Ferguson lauds floating LNG

Former Labor minister Martin Ferguson has heralded floating liquefied natural gas as the wave of the future, urging the Western Australian government to work with developers including Shell, Woodside Petroleum, ExxonMobil and BHP Billiton.

Now chairman of the Australian Petroleum Production and Exploration Association, Mr Ferguson said despite the WA government’s preference for onshore gas development, FLNG could not be ignored.

“FLNG will emerge and your requirement to actually service this industry must be top of mind,” Mr Ferguson told a Committee for Economic Development of Australia event in Perth today.

“The responsibility of the government is to chase it, not resist it.

“I’ve worked with (Premier Colin Barnett) and I respect his commitment to James Price Point, but the debate’s moving on and governments are not making investment decisions, we are not the shareholders. Our job is to facilitate and once decisions are made to help implement them.” 

Mr Ferguson said 470 million tonnes of LNG would be needed by 2030, but if all planned LNG projects went ahead they would produce more than double the new capacity needed to meet annual demand.

He said this meant not every project would go ahead and competition would be fierce.

“There is a very real danger that Australia may be pricing itself out of the global LNG market,” Mr Ferguson said.

“We must get serious about closing the competitive gap that has opened up between Australia and our rivals, and it’s no different to playing football or cricket. We’re out there chasing investment and our job is to win that investment, not to come second.”

Australia had to embrace FLNG to remain competitive, he said, and not dismiss it because its offshore location excluded it from contributing to gas reservation policies currently in place in WA.

“Gas reservation is bad policy and FLNG’s inability to co-exist with flawed policy should not be the criteria against which it is judged,” Mr Ferguson said.

Calling the policy “protectionism”, he said gas reservation deterred investment.

“This type of subsidy does not just harm the oil and gas industry, but it also hurts residential, commercial, and industrial customers,” Mr Ferguson told the forum.

Mr Ferguson said while FLNG projects created fewer jobs than onshore developments, it created jobs and tax revenue that may not otherwise have occurred and once they were built required more long-term maintenance jobs than onshore projects.

“An entire new industry – FLNG servicing – will emerge. It will create well-paid jobs and offer training that will take Australians around the world, he said.

FLNG projects in WA include well developed plans for Shell’s Prelude, Woodside Petroleum’s Browse joint venture, and early stage plans by ExxonMobil and BHP Billiton for the Scarborough gas field.

“I hope that between the Commonwealth, the WA government and those involved in developing this technology ... that we can find a way to deliver these centres and these opportunities because in 10 years’ time we’ll see the benefit of it. Not just in Australia, but also internationally.”

Mr Ferguson, who is a former Australian Council of Trade Unions president, also lent his support to the Abbott government’s recent announcements to reform industrial relations.

“The federal government’s move to establish a framework for a one-stop-shop to streamline environmental approvals processes is a sensible reform,” he said.

“While the changes are a step in the right direction, they are really quite modest and timid. I would urge government to keep an open mind on the need for further reform in this area.’’

Mr Ferguson said some conservationists were advocating for regulatory processes for approving projects that were becoming increasingly inefficient.

"A radical environmental movement has arisen that despises market economics. It is unfortunately adept at creating fear campaigns to advocate for new layers of unnecessary regulation," he said.

“Less intrusive regulation will stimulate business activity and increase revenues from tax and royalties without diminishing environmental standards.”