Oil and gas producer Buru Energy and Mitsubishi Corporation of Japan have gained approval to further develop gas resources in the Kimberley region.
The onshore oil and gas project will see a $500 million dollar pipeline built which will run from the Kimberly to the Pilbara, after a deal was struck with the West Australian Government, ninemsn reported.
Under the agreement, 15 per cent of gas from new projects is earmarked for domestic use first before any can be exported.
Buru Energy executive director Eric Streitberg said the company had spent $120 million exploring the area.
"This agreement gives us the ability to coherently and appropriately continue to develop gas resources in the basin," Streitberg said.
WA Premier Colin Barnett said the government was committed to helping the development of a gas pipeline to the Pilbaram ensuring WA consumers had first use of any gas found.
"It ensures gas discoveries are rapidly brought into production, and that gas is delivered to the state's domestic gas network, before any is exported," Barnett said.
According to the Premier, there was massive potential for natural gas in the 530,000 square kilometre Canning Basin.
The US Energy Information Administration has estimated the Canning Basin's unconventional gas resources at about 229 trillion cubic feet, one and a half times more than WA’s offshore resources.
The two companies must now obtain state and commonwealth environmental, safety, Indigenous heritage and Native Title approvals for all exploration, development and infrastructure plans.
Last week the Department of Indigenous Affairs was investigating a claim by the Nyikina Mangala people that Buru Energy had bulldozed an area containing rare tool-making artefacts in the Canning Basin, 100 kms east of Broome.
Buru Energy said there were no registered sites in the area where it was working but would co-operate with any investigation.