Some of Australia's richest industrialists will be allowed for the first time to send Western Australia's gas overseas after the state government opened up onshore reserves to exports.

But gas market players, not authorised to speak on record, have told the ABC mining billionaires are still unlikely to be overjoyed amid efforts by the state to tightly cap the amount of gas they can sell to international buyers.

The government said the move will encourage more gas development and therefore bring more supply to the domestic market in the years ahead.

WA's domestic gas policy has required projects to reserve gas equivalent to 15 per cent of what is exported for the domestic market and prevented the export of onshore gas.

How did we get here?

The banning of onshore exports came in 2020 under former WA premier Mark McGowan.

But he gave one exemption — the Waitsia project in the state's mid-west region, where Japanese firm Mitsui and ASX-listed company Beach Energy developed a gas field.

Beach Energy's biggest shareholder is Kerry Stokes's Seven Group Holdings.

That company has a diverse portfolio of mining and construction companies and also owns significant media interests, including a stake in WA's only daily newspaper The West Australian.

Following that exemption, other onshore gas players have been pushing for similar treatment, warning their projects would not be viable without selling to the international market.

Today, the state government announced onshore gas projects will be able to export 20 per cent of gas production up until December 31, 2030, after which time projects will be required to reserve 100 per cent for the local market.

The revised policy will apply to new onshore gas projects or existing projects seeking to expand production.

"Modelling shows that our state's gas supply is balanced over the next five years to 2030. We expect to produce enough gas to meet the needs of our economy," Premier Roger Cook said in announcing the changes.

"But beyond 2030 we need more gas coming into our system.

"By keeping 80 per cent of gas for domestic use and allowing new gas projects to export a reasonable proportion over the next five years we will help stimulate development while WA's gas market is in balance."

Last month a parliamentary inquiry poured cold water on the idea of lifting the onshore export ban, finding it could leave WA short of gas at a time when supply was already tight and prices were high.

It recommended the state "allow onshore gas projects to export LNG only if the domestic market is adequately supplied and is expected to be well supplied for a period of time".

The Waitsia project will retain its domestic gas reservation obligations and export permit, issued under the "2020 COVID-19 exemption".

The changes have already been welcomed by industry, represented by Australian Energy Producers.

Warning of higher gas prices

Gas buyers who spoke on background to the ABC following the announcement said the tighter export caps tied to the new policy may anger billionaires such as Gina Rinehart and Chris Ellison, who own massive gas projects in WA.

But Peter Kerr, of energy advisory ATA Consulting, said he views it as the government attempting to find a middle ground. 

But he warned increasing the flow of overseas exports could see prices rise.

"We've proven on the east coast, when you do open the export tap to the world, that means domestic prices rise to meet international prices, which are generally higher," he said.

"So are you potentially exposing your local market to slightly higher gas prices? Absolutely."

He said at the same time, companies needed to ensure their projects were commercially viable.

Mr Cook said he believed the extra supply for the WA market would put "downward pressure" on gas prices, but that "ultimately it will also depend upon demand".

Legislation not off table

One of the key issues highlighted by the parliamentary inquiry was a lack of transparency which meant producers were not currently meeting the 15 per cent domestic reservation requirement.

It found they were providing the domestic market, on average, gas equivalent to about 8 per cent of what they export – about half of what they were required to provide.

Woodside's Pluto project was singled out as having only supplied about 6 per cent of what it was required to, although some had been offset by the company supplying more from other projects.

Mr Cook said the government had "very, very strong conversations" with Woodside about that shortfall, understanding there had been "infrastructure constraints" the company was grappling with.

He said while working with industry was always the government's preference, passing legislation to require compliance was not out of the question.

In a statement, Woodside CEO Meg O'Neill said the company was committed to delivering gas to WA and agreed having clarity on how the policy operated with specific projects was important.

"That's why even before the [inquiry] commenced its work we were in discussions with the state government about how these outcomes can be achieved," she said.

"Woodside has already committed to make up to an additional 50 terajoules a day of domestic gas available in WA for the next two years."

The government has committed to publishing an annual WA Domestic Gas Statement to show how gas producers are meeting their obligations.

Gas vital for energy transition: premier

The government has also vowed to strengthen the use of 'use it or lose it' provisions to prevent land banking of onshore petroleum tenements and ensure more gas is brought to market over the coming decade.

It said it will conduct a review of legislation to determine how to strengthen the current policy.

"WA needs a secure supply of gas to reach our net zero emissions, to keep our economy strong and to keep energy prices affordable and that's what this policy delivers," Mr Cook said.

Opposition energy spokesman Steve Thomas said the government's revised gas policy seemed like a "short-term political fix".

"Critically the government will have to ensure that there is transparency for both the parliament and the public that domestic supply will be 'adequately supplied' into the future," he said.

WA Greens MP Brad Pettitt said the government had failed to facilitate a transition to renewable energy.

"Wind and solar are the cheapest way to create electricity, much cheaper than new gas, but extraordinarily there's not a single large-scale renewable energy generation project under construction on WA's new grid," he said.

"If WA was managing the transition properly, we would be needing gas in vanishingly small amounts and certainly not encouraging domestic gas producers to export."