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Oil & Gas

Western Australia’s petroleum sector includes crude oil, condensate, liquefied natural gas (LNG), natural gas and liquefied petroleum gas. In 2017-18, the value of petroleum products produced in State areas (onshore and offshore) and in adjacent Commonwealth offshore areas totalled $26.6 billion, up 39 per cent from 2016-17.

Natural gas is odourless, colourless and tasteless. Gas manufacturers add a harmless chemical called mercaptan, giving natural gas the distinctive stench of rotten eggs to make the smallest gas leak easily detectable.

Petroleum production accounted for 23 per cent of the value of mineral and petroleum sales for Western Australia in 2017-18, making the sector the second most valuable commodity after iron ore. More than 90 per cent of petroleum production originates from projects in adjacent Commonwealth offshore areas. Japan remains the primary export market for petroleum, taking $12.8 billion (52 per cent. Singapore and South Korea were the next largest markets with 12 per cent and 10 per cent respectively.

Petroleum Production in WA

LNG is a significant sector for Western Australia, with the volume of LNG produced increasing 45 per cent in the five years to 2016-17, exporting 13 per cent of the world’s supply. In 2017-18, a further 32 per cent increase was achieved with production reaching a record 37.9 million tonnes.

LNG is currently produced from four projects in Western Australia:

  • North West Shelf Joint Venture
  • Woodside’s Pluto (first LNG in April 2012)
  • Chevron’s Gorgon Gas (first LNG in March 2016); and
  • Chevron’s Wheatstone (first LNG in October 2017).

Located off the Western Australian coast in Commonwealth waters is Shell’s Prelude Floating LNG project. INPEX’s Ichthys project also substantially contributes to the WA economy.

LNG was WA’s most valuable petroleum product in 2017-18, accounting for 17 per cent of the value of mineral and petroleum sales. LNG sales rose from $12.7 to $19.1 billion in 2017-18. The increase in sales volumes was driven in part by the ramp up of Chevron’s LNG projects. Wheatstone has produced 2.1 million tonnes since its first shipment and Gorgon has seen considerable production growth in the past year from 6.9 to 12.7 million tonnes. This is close to its 15.6 million tonnes per annum nameplate capacity.

LNG is a natural gas converted into a liquid by cooling to around -162 degrees Celsius and is odourless, colourless and highly flammable. In its re-gassified form, it is used for cooking, etc for cooking, heating, and as a lower carbon fuel in electricity generation and transportation. It is also a key feedstock for manufacturing plastics and chemicals.

Western Australia accounts for about 70 per cent of the nation’s crude oil and condensate production. The State’s major producers are BHP, Woodside Energy, Vermilion Energy, Santos and Roc Oil whom operate in the Carnarvon, Perth and Canning Basins. The Canning Basin has significant potential for new gas and oil discoveries, with 90 per cent of Australia’s prospective shale gas, 40 per cent of prospective tight gas and over 80 per cent of prospective shale oil.

Crude oil volumes fell for the third consecutive year in 2017–18, from 5.4 to 4.8GL (11 per cent). The improvement in the oil price meant that despite this decrease in production, the value of WA crude oil increased from $2.1 to $2.3 billion.

For more than a century, petroleum and its associated products have shaped the world. As a transportation fuel, a lubricant, a source of energy for electricity generation, or as a feedstock for chemicals, plastics and synthetic materials, petroleum products are indispensable and abundant in the modern world.

Crude oil is a naturally occurring petroleum product that can be refined to produce gasoline, diesel and petrochemicals. Although it is often called ‘black gold’, crude oil can appear in various shades of black, brown or yellow.

Condensate is a by-product from natural gas fields and is used in high-octane petrol, diesel and boiler fuels, as well as plastics, synthetic rubbers, fibres and resins.

*Sources: DMIRS.