By Nick Toscano
Gas giant Woodside has hit out at the federal government’s decision to postpone a critical assessment of its bid to extend the life of its North West Shelf operations, saying regulatory uncertainty is deterring investments needed to avert an energy crisis in Victoria and NSW.
Woodside, the nation’s largest oil and gas producer, voiced frustration on Tuesday at ongoing delays holding up its application to allow its 40-year-old natural gas development in the north-west of Western Australia to continue operating until 2070 after the federal environment department pushed back a deadline for a decision.
Woodside’s Karratha Gas Plant.
The company first submitted the application at a state level more than six years ago, before gaining approval in December, Woodside chief executive Meg O’Neill said. It now needs to undergo a federal government assessment, which has been delayed.
“We are pretty frustrated,” O’Neill said. “Red and green tape is slowing down business investment in Australia and creating additional sovereign risk – and I think this is a great example.”
The proposal to extend the Woodside-operated North West Shelf joint venture, which supplies gas to customers in Western Australia and ships liquefied natural gas (LNG) overseas, is staunchly opposed by climate advocates and other campaigners who are worried about the impact on the environment and global warming. The plan is also opposed because of fears that releasing additional industrial emissions may present a risk to 50,000-year-old Indigenous cultural heritage in the region, the Murujuga rock art
Mardudhunera woman Raelene Cooper, former chair of the Murujuga Aboriginal Corporation, said the Burrup Peninsula, known as Murujuga to traditional owners, contained the largest, oldest collection of Aboriginal rock art in the world and was sacred to her people. “This is a massive decision for [Environment] Minister [Tanya] Plibersek. Huge,” she said.
Nominated for a World Heritage listing, Murujuga was among the “world’s greatest artistic treasures,” added Mark Ogge, principal adviser at progressive think tank The Australia Institute. “It is eight times as ancient as the pyramids in Egypt and Stonehenge, and at least as important.”
O’Neill said on Tuesday Woodside’s proposal would not expand the North West Shelf’s footprint nor cause any “additional impact on the natural environment”. Having already gained clearance from the state’s environment minister, O’Neill said the further delays in the project’s federal permitting process underscored the challenging regulatory environment facing oil and gas developers in Australia, despite the fact they were being urged to drill for more gas to prevent a looming domestic shortfall.
“The fact that it continues to get delayed is concerning for us as we think about the investment environment here in Australia,” she said. “It’s hard going.”
It comes as the Australian Energy Market Operator has been sounding the alarm over the speed and scale of depleting output from the giant gas fields in Bass Strait that have supplied the local market for decades.
Woodside, which owns a 50 per cent stake in Bass Strait’s Gippsland Basin joint venture with ExxonMobil, this month signed off on a project to expand capacity at one of their fields, but overall production remains in rapid decline.
Unless greater gas supplies are urgently made available to offset those declines, warns AEMO, homes and businesses in Victoria, NSW and South Australia are heading for a domestic gas deficit by 2028 or even sooner, raising the risk of physical fuel shortages and runaway bills.
More Australians are moving to replace gas appliances with electric alternatives, which is driving down forecast demand levels. But that shift is not happening fast enough to avert annual supply deficits, expected within as little as three years, according to AEMO.
Companies across the Australian energy sector are proposing ways to address the looming shortfall, including planning the south-eastern states’ first shipping terminals capable of importing LNG from parts of the country that export cargoes of the fuel, including Queensland and Western Australia.
The most advanced plan to import LNG is the Port Kembla energy terminal, developed by Andrew and Nicola Forrest’s Squadron Energy. Another is Viva Energy’s planned terminal at its Geelong oil refinery, which is undergoing assessment for environmental approval.
Gas infrastructure company APA Group has revealed a proposal to expand the capacity of the pipeline from Queensland into the southern states by 24 per cent. APA chief Adam Watson said this would negate the need for the “disastrous option” of gas-rich Australia turning to imports, which would tie local consumers to price swings of volatile global gas markets.
“Importing higher-cost, higher-emissions LNG … will undermine domestic energy security and expose Australia’s energy market to global supply chains and prices,” he said.
Viva Energy chief Scott Wyatt said Victoria’s gas market was “getting shorter by the day”, and the crunch would require more than one way to boost supply.
“Victoria needs gas, and every project can have its place,” Wyatt said.
“The beauty of an LNG facility like ours is that it can be done very quickly, relative to building a new pipeline, and at a much lower cost.”
The comments came as shares in ASX-listed Viva Energy, which also owns Australia’s Shell and Liberty petrol stations, crashed by 26 per cent on Tuesday after it delivered a 20 per cent fall in benchmark profit and warnings of ongoing challenges in retail and refining.
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