The WA and Federal Governments have been arguing over the State Government’s proposal to reserve up to 20% of gas for the domestic market from fields feeding liquefied natural gas projects.

Legal advice indicates that the Federal Government would be unable to prevent the WA Government from implementing gas reservations in situations where companies have signed agreements with the State Government, as the North West Shelf partners did when setting up that project.

But Inpex seems likely to evade the WA gas reservations scheme.

Inpex has received major project facilitation status from the Federal Government for its proposed $A7.9 billion LNG plant in the Browse Basin off the WA coast, according to a report in the Australian newspaper today.

The company has no agreement with the WA Government and it has not sought special legislation in the state for its development plan.

The signs are that Inpex does not want state land for a processing plant. It seems to be moving towards an offshore processing plant located in waters under the Federal Government’s jurisdiction.

Inpex’s gas reserves in and around the Ichthys field are in waters administered by the Federal Government.

In its proposed Browse LNG project, Woodside has said it favours an offshore plant built in the lagoon near Scott Reef to avoid the need for costly pipelines and onshore facilities. Once again, the gas and the processing facility would be in Federal waters.

But the Pluto project looks set to have onshore facilities on the Burrup Peninsula and is likely to fall into the State Government’s clutches.

Other LNG players may now be thinking carefully about the value of offshore facilities.

Gas reservations could affect BHP Billiton’s plans to develop the deepwater Carnarvon Basin Scarborough field via facilities near the Pilbara town of Onslow. Operating partner ExxonMobil has long had misgivings over the economics of the project, and significant gas reservations could see Scarborough deferred.