The West Australian government wants to prevent forecast gas shortages over the next decade by incentivising onshore producers to drill for more gas. 

It has decided to give domestic gas producers access to the lucrative export market, albeit for 20 per cent of a project's supply and only until the end of 2030.

However, some industry analysts say the strategy is risky, could lead to a price increase for West Australian households and is unlikely to substantially boost the state's gas supply.

For more than a decade, West Australians have paid significantly less for their gas compared to people living on the east-coast. 

A 2022 Senate report said WA gas prices were often less than half those on the east-coast.

This was primarily due to the state's domestic gas reservation policy, which requires offshore gas exporters to isolate 15 per cent of their vast reserves for the domestic market.

Higher household prices predicted

Curtin University professor and energy economist Liam Wagner said allowing onshore producers to send some gas overseas would likely undermine the reservation policy's ability to keep prices low. 

If onshore producers take advantage of the policy and increase production, their business costs will also increase. 

While some of those costs could be covered by selling some gas at a higher price internationally, Mr Wagner argued the remainder would be passed onto local consumers.

"I think what it [the policy] does is make it more fair for the gas producers by making that gas exportable," he said.

"Therefore, they would charge the export price [to local consumers] ... essentially their opportunity cost of not exporting it."

WA Premier Roger Cook said domestic producers and consumers had given the government opposing predictions about the policy's impact on prices. 

"Both the producers and the consumer of gas each predict that it will have a detrimental effect to their area," Mr Cook said. 

"So the customers are saying it will increase the price [while] the producers are saying it will reduce the price because there will be increased supply."

Mr Cook said ultimately, the policy was about getting more supply into the domestic market, which the government believed would put downward pressure on prices.

Australian Energy Producers, the peak body of the oil and gas industry, has welcomed the strategy after lobbying for the changes.

"The Cook government has … pulled the right levers to bring on more new gas supply to serve rising demand for gas in coming years," the body's WA director, Caroline Cherry, said in a statement.

"Exports deliver important economic benefits for WA and also support the domestic energy security the state has enjoyed for decades because of the industry’s commitment to providing energy for this region."

Policy time frame too short, analyst

Gas industry analyst Jeanette Roberts believed the policy had missed the mark if it was all about supply, as the government claimed.

"I think it's too short a time frame and too small a volume of relatively small reservoirs to really have an impact on approval of onshore projects," Ms Roberts said. 

But she said the idea was sound, and the industry would appreciate having a clear investment signal. 

"Policy uncertainty is a very big issue for this as always," she said.

"So it's good to have it confirmed, but I can't really see that it's significant enough to have a big impact."

Government accused of ignoring shortage cause

Australia's energy market operator has predicted more domestic gas will be required in WA over the next decade as the state's electricity use is expected to rise and more coal-fired power stations are coming offline.

The problem is not a lack of gas in Western Australia.

The state possesses some of the largest offshore gas reserves in the world, but most of it is exported overseas.

Rod Campbell, research director at the left-wing think tank The Australia Institute, argued the impending gas shortage was a problem of the government's own making. 

"The problem is that WA exports 90 per cent of its gas, and, in fact, prioritises gas exports over its domestic market," Mr Campbell said.

"And so exporting more is not the solution. The solution is export less, not more." 

Ms Roberts, who has worked and consulted for the oil and gas sector, said exporting less gas was a complex issue. 

"[That's] getting into a bigger argument about how much of an economy we want based on exports," he said.

"Here in WA, we have a number of natural resources of world scale, and we have these enormous offshore gas reserves, but it's just not economic to develop them just for the local market.

"There's not enough demand."