11/04/2014 - 12:23

Perception challenges for gas

11/04/2014 - 12:23


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This week’s APPEA conference highlighted the key issues facing one of the state’s fastest growing industries; the solutions are less clear.

Perception challenges for gas
FRUSTRATED: Premier Colin Barnett says the oil and gas industry needs to learn to deal with the government of the day. Photo: Attila Csaszar

This week’s APPEA conference highlighted the key issues facing one of the state’s fastest growing industries; the solutions are less clear.

International Gas Union president Jerome Ferrier made one of the more arresting presentations at this week’s Australian Petroleum Production & Exploration Association conference in Perth.

He opened with a video, but not one that showed oil and gas projects delivering clean energy to the world as many delegates might have expected.

Instead it was from a campaign in California depicting young children talking about gas as a dirty fossil fuel that needs to be replaced.

Mr Ferrier described this type of public campaign as the challenge the industry needs to confront.

“It is up to the world gas community to work together to counter the simplistic and untruthful messages about natural gas,” Mr Ferrier told the APPEA conference, which attracted 3,500 delegates.

But the challenges didn’t stop there.

The stand-off between buyers and sellers in the global gas market is a big issue, though not surprising when the market is dislocated by seismic events, like Japan losing 30 per cent of its energy supply after shutting its nuclear industry and the US emerging as a likely exporter of energy on the back of its shale revolution.

On the local front, a predictable challenge came from unions that are fighting to retain the generous pay and conditions they have won for their members over the past decade.

More surprising was the address delivered by Premier Colin Barnett, who is generally a strong supporter of the industry.

His critique stemmed in part from his frustration at the industry’s failure to fulsomely support his advocacy for the planned gas hub at James Price Point.

Mr Barnett invested a lot of political capital in that failed project, and does not want to retire with nothing to show for his efforts.

He made the telling point that the industry needs to deal with the government of the day, at both state and national levels.

“You should stop reading those American management books, think a bit broader and think in the context of where you are in the world,” Mr Barnett told delegates.

“Your ultimate social licence is not what you might think it is; your ultimate licence is getting agreement and alignment with both the national and state governments.

“That’s the one that counts.” 

He also challenged the industry to rethink its stance on the east coast, where it opposes any measures that might slow its rapid export-focused expansion.

“You can’t say to people, gas production is going up, and by the way, your (domestic) supplies are going down, and the price is going up. That’s a big challenge for the industry,” Mr Barnett said.

Industry leaders who spoke at the conference spent a lot of time urging the Abbott government to push harder on workplace relations reform.

Chevron’s Roy Krzywosinski had some powerful statistics to back up this call.

He said the Gorgon project has been subject to almost 1,000 disruptive right-of-entry claims from unions.

He also said many workers in the offshore construction industry were earning in excess of $350,000 per year.

There are many contributors to this outcome, one of which is the fact that resources companies chose to pursue big expansion projects in Australia concurrently.

Little wonder the market overheated.

The industry is right when it says a more flexible labour market is needed. That will be one contributor to more sustainable growth.

But it won’t be the instant panacea some in the industry seem to be hoping for.


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