The Australian Petroleum Production & Exploration Association (APPEA) has applauded the West Australian Government’s decision to encourage the development of the tight gas industry by halving the royalty rate for ‘tight’ gas production.
The State Government announced that it will reduce the royalty rate applied to the value of tight gas at the wellhead from 10 to five per cent. APPEA has previously identified a reduction in royalties in selected onshore areas as an important measure that could assist in stimulating exploration in frontier areas.
APPEA director WA, Tom Baddeley, said the move was a positive policy initiative that recognises the need to stimulate investment in unconventional gas fields.
“Unlocking the tight gas of the Perth Basin has the potential to significantly boost domestic gas supply and government initiatives like this will help attract new entrants and diversity,” he Baddeley.
“The Minister is to be applauded for pulling the right levers.”
While tight gas has been part of the North American energy supply for some time, the sector is still in its infancy in Western Australia, says APPEA.
Fiscal measures are one of the most effective policy tools at the disposal of governments (both state and federal) in which to stimulate exploration, the organisation said.
“WA has an abundance of clean, natural gas. Incentives like this will further underpin long term supplies of gas to support the State’s long term energy needs,” said Baddeley.