Great gas giveaway: $215 billion in royalty-free gas for Woodside’s North West Shelf project
A 50-year extension to the North West Shelf (NWS) project in Western Australia would see huge amounts of gas given away with no return for Australians.
While the exact volume and value are hard to predict, a basic estimate is that up to $215 billion worth of gas could be given away, royalty-free.
The NWS liquefied natural gas facility, specifically the Karratha Gas Plant, producers up to 18.6 mega tonnes of LNG each year. At present, it sources around 75 per cent of its natural gas from the royalty-paying NWS gas fields off the coast of WA.
These fields are the only major offshore gas project in WA that pays royalties, all others are royalty-free because the Commonwealth Government chooses not to charge a price for the public’s gas.
As we’ve pointed out before, the proponents of the NWS extension, Woodside, have not identified where all the gas will come from, with major implications for WA gas prices.
What is clear is that the royalty-paying NWS gas that feeds the Karratha Gas Plant is forecast to decline and it will increasingly be fed by gas from non-royalty paying reserves such as the Browse Basin, as shown in this chart that we first published here.
As shown in the above chart, it is possible that by 2036, none of the gas feeding the Karratha Gas Plant would be coming from royalty-paying reserves, although some gas could be sourced from Waitsia and other onshore or state-waters sources that would pay a royalty.
Below, we conservatively assume that 70 per cent of Karratha Gas Plant feedstock gas is royalty-free by the mid-2030s, and a price of $8 per gigajoule for gas, which is now common in WA wholesale trades.
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On these assumptions, the NWS shelf extension will be receiving around $5.1 billion a year in royalty-free gas, or $14 million each day, or $215 billion over the project’s 46-year life. These calculations are shown in Table 1.
Across the 46-year extension of the project, a total $215 billion in free gas will be given away. For comparison, the output of the entire WA economy was $448 billion in 2024.
Matt Saunders is a senior economist and Rod Campbell is research director at the Australia Institute.
