Gas strategy to flag tough new ‘use it or lose it’ stance on undeveloped fields

A tougher “use-it-or-lose-it” policy to encourage development of offshore gas fields could be in the pipeline as the Federal Government looks to prevent looming supply shortfalls – including in WA. Potential changes around Commonwealth retention leases will be flagged in a new Federal Government strategy setting out the role of gas in the energy transition. Resources Minister Madeleine King said the strategy made it clear that gas would be an important energy source through to 2050 and “beyond” and a critical player in Labor’s much-hyped Future Made in Australia vision. The Future Gas Strategy will call on the Federal Government to work with the States and industry to encourage “more timely” development of untapped gas fields to help avoid forecast supply shortages. WA is facing a severe gas shortfall at the end of this decade while southern States on the East Coast need new supply to avert shortages from 2028, according to the Australian Energy Market Operator (AEMO). “It is clear we will need continued exploration, investment and development in the sector to support the path to net zero for Australia and for our export partners, and to avoid a shortfall in gas supplies,” Ms King said ahead of the strategy’s full release on Thursday. The strategy will suggest updating retention lease policies, including toughening up the “use-it-or-lose-it” policy that allows the Commonwealth to push a titleholder to either develop a field or lose their rights to it. The West understands the Government has no immediate plans to change the policy but wants to open up the idea for debate. The DomGas Alliance and WA Government want the Federal Government to adopt a tougher stance on untapped fields to help prevent the forecast supply shortfalls. A total of 27 leases under the Commonwealth’s retention system are currently under review, according to the Alliance. The lobby group has five fields in its sights in the Carnarvon Basin off the Pilbara coast, including Chevron’s Clio-Acme and Santos’ Corvus. Former WA Petroleum Minister Bill Johnston last month revealed he had written to the Federal Government urging it not to grant retention leases to five fields off the State’s coast, effectively forcing them to start production inside five years. It’s unclear if Mr Johnston was referring to the same five fields as the Alliance. The wider strategy is designed to solidify the Albanese Government’s support for the gas sector, which the federal Opposition and industry have called into question after a series of market interventions. It will be underpinned by six principles, including that gas must be affordable throughout the transition and that Australia will remain a reliable LNG exporter. The strategy will identify a series of “actions”, including cutting gas-related emissions by working to minimise venting and flaring of methane. It will also promote carbon capture and storage technology. Gas will be cast as crucial to Labor’s Future Made in Australia vision, with the fuel needed for manufacturing, food processing and refining of critical minerals. “Gas plays a crucial role in supporting our economy, with the sector employing 20,000 people across the country, including remote and regional communities,” Ms King said. “Ensuring Australia continues to have adequate access to reasonably priced gas will be key to delivering an 82 per cent renewable energy grid by 2030, and to achieve our commitment to net zero emissions by 2050.