User:Glen Dillon/WA petroleum working copy

Locations of main gas pipelines in WA

The Western Australian petroleum industry is the largest contributor to Australia's production of most petroleum products. Based largely on development of the reserves of the North West Shelf and other onshore hydrocarbon basins, the industry extracts crude oil, condensate and natural gas from petroleum reservoirs deep beneath the earth's surface. A large plant located at Withnell Bay near Dampier, in the Pilbara region, produces liquefied natural gas (LNG) for export to Asian customers. Crude oil and most petroleum liquids are exported. Australia's largest petroleum refinery at Kwinana in WA's south-west produces petrol and diesel for local consumption. Natural gas is processed at plants located on islands off the WA coast and onshore, then transported by pipelines to gas users throughout the state. hewo people

The total value of the primary products produced by the industry in 2007 was $16.6 billion, accounting for 31% of all natural resources produced in the state.

Gas

Major Petroleum Basins of Western Australia

In 2006-07, around two thirds of Australia’s natural gas was produced in the Carnarvon Basin off the coast of Western Australia. Most of the gas produced in WA is transformed into liquefied natural gas (LNG) and exported to Japan. The remainder is used within the state. The domestic market for natural gas in WA, like that of Australia as a whole, is characterised by a small number of producers and a small number of large industrial consumers, with limited depth in consumption.

The state's two largest individual users of gas are Alcoa (which operates three alumina refineries in the south-west) and Burrup Fertilisers (which operates the world's largest ammonia plant on the Burrup Peninsula, near Dampier). Together they account for more than half of the natural gas consumed in WA. Most of the remaining gas is used for electricity generation and by other smaller industrial and commercial users. Residential gas users consume only about 2% of the natural gas produced in the state.

There are three main 'supply lines' for WA's domestic gas:

• 65% from the North-West Shelf domestic gas plant near Dampier, operated by Woodside Petroleum, transporting gas via the Dampier to Bunbury Natural gas Pipeline (DBNGP);
• 30% from the Varanus Island facility operated by Apache Energy on behalf of a number of production joint ventures. Output from the Varanus Island plant is divided between mineral processing operations who receive their gas via the Goldfields Gas Pipeline, and industrial and commercial customers in Perth and the southwest who receive their supplies via the DBNGP which links with the Varanus Island trunk line about 130km south of Dampier; and
• 5% from small gas producers near Dongara, transported via the Parmelia Pipeline.

Petroleum liquids (Crude oil, condensate and LPG)

Western Australia's share of national petroleum production in 2007

Western Australia is Australia’s leading oil (and condensate) producing State, having surpassed Victoria, where production from the Gippsland Basin off the southern coast has been steadily declining. Western Australia currently produces 71% of Australia's crude oil and condensate.

Industry Structure

Overview

Similar to petroleum industries in other market-capitalist economies such as those in Western Europe and North America, the WA petroleum industry is characterised by the involvement of private corporations, although an important regulatory role is occupied by the federal and state governments in most aspects of the industry.

The town of Karratha, situated near the Burrup Peninsula, in the Pilbara region

Production Facilities

Production refers to the process of extracting the hydrocarbons from existing wells, along with initial separation of the wellstream components (which typically include varying proportions of crude oil, natural gas, and water), prior to transportation to end-use markets or further processing and refining. Most of the state's petroleum production occurs at offshore production platforms, although many wells are situated on the mainland and on several islands off the coast such as Thevenard Island and at Barrow Island where commercial oil production in WA commenced in 1964. thumb|right|Western Australia's share of Australian gas reserves WA's largest production platforms are North Rankin A and Goodwyn A - both operated by Woodside Petroleum - located approximately 130 km west of Dampier, where the ocean depth is about 100 metres.

Transportation

See also List of natural gas pipelines in Western Australia

There are currently four major natural gas transmission pipelines supplying the Western Australian gas market:

• Dampier to Bunbury Natural Gas Pipeline (DBNGP), which transports gas from the North West Shelf area to customers in the Geraldton, Perth, Mandurah and Bunbury areas;
• Goldfields Gas Pipeline (GGP), taking gas from Varanus Island to the Goldfields;
• Parmelia Pipeline, taking gas from various fields in the Perth Basin to customers in the State's South West; and
• Pilbara Energy Pipeline - from Dampier to Port Hedland.

Refining

Refining refers to the transformation of crude oil and condensate into end-use petroleum products, including gasoline and distillate (diesel). Most of the crude oil and condensate produced in WA is exported to refineries in Asia by ship. The state's only oil refinery at Kwinana, owned and operated by BP is Australia's largest and relies mainly on shipments of crude oil from elsewhere in Australia and overseas. A small amount of crude oil is produced near Dongara, about 400km north of the capital city, Perth, which is transported by road tanker to the Kwinana refinery.

Government Involvement

Government involvement in the industry covers areas such as policy development, safety and environmental regulation, investment facilitation, provision of infrastructure, releases of new exploration areas, acquisition of regional geological data. The legal framework within which petroleum exploration and development occurs is a result of the division of responsibilities between the Commonwealth and the states/territories under the Constitution and inter-governmental agreements (in particular, the 1978-79 Offshore Constitutional Settlement).

Onshore, and out to 3nm (nautical miles) from the territorial sea baseline (coastal waters), petroleum operations are the responsibility of the state government. WA's offshore areas beyond the 3nm limit are governed by Commonwealth legislation (Offshore Petroleum Act 2005) administered by the Department of Innovation, Industry, Science and Research. The Law of the Sea Convention gives effect to a system of Exclusive Economic Zones under which nations have sovereign rights over natural resources out to 200nm from the coast (Australia claimed such rights in 1994 under the Maritime Legislation Amendment Act 1994). The convention also allows Australia to claim sovereign rights over seabed resources where the continental shelf extends beyond 200nm. State agencies also administer some aspects of federal petroleum-related legislation on behalf of the Commonwealth.

Commonwealth Departments & Agencies

• Department of Innovation, Industry, Science and Research
• National Offshore Petroleum Safety Authority
• Australian Taxation Office
• Foreign Investment Review Board
• Geoscience Australia

State Departments & Agencies

• Department of Industry and Resources
• Aboriginal Areas Protection Authority
• Economic Regulatory Authority
• State Revenue Department
• Department of the Environment
• Environmental Protection Authority
• Department of Consumer and Employment Protection

Issues

Supply Disruption

The state's heavy reliance on gas from the north west has become a prominent public issue on several occasions when disruptions to these main supply lines have occurred. On 18 February 2004, elecricity provider Western Power imposed compulsory restrictions on electricity use in Perth. This ocurred on a day when the temperature was expected to reach nearly 42ºC and the company was unable to use its 'peakload' gas-fired power stations because of maintenance being carried out on the main pipeline from the north-west. An unplanned shutdown at Woodside's Karratha plant in 2007 temporarily reduced supplies to the state's south. The most serious and significant event occurred in June 2008, when a pipeline rupture and explosion at the Varanus facility caused a 3-month shutdown of the plant, reducing the state's supply of natural gas by one-third.See also Western Australian gas crisis.

Domestic Gas Reservation Policy

In 2006, the state government announced a policy requiring gas producers to reserve 15% of the reserves in each gas field for domestic use in the state. A federal parliamentary report referred to the state policy, stating that "while Western Australia presently consumes about 35% of Australia’s domestic gas use, and the bulk of LNG exports, there is still a very healthy reserve-to-production ratio in excess of 100 years.

Garnaut Climate Change Review

The first draft report of the Garnaut Climate Change Review (released on 4 July 2008) identified the impacts of climate change on Australia and proposed numerous public policy measures designed to mitigate these effects. Among those measures was an emissions trading scheme "which will make higher-emissions forms of energy generation more expensive, shifting demand towards lower-emissions sources, and towards technologies that capture and sequester emissions...and in transport, an emissions trading scheme will make higher-emissions forms of transport more expensive, shifting demand to lower-emissions forms"

Security

The Australian Strategic Policy Institute has identified petroleum facilities in Western Australia, including offshore platforms, ports, processing plants and pipelines as potential targets of military or terrorist attack. Offshore structures and floating production and storage vessels have few defences against attack. In a 2005 report on maritime security threats, the Institute noted that the general trend in Australian petroleum production from onshore to offshore and from Bass Strait to the Northwest Shelf posed increasing risks for the Western Australian petroleum industry. In December 2004 the Australian Government announced a program of augmented security patrols in the the Northwest Shelf area.