)   decrease in coal, oil and condensate

» Access by commercial negotiation working in WA
» Access assisted by Government open market approach
» Fundamentals support efficient outcomes &
  international competitiveness
» Environmental benefits from sharing facilities
» WA not seeking to impose new mandatory access
» WA would support a voluntary code that states
  commercially realistic principles

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