A gas pipeline linking WA to the east coast that could help address spiralling energy costs in the rest of the country has received a major boost, with the Federal Government awarding a contract to examine the project in more detail.

Federal Energy Minister Josh Frydenberg will announce today that ACIL Allen, in conjunction with GHD, has won the tender for a pre-feasibility study for the West-East Gas Pipeline, to report back to the Federal Government in March.

The study is the first Commonwealth investigation into the potential for the pipeline between WA and the east coast gas market, in what could cost up to $5 billion according to some estimates.

The study into the project — billed by Mr Frydenberg as “nation building” — comes amid a chronic shortage of gas in the Eastern States caused by the development of three major LNG export plants and State and Territory bans on new gas exploration.

“Improving the transparency, competitiveness and long term security of Australia’s ... gas market is a priority for the Government as gas is a crucial component of the current and future energy mix to ensure we keep the lights on,” Mr Frydenberg said.

WA Energy Minister Ben Wyatt said he would be watching the progress of the project with interest, but flagged the State may seek a toll from the Commonwealth to access its gas resources.

Play Video Australia's gas shortage is far worse than previously thought. The West Australian Video Australia's gas shortage is far worse than previously thought.

“I shall be paying particularly close attention to any modelling and the impact of the toll which will be paid to the WA government for the use of WA gas to solve an east coast energy problem,” Mr Wyatt said.

Perth-based consulting firm ACIL Allen will be involved in the market and analysis component of the study, while GHD will take on the pipeline engineering and pipeline route assessment component.

“Together, the parties have deep and wide-ranging experience in gas markets and infrastructure and demonstrated through their bid the ability to deliver excellent analysis to inform future infrastructure decisions,” Mr Frydenberg said.

The findings from the study are expected to inform a full feasibility process which would test the viability of constructing a natural gas pipeline to provide additional gas supplies and increase competition in the east coast gas market.

Nationals leader Barnaby Joyce, who is in the throes of a by-election, has previously backed the project, as has Finance Minister and WA senator Mathias Cormann.

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In Perth last month, Mr Joyce suggested the Northern Australia Infrastructure Facility could potentially help finance infrastructure to take WA gas to the east coast.

An $800 million pipeline connecting the Northern Territory to the national gas grid from Tenant Creek to Mt Isa in Queensland is under construction, with the first gas expected to flow next year.