Regulator flags WA gas squeeze as H3 Energy dusts off Warro giant
- James Pearson
- 4 hours ago
- 3 min read
H3 Energy (ASX: H3E) appears to have positioned itself squarely in the path of a tightening gas market, with Western Australia staring down the barrel of a domestic gas shortfall from 2028, according to the regulator.
Australia’s energy market umpire, AEMO, has flagged a material supply gap opening in the WA gas market from 2028 and widening into the 2030s, setting the scene for higher prices and a scramble for reliable local supply.
Against that backdrop, H3’s long-overlooked Warro gas field is suddenly back in focus, shaping up as a strategically placed onshore asset with the scale and infrastructure close to where the state needs domestic gas the most.
Sitting just 30 kilometres from the Dampier-to-Bunbury natural gas pipeline, Warro is regarded as one of the state’s biggest undeveloped onshore gas resources. Independently assessed with up to a whopping 3.2 trillion cubic feet (Tcf) of gas in the ground, the field has long been viewed as a sleeping giant that never quite woke up.
First drilled in 1977 by WAPET – the Caltex–Ampol joint venture formed in 1952 – more than $100 million was later poured into seismic and drilling to define a major gas discovery, intersecting a massive 390-metre gas column.
Flow tests delivered 1–2 million cubic feet of gas per day despite minimal stimulation and high water cut. However, those water issues – compounded by uncertainty about fracture stimulation – ultimately sidelined Warro for years.
Management has since doubled down with a suite of technical and commercial studies aimed at pinning down reservoir behaviour, water ingress pathways and commerciality. Those studies included a commerciality assessment by RISC Advisory and image log interpretation by ImageStrat to help map fractures and fault zones and separate the likely water conduits from the gas pay.
Preliminary results from the new Warro 3 image log interpretation in mid-December added another layer of confidence, linking water inflow to one or two discrete fault zones at depth, rather than pervasive natural fracturing throughout the reservoir. The company said that the shift creates a more manageable engineering problem. By simply isolating the culprit zones, the company expects to return to dry gas.
With the water issues now seemingly understood, fast-forward to today, and the landscape is starting to look very different.
Gas prices in Western Australia have more than doubled since 2019, averaging more than $7 per gigajoule and rising. AEMO has warned that price-sensitive industries could start pulling the pin if gas breaches $10 per gigajoule, underscoring just how tight the market could become once supply falls short.
H3 says rising gas prices have also shifted the commercial equation at Warro, allowing lower flow rates to work and reviving once uneconomic engineering solutions. H3 Energy’s recent technical review has confirmed that gas flow is not a geological issue but an engineering challenge, with the focus now on managing water and delivering sustainable production.
The AEMO report highlights the potential significance of the Warro gas field to the State’s economy. This asset has been on the backburner for many years due to hitherto mischaracterised technical challenges and regulatory uncertainty but now its time has come.
H3 Energy CEO Nik Sykiotis
In a market where timing is everything, Warro’s long exile may yet prove to be its greatest asset. As Western Australia heads toward tighter gas supply and higher prices, the once-maligned onshore field is starting to look less like yesterday’s problem and more like part of tomorrow’s solution.
With improved regulation, sharper technical execution and commercial work, Warro may now finally be ready to unlock its value.
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