2017 May 19

NT gas industry, thousands of jobs at risk

The Northern Territory is at serious risk of missing the chance to secure thousands of new jobs and the NT’s future in the lucrative on shore gas industry.

That’s one of the key messages for the Territory Government at Australia’s largest oil and gas exploration conferences in Perth this week.

More than 3000 people from 30 countries, including, for the first time, a large delegation from Russia, are attending the Australian Petroleum Production and Exploration Association conference.

APPEA chairman Bruce Lake has warned that Australia is fast approaching the tipping point of becoming a high risk country for overseas investors and singled out the Northern Territory as one of the growing examples.

“If there is a simple statement that captures APPEA’s concerns about the pressures on our industry, it is this: Australia has succeeded as a high-cost, low-risk country,” he told delegates attending the Perth conference.

“Australia will fail if we become a high-cost, high-risk country. We seem to be approaching a tipping point.”

Mr Lake warned that while the global demand for Australia’s products continues to grow, so does its competition.

“We are only one of 18 countries exporting LNG ... the largest LNG exporter today — Qatar — has just lifted its moratorium on new gas projects in its North Field, the world’s largest natural gas field. The US may have only supplied one per cent of global LNG trade in 2016.

“But it will soon add 50 million tonnes in capacity to become the third largest LNG exporter.”

He also pointed to Russia’s exploration ambitions in the Asia region.

Mr Lake said policies that restricted access to the nation’s resources and create sovereign risk were eroding Australia’s key competitive advantage — a stable operating environment. “Explorers are not readily intimidated by risk, but a steady escalation of regulatory costs and risks ... has led to an unsustainable situation.”

“It is easy to complain about how our political culture is obsessively focused on the moment rather than long-term policy.

“That confidence in markets is eroding … that the expectations of the community, the media and the political class about our industry are impossibly contradictory — not in my backyard; zero-risk; lower prices; and more tax.

“In response, APPEA has been advocating long-term policies to protect a sustainable operating environment for the industry.

“We have concentrated on three overlapping themes: access to resources; competitiveness; industry reputation.

“Access to resources has to be the starting point for any extractive industry. The obvious challenge occurs onshore, where projects must coexist with traditional rural industries. But offshore developments are also being targeted.”

Mr Lake hit out at dishonest activist campaigns capturing the minds of state governments and “producing a bipartisan race to the bottom”.

“Activists are striving to create the same situation in the Northern Territory,” he said.

“Fear campaigns can prevail when activists’ alternative facts are not contradicted by the lived experience of a safe industry, decent local jobs and new infrastructure.

“Cookie-cut campaigns are being rolled out, with the same theatrical touches, merchandise and social media cheer squad.

“APPEA’s response has been to mobilise local industry to fight local campaigns. In the process, we have discovered independent science and factual debate is necessary but not sufficient to counter fear campaigns. It is essential that communities can turn to impartial, independent agencies which can inform people, mediate any frictions and build trust.

“The successful models are the Queensland GasFields Commission and the Gas Industry Social and Environmental Research Alliance.

“We have urged states to create the same infrastructure.

“In the NT, APPEA has helped pastoralists and indigenous people talk about their experiences with our industry.”

Mr Lake said while there was the potential for sovereign risk if costly investments in exploration were lost because of unexpected policy changes, he said APPEA was pleased that South Australia and the Federal Government had announced programs to pull forward near-term gas projects.

South Australia has incentivised the extraction of more gas for use in SA power stations, through a taxpayer-backed exploration fund.

The South Australian Government has committed an additional $24 million to bring on new gas reserves, both conventional and unconventional.

It has previously committed $24 million to encourage gas companies to explore for new gas fields but interest has been so great, the SA Government has increased the funding.


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