❓ Mr. McGowan questions the Premier regarding onshore processing of Browse Basin gas, specifically asking about the government's stance on onshore processing, floating LNG, and departmental efforts to pursue onshore options. The Premier's response outlines the complexities, state's role, and concerns about reliability of floating LNG.
AnsweredQoN 273Legislative Assembly
QuestionView source ↗
BROWSE LNG PROJECT — ONSHORE PROCESSING
273. Mr M. McGOWAN to the Premier:
I refer to the Premier's
statements regarding the development of the Browse gas projects, in which he
stated the joint venture partners should ''recognise the policy position
and deal with it. That gas will be developed in the north in the Kimberley
region.''
(1) Is that still
the Premier's position regarding onshore processing of Browse Basin
gas?
(2) Will the
Premier allow state Browse Basin gas to be processed by floating liquefied
natural gas?
(3) Has the Premier directed the Department of State
Development to strenuously pursue all onshore processing possibilities?
273. Mr M. McGOWAN to the Premier:
I refer to the Premier's
statements regarding the development of the Browse gas projects, in which he
stated the joint venture partners should ''recognise the policy position
and deal with it. That gas will be developed in the north in the Kimberley
region.''
(1) Is that still
the Premier's position regarding onshore processing of Browse Basin
gas?
(2) Will the
Premier allow state Browse Basin gas to be processed by floating liquefied
natural gas?
(3) Has the Premier directed the Department of State
Development to strenuously pursue all onshore processing possibilities?
AnswerView source ↗
(1)–(3) The Browse gas field is one of the
world's great gas resources, and, I might say, there is also a
significant amount of oil in that field. However, it is yet to produce a single
molecule of gas. I think everyone remembers the Inpex project, the Ichthys
field, initiated under Labor, from which gas is being piped 900 kilometres to
Darwin at a cost of $5 billion, which becomes one giant tax deduction for the
company. That is not a good result for the Australian community. There is no
obligation for any of that Ichthys gas to stay in Australia. Indeed, the
Northern Territory has a gas shortage problem, yet there will be a huge amount
of gas piped from Western Australia to Darwin and sent straight off to Japan.
That is hardly a great result.
However, the Browse field itself
is in the vicinity of Scott Reef, which is an island and therefore part of
Western Australia, as it has three nautical miles of ocean around it. The
wash-up of that is that of the five petroleum retention leases in the area,
three belong to the commonwealth and two belong to the state. The state
probably owns about 20 per cent to 30 per cent of gas, so we are a player. This
is a case in which it is not offshore and all up to the commonwealth; the state
has a direct role. Those retention leases are not due to expire until the end
of next year. I do not see the great rush. The commonwealth seems to running
around in a rush; I do not see any need for that. I met with partners
PetroChina, Mitsubishi and Mitsui on my overseas trip and I must say there is a
bit of reluctance about floating LNG there, because for the customers, and
those partners who represent the customers, the most important issue is reliability
of supply.
The floating LNG will be in a
cyclone belt. Six cyclones a year, on average, will be coming through that
area. If a cyclone is anywhere in the vicinity, it will be necessary to
decouple the floating LNG from the subsea technology, and evacuate the crew, of
around 400. That will probably take three days. When the cyclone has left, it
will take another three days to re-establish it. When we export iron ore, we
can stockpile it. We cannot do the same with gas; it goes directly into the pipeline
system of the importing countries. The ships have to arrive almost to the hour.
That is the way natural gas works. So, the customers are concerned about
reliability of supply. Given that China is looking at a trebling of its gas
consumption between now and 2020, and given that Japan has the problem that
only two of its 50 nuclear reactors are operational, and its only solution is
gas, their concern is security of gas supply, and therefore security of energy
supply.
With respect to this question,
although the state has a say, I cannot dictate to companies when and how they
spend their money. But we are not as a state government simply going to roll
over the retention leases now, well over a year in advance, as the federal
government would seem willing to do. We will not do that. We will continue to
negotiate with the joint venture partners for that gas to come onshore, and we
will continue to want to see the major supply base onshore in Western
Australia. We have a long way to go. But they have an urgency for gas.
Can I stress again to the house
that although Woodside, at probably the urging of Shell, has stepped away from
the site at James Price Point, the site at James Price Point was not a loss
maker. It was profitable—significantly profitable. That is a fact.
However, it was not profitable enough for the joint venture partners. That is
the point.
world's great gas resources, and, I might say, there is also a
significant amount of oil in that field. However, it is yet to produce a single
molecule of gas. I think everyone remembers the Inpex project, the Ichthys
field, initiated under Labor, from which gas is being piped 900 kilometres to
Darwin at a cost of $5 billion, which becomes one giant tax deduction for the
company. That is not a good result for the Australian community. There is no
obligation for any of that Ichthys gas to stay in Australia. Indeed, the
Northern Territory has a gas shortage problem, yet there will be a huge amount
of gas piped from Western Australia to Darwin and sent straight off to Japan.
That is hardly a great result.
However, the Browse field itself
is in the vicinity of Scott Reef, which is an island and therefore part of
Western Australia, as it has three nautical miles of ocean around it. The
wash-up of that is that of the five petroleum retention leases in the area,
three belong to the commonwealth and two belong to the state. The state
probably owns about 20 per cent to 30 per cent of gas, so we are a player. This
is a case in which it is not offshore and all up to the commonwealth; the state
has a direct role. Those retention leases are not due to expire until the end
of next year. I do not see the great rush. The commonwealth seems to running
around in a rush; I do not see any need for that. I met with partners
PetroChina, Mitsubishi and Mitsui on my overseas trip and I must say there is a
bit of reluctance about floating LNG there, because for the customers, and
those partners who represent the customers, the most important issue is reliability
of supply.
The floating LNG will be in a
cyclone belt. Six cyclones a year, on average, will be coming through that
area. If a cyclone is anywhere in the vicinity, it will be necessary to
decouple the floating LNG from the subsea technology, and evacuate the crew, of
around 400. That will probably take three days. When the cyclone has left, it
will take another three days to re-establish it. When we export iron ore, we
can stockpile it. We cannot do the same with gas; it goes directly into the pipeline
system of the importing countries. The ships have to arrive almost to the hour.
That is the way natural gas works. So, the customers are concerned about
reliability of supply. Given that China is looking at a trebling of its gas
consumption between now and 2020, and given that Japan has the problem that
only two of its 50 nuclear reactors are operational, and its only solution is
gas, their concern is security of gas supply, and therefore security of energy
supply.
With respect to this question,
although the state has a say, I cannot dictate to companies when and how they
spend their money. But we are not as a state government simply going to roll
over the retention leases now, well over a year in advance, as the federal
government would seem willing to do. We will not do that. We will continue to
negotiate with the joint venture partners for that gas to come onshore, and we
will continue to want to see the major supply base onshore in Western
Australia. We have a long way to go. But they have an urgency for gas.
Can I stress again to the house
that although Woodside, at probably the urging of Shell, has stepped away from
the site at James Price Point, the site at James Price Point was not a loss
maker. It was profitable—significantly profitable. That is a fact.
However, it was not profitable enough for the joint venture partners. That is
the point.
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