Wood Mackenzie's lead analyst for Australasia, Saul Kavonic, told Energy News that the "new era" WA energy minister Mike Nahan hailed earlier this month when North West Shelf operator Woodside Petroleum inked a short-term deal to supply gas to Synergy did not materially impact his firm's base case forecast.
Gas from the Gorgon and Wheatstone domgas plants were meant to offset the reductions in North West Shelf contracted supply, but Wood Mackenzie still forecasts the state is facing a supply shortfall of 150 million cubic feet per day when many of the current gas supply agreements are up for recontracting from 2021.
Nahan said the North West Shelf partners selling their own equity gas into the domestic market individually would increase competition and provide for "more efficient markets producing the best available contract terms and conditions".
However, Kavonic said that while there was still plenty of additional gas available for development in the offshore Carnarvon Basin, "… the relatively low prices industry has seen in historic legacy contracts were no longer sufficient to justify future field developments - which are structurally higher-cost developments".
Prices would need to rise to bring online new supply in the 2020s, Kavonic added.
However, RISC's principal Martin Wilkes told Energy News that his firm does not see it as a "necessity" that domestic gas prices would increase structurally.
One of the reasons for that lay in the differences between the LNG players, he said.
"The North West Shelf [equity partners] are going to be the only ones that have room in their LNG trains," Wilkes said.
"The other players - Gorgon and Wheatstone - their trains will be full, so they don't really have the choice of either domgas or LNG for the molecules.
"It's a different value calculation to the one the North West Shelf has.
"On the one hand you've got an ageing project that's coming off plateau, not near end of life yet - there's plenty of life in it - but it will have lots of room in its facilities at some point.
"On the other end of the spectrum are new projects like Gorgon and Wheatstone which will be on plateau for the foreseeable future and therefore may be prepared to accept lower prices."
Wilkes said their choice was to either deliver gas into the domestic market and get money for it now, or potentially wait 15-plus years before they can deliver that gas when there's room in the LNG trains.
However, he said even this would depend on whether they were allowed to sell the gas as LNG or not - that's dependent upon the actual agreements that have been made for each project.
He believes there's little chance Chevron will run the LNG trains at Gorgon and Wheatstone at less than maximum capacity unless the operator is forced to.
Woodside CEO Peter Coleman alluded to the NWS' comfortable position when discussing the company's growth options regarding asset-based M&A during his first-half call last Friday.
He said that between the NWS, Pluto and a stake in Wheatstone, Woodside was "well positioned" to take advantage of any "asset movement" in that area and would also benefit from any tolling that takes place.
"We're quite positive for where we think the backfill for North West Shelf will come from," Coleman said.
While it was too early to give guidance on that, he said a "line of sight" had emerged to assets that can come through the NWS.
Then there are the domestic gas-focused players who have developments in hand which may or may not end up as cheaper gas than what you can get from the LNG projects.
Wilkes believes these assets are somewhat undersold in the market as valuable additions to domestic gas supply.
"We see potentially a range of prices coming out, whereby you have domestic gas-focused players who may end up with developments that can provide gas at a reasonably low cost," Wilkes said.
"You [also] have differences between the LNG providers in terms of what their costs might be and what they might be prepared to accept in terms of pricing, because they're in different places in terms of their project development."
Wilkes believes AWE's Waitsia project, being onshore and close to infrastructure, should result in a different cost structure than the offshore fields, potentially on the cheaper end, while the scale is also different.
Waitsia was due to come online this month, but could be a tad late.
"The bottom line of all this is that prices don't have to rise," Wilkes said.
"We see that there will be a range of prices into the future that people may be prepared to negotiate on."
"The big players in the market are the LNG players with the big domestic gas plants and big resource bases, but they're not the only players. There are other people that are trying to develop other gas, and they may be able to develop it at slightly lower cost.
"I'm not saying the bottom is about to fall out of the market, but neither would I say that there's an imperative that domgas prices have to rise."