Beach Energy oblivious to gas ban exemption until WA Premier’s announcement
Seven Group Holdings is the biggest shareholder of Beach and the share price jump increased the value of chairman Kerry Stokes’ stake in the company by about $65 million.
At a press conference on Tuesday, Mr McGowan refused to answer questions about whether he had discussed the Waitsia exemption with Mr Stokes or the chief executive of Seven Group Holdings, Ryan Stokes.
A Beach Energy spokesman said while it had been discussing potentially exporting the Waitsia gas for two years, it was not aware of the ban until after the announcement.
“In relation to the government’s plan to bring in the new onshore gas export ban, Beach was informed when the announcement was made,” he said.
“The Waitsia JV, led by operator Mitsui E&P Australia, has been in discussions with the Western Australia government for the past two years around the development of this project, including the potential for export of limited gas volumes.
“The Waitsia JV highlighted the need for a concurrent export element in addition to domestic sales to enable the sanctioning of this project.”
Kerry Stokes had never discussed the Waitsia project with the Premier or WA government, his spokesman said.
Seven Group Holdings declined to respond to questions. A spokesman referred further questions about the exemption to Beach Energy.
The Waitsia gas field was discovered in 2014 near Dongara in WA’s Mid West region and is considered one of Australia’s biggest ever onshore gas finds.
In its investor conference, Beach chief executive Matt Kay revealed the joint venture planned to send about 50 per cent of the field’s total reserves overseas through Woodside’s Karratha Gas Plant from 2023 onwards.
Beach Energy and Mitsui and Co are eyeing a final investment decision for stage two of the project by December, which would see the gas field further developed with more wells and a new 250 terajoules-per-day production facility.
The Beach spokesman said, if sanctioned, stage two would mean significant royalties for the state and investment in the Mid West – which was important given the pandemic-driven economic downturn.
He said the Waitsia project would still provide about 40 terajoules a day to the domestic market by 2021. In a 2019 report, the Australian Energy Market Operator predicted WA’s daily gas demand could reach 1332 terajoules by 2025.
“This project will increase and diversify domestic supply of gas outside of the Pilbara region and it is important to note Beach and Mitsui are currently key suppliers of domestic gas in Western Australia,” the spokesman said.
The export ban also copped heat from the Australian Petroleum Production and Exploration Association, which said it was not consulted and claimed the move would stifle future investment.
Hamish Hastie is WAtoday’s business reporter.