ExxonMobil tells Canberra to stop ‘feeding on debate and division’

ExxonMobil has called on Canberra to quit squabbling about renewables and start developing a clear energy policy.

ExxonMobil's Australian chairman Richard Owen. Aaron Francis/The Australian

The world’s biggest oil company, ExxonMobil, has called for Australia’s politicians to stop “feeding on debate and division” and address meeting the nation’s energy needs and cutting emissions rather than arguing about the role of renewables.

Exxon argues that both sides of politics accept Australia will still rely on fossil fuels for most of its energy in 2040, meaning the debate has centred around renewables which is more highly contested.

“There is one sobering fact we all agree on — that the world, including Australia will continue to be reliant on fossil fuels for most of our energy in the year 2040,” Exxon Australia chairman Richard Owen said in a Melbourne speech today. “We don’t hear much about this sobering fact because there is bipartisan agreement on this outlook, and our political system, feeds on debate and division. So, instead we argue about renewables.”

Clean energy supplies are growing fast but will take decades to replace fossil fuels in the nation’s energy mix.

“Wind and solar are great, and they are the fastest growing source of energy. But our energy demand is huge and it’s growing, and it takes many generations to evolve,” Mr Owen said.

“We currently get eight per cent of our electricity from wind and solar. But this represents only 1.5 per cent of our total energy demand.”

The complex job of cutting greenhouse gas emissions and meeting the country’s energy needs will require major investments from large corporations, underlining the importance of developing government policy that will provide a signal for investors.

“The fossil fuels we all rely on are a diminishing resource, so even maintaining supplies at current levels requires continuing major investments from large corporations as well as input from a multitude of highly skilled suppliers and workers,” Mr Owen said.

“This is what we should be talking about today because we have reached a turning point and we need to make some important decisions that will set the course of our economy for future generations.”

Exxon is facing pressure to find new sources of gas as the decline of the Bass Strait fields it runs with BHP spark concern of a broader supply shortfall for the east coast in the next few years.

One of the most anticipated searches for a giant gas field in decades — Exxon’s Dory prospect in the Bass Strait — came up dry in November dashing hopes of a source of new gas for tight domestic markets.

Gas shortages on the east coast are set to emerge within three years and prices will remain high for the next decade ratcheting up pressure on large industrial users struggling with soaring tariffs, EnergyQuest warned earlier this week.

Exxon said it will increasingly be a balancing game about how much to invest as reserves dry up, although it expects cost cuts and innovations will allow the life of the Bass Strait to be extended.

“We are seeing concerns arise around liquid fuel security for the nation, and gas supply on the east coast,” Mr Owen said. “As the reserves diminish the costs of production increases. There comes a point where the cost to produce it is more than the customers would be willing to pay.”

Exxon said one option to bridge any supply shortfall could be an LNG import terminal which it said it continues to study at the Western Port area near Hastings where it operates the Long Island Point plant.

Macquarie analysts estimated Exxon’s LNG import plant would cost $100m — compared to announced costs of $250m from AGL and $200m to $300m from Andrew Forrest’s Australian Industrial Energy — and operating costs up to 25 per cent cheaper than its rival plants. Exxon has started conducting initial engineering and design studies and started scoping potential suppliers — including gas from its own global portfolio — to a plant which could receive its first imports by 2022. A final investment decision could be struck in the next 12-18 months.