The deal was presaged by Synergy and Woodside reaching an agreement last month for a spot gas purchasing contract that they said would provide "flexibility" between parties.
State Development Minister Bill Marmion said that, since 1984 when domestic gas sales from the NWS started, all gas marketing and sales have been conducted jointly by the owners of the NWS domestic gas facilities.
The NWSV partners agreed to an altered agreement with the state in November 2014, by which point the country's oldest and largest LNG project had already supplied more than 5150 petajoules of gas into WA's market, meeting more than half WA's gas consumption in 2013.
Under the agreement, Woodside and its partners had agreed to reserve domestic gas equivalent in volume to 15% of new approved LNG exports, as per the state's reservation policy.
The gas will come in part from new developments like Greater Western Flank Two, which will underpin the future operation of the project's processing plant.
These new developments will also enable the joint venture to export a further 86 million tonnes of LNG.
Woodside then promptly announced the approval of the $1.2 billion Persephone development the day after the variation agreement came out.
Without that agreement, the NWS would have been a continuing but declining supplier for the WA market until 2020.
This is when the last of its domestic gas contracts were due to expire, with gas from the new Gorgon and Wheatstone domestic gas facilities meant to offset the reductions in NWS contracted supply.
However, Wood Mackenzie still forecasts that WA is in for a supply shortfall of over 150 million cubic feet per day when many of the current gas supply agreements are up for recontracting.
Even so, Marmion said the deal announced last Friday marked a "new era" for domestic gas in WA as Woodside is now marketing its share directly to larger industrial, commercial and mining gas users.
Energy Minister Dr Mike Nahan said there was significant benefit for state-owned energy generator and retailer Synergy to be able to enter into short-term agreements directly with Woodside.
"Synergy is able to further strengthen its gas supply position on an as-required basis without having to commit to extensive gas supply agreements," Dr Nahan said.
"It is fitting that Synergy, the NWS project's first domestic gas customer, is now able to be a counterparty in a first of its kind supply agreement directly with Woodside.
"The state government welcomes this increased level of competition, which will benefit gas market consumers because there are new sellers in the market. It will also lead to more efficient markets and the best available contract terms and conditions."
Wood Mackenzie's lead analyst for Australasia, Saul Kavonic, told Energy News that his firm understands the entire NWSV is moving to equity marketing of its domestic gas.
The firm also believes the JV still has domestic market obligations with the newly-sanctioned projects like Persephone and Greater Western Flank 2 which will be about 100 terajoules per day after 2021, by which time Wood Mackenzie's base case says the NWS' domgas supply will drop from about 4-500TJ down to about 100TJ.
While WA's LNG and domestic gas markets have always been segregated, Wood Mackenzie believes that with the current depressed state of LNG prices - and the firm forecasts they will be until at least 2020 - the state could find itself in an extraordinary situation of the domestic gas market potentially becoming more attractive.
It should be noted, however, that this has not actually happened yet - both spot domestic gas prices and spot LNG prices have been low for unrelated reasons.
"If WA domestic gas prices were to provide a more compelling value proposition you could potentially see members of the NWS JV consider sending out one less spot LNG cargo from the NWS JV and put that into the domestic market if that arbitrage justifies it," Kavonic said.
"That can work for relatively small swing volumes, but most buyers need long-term contract to underpin their baseload of demand, then it comes down to what the JV partner's long-term forecast for LNG prices are versus domestic gas prices.
"That's a future possibility, but we're yet to see any clear indication of that from our end."
This provides a delicious twist on the age-old argument between the WA DomGas Alliance and the upstream industry about the worthiness and need for a reservation policy.
Yet it would appear that, at least according to Wood Mackenzie's modelling - previously revealed exclusively to Energy News - that says the state still faces a gas shortfall once the current long-term contracts roll off in the early 2020s.
"We're not changing our base case forecast, which is still that there is going to be a supply-demand gap from the early to mid-2020s. This announcement doesn't materially impact that," Kavonic told Energy News.
"While there is plenty of additional gas available for development in the Carnarvon Basin, the relatively low prices industry has seen in historic legacy contracts are no longer sufficient to justify future field developments - which are structurally higher-cost developments.
"So prices would need to naturally rise to bring online new supply in the 2020s."
This answers the conundrum of how there can a shortfall with so much undeveloped gas out there: the structural cost of supply needs higher prices.