The recent hike in gas prices has kicked off renewed interest in Western Australia's smaller gas fields. Explorers and investment firms are on a buying spree of undeveloped gas tenements to take advantage of a growing domestic gas market and there's expectations the price of gas will continue to rise.
For years WA industry has relied on cheap gas from the North West Shelf.
But Eric Streitberg from Arc Energy says demand is almost outstripping supply and the price is rising.
"We've been in the oil and gas industry for ten years and this is the first time we've seen gas prices that make us want to reinvest in the business," he said.
Arc energy has this week almost doubled its exploration program in fields in the Kimberley hoping to take advantage of the new market.
Latent Petroleum an explorer headed up by three ex-apache energy bosses is looking to more than quadruple local gas supplies by developing the warra gas field in the Perth Basin.
The field was once owned by millionaire businessman Ric Stowe but has not been financially viable until now.
WA boasts some of the highest gas prices in Australia and Argonaut Securities analyst Ian Christie predicts they will climb even higher to ten dollars a gigajoule by 2009.
"Two dollar gas is gone forever and I don't think we're ever going to see those prices again," he said.
However, Stuart Hohen from Domgas Alliance says there is concern industry will turn to less clean but cheaper energy alternatives if gas remains expensive.
"We would want to see those prices challenged in the long term because it would challenge the viability of some of the existing uses," he said.
At the moment the pain is being felt by industry and not households because prices for domestic users is capped, but that could chandge.
The State Government will be renegotiating the price of gas for home users over the next year and Babcock and Brown, the new owners of Alinta, are expected to push for a price hike. © 2007 Australian Broadcasting Corporation
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