Industry Comment

Australian Gas Association

The Australia’s polluting power: coal-fired electricity and its impact on global warming report, released by the World Wide Fund for Nature Australia, supports the positive contribution that natural gas can make in providing cleaner power generation.

This is something that should be further encouraged by Australia’s governments.

The WWF report reveals that electricity generation produces one-third of Australia’s greenhouse emissions, and that 97 percent of these emissions are produced by 24 coal-fired power stations.

This report demonstrates that the environment sector supports the use of natural gas, alongside renewables, in providing cleaner power generation in Australia.

Natural gas is a much cleaner energy source for power generation than coal, and it can also reliably meet the growing demand for energy coming from Australia’s residential, industrial and commercial sectors.

Given its cost-effectiveness, cleaner environmental credentials, and reliability in meeting power demand, natural gas provides a perfect energy source to complement renewable energy strategies for cleaner power generation.

It is to be hoped that, in this year’s decision-making process for a national energy policy for Australia, measures will be introduced to encourage the nationwide uptake of natural gas in power generation alongside renewable energy sources.

Beach Petroleum Limited

Looming changes to Australia's write-off provisions for oil and gas companies will stall frontier exploration, limit dividend options by new producers and create false market perceptions about the sector.

Under international accounting rules to be adopted in Australia by 2006, exploration costs will have to be totally written off in the same year, instead of amortised over the life of an oil or gas discovery as the field is commercialised.

The effect is that explorers emerging as producers will have to bear these costs up front and possibly prior to any pumping of oil or extraction of gas.

The new accounting standards do not affect the top and bottom end of the petroleum spectrum.

The largest players have financial depth.

And exploration-only companies which have no revenue, simply accumulate exploration costs as losses, and can even enjoy share price growth based on perceptions about the prospectivity of their acreage.

Unless amendments are made to corporations law - to have exploration costs written off against capital, and not revenue - the squeeze will come in the mid-range.

For these companies, the changes will mean that profits, and therefore dividend capability, will be either wiped out or heavily diluted.

Chamber of Commerce and Industry WA

Industry supports the need for the community to have confidence in WA’s environmental regulator and will work with the changes - in the community's interest and its own - to help restore that confidence.

There has been a long-standing need to address environmental licensing and enforcement processes, and clearer guidelines and better documentation, as proposed, are steps in the right direction.

It is most important that the revised Department of Environmental Protection is focused on outcomes rather than process.

The outcomes the community desires are more likely to be achieved through cooperative management rather than punitive policies and black letter law.

The Environment Minister's talk of tough new laws and a stronger focus on regulation and enforcement does need to be seen in context. Her words imply there are pollution problems not being addressed and that a 'big stick' approach is required.

In fact, it was the Government's failings in administering the department and managing its issues that led to this overhaul – not industry's environmental performance.

Industry had no case to answer over the Brookdale waste plant affair, which was the catalyst for the department shake-up.

It has demonstrated a responsible approach and continuous improvement for many years in managing the potential impact of its activities.

Industry accepts its responsibilities and a big-stick approach now would be counterproductive and a mistake.

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