Browse LNG is critical to Australia and rest of the region, Woodside CEO declares
Woodside’s proposed $30bn-plus Browse LNG development appears set to be rejected by a WA environmental agency, but the company’s chief says the project is vital and should be endorsed.
Woodside’s proposed $30bn-plus Browse LNG development is critical to the energy security of Australia and the wider region, the company’s chief executive says.
Tre comments come as energy giant intensifies its campaign for regulatory approvals.
On Monday is was revealed the project was on course to be rejected by the WA Environmental Protection Agency, setting the scene for a major test of governments which are struggling to placate energy security concerns against rising environmental opposition.
The prospects for the project were dented with the revelation that the WA EPA had preliminarily determined that Browse poised an “unacceptable” risk, but Woodside’s chief executive, Meg O’Neill, said the development should be approved.
“Browse remains an important asset for Woodside. I think it is an important asset for Australia. If you look at forecasts for energy demand out into the 2030s it is very clear that new sources of domestic gas are going to be required – and the only field of sufficient size to meet that need is Browse,” Ms O’Neill told The Australian.
“The state government accepts that so we will continue to work closely with the environmental regulators to understand those and do our best to ensure that we have a project that will have minimal environmental impact.”
The Australian understands the ruling is based on the threat to marine organisms and Scott Reef if Woodside’s proposed development – which includes a 900km pipeline – proceeds.
Ms O’Neill’s comments hint that Woodside will continue to push the project, setting up a difficult decision for federal politicians.
The EPA recommendation, which will be concluded next year, could be overruled by the federal government.
WA-based federal Resources Minister Madeleine King is a strong supporter of gas, although Environment Minister Tanya Plibersek has shown she will not endanger native wildlife in favour of fossil fuel projects.
In a bid to win favour, Woodside and other gas developers have sought to frame the debate around Australian energy security as the country’s eastern seaboard is expected to endure a supply shortage as soon as 2026, although the economically damaging shortfall is expected from 2027.
But Browse is a WA project, and so the benefit for Australia’s eastern seaboard would likely be felt only if the region were forced to rely on LNG imports. If that occurs – and the east coast is increasingly certain it will – Woodside could provide shipments during peak winter and summer periods when demand for gas grows.
The majority of Browse’s supplies would, however, be destined for Asia – which is increasingly reliant on Australia. Asia, one of the world’s largest coal users, is likely to rely on LNG for decades to come as it has insufficient renewable resources – unlike in Australia.
That demand is a key reason why Woodside is seeking to rapidly grow, although its expansion plans have put it in the crosshairs of environmentalists.
Environmentalists insist Woodside’s LNG expansion is slowing global efforts to move to renewables, a claim rejected by the WA-based energy company.
Under pressure, Woodside had pledged to also grow its so-called future energy business by spending $5bn – the first major investment came on Monday when it announced it could acquire a low-carbon ammonia production facility in Texas from US company OCI Global in a deal worth $US2.35bn ($3.65bn)
Ms O’Neill has described the acquisition as “too good an opportunity to pass up”, but coming just weeks after Woodside said it would acquire a US LNG processing facility for $US1.2bn – catapulting it into one of the world’s biggest LNG players – the market greeted the transaction poorly.
Citi energy analyst James Byrne said the ammonia facility was attractive but investors had expected Woodside to spend the bulk of the $5bn later in the decade. Shares fell as a result and were down more than 5 per cent in Tuesday afternoon trade.
“In our Trilemma framework we don’t begrudge oil companies allocating scarce capital to 2020s experimentation in new energy to understand which technology to scale in the 2030s with the least risk. The Beaumont acquisition goes against this concept by moving straight to the ‘front of the queue’ in blue ammonia; however Europe’s legislated CBAM and an existing ammonia market do constrain the risks to an extent,” Mr Byrne said.
“Our issue is the acquisition seems the wrong point in the cycle.
“Woodside’s US$5bn target had market expectations of being spent closer to 2030 and Woodside has a long-dated rationale, so there was no time pressure.
“Who’s to say another good asset won’t come along over the next half decade, potentially during a bear market too?”
