09/07/2008 - 22:00

Reports signal project complexity

09/07/2008 - 22:00


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Many business people in Perth hanker for the days when Sir Charles Court ran the state with forceful conviction and a single-minded focus on development.

Reports signal project complexity

Many business people in Perth hanker for the days when Sir Charles Court ran the state with forceful conviction and a single-minded focus on development.

Sir Charles was premier in the 1970s, and nobody at the time could have envisaged the degree of complexity that would surround new project developments more than 30 years later.

That complexity was highlighted by two reports issued last week - Professor Ross Garnaut's proposal for an emissions trading scheme, and the Northern Development Taskforce's report on a potential gas-processing hub in the Kimberley.

Professor Garnaut's report posed as many questions as it answered. In particular, it failed to tell industry how much it would have to pay for carbon emissions.

What it did tell us is that there is strong momentum in government towards the adoption of an emissions trading scheme of some kind, and that industry - and ultimately consumers - will have to pay a price.

Industry needs to start planning for this change but, given the lack of detail surrounding the proposed scheme, it is hard to do much more than undertake some very broad scenario planning.

Gas producers such as Woodside Petroleum could be profoundly affected by an emissions trading scheme.

Even though gas is considered a clean fuel - especially compared with coal, which is currently the main alternative in Australia - the process of extracting and processing gas creates substantial greenhouse gas emissions.

Woodside is one of several major companies that also has to contend with uncertainty surrounding development in the Kimberley region.

Woodside, Japanese company INPEX, Shell, BHP Billiton, Nexus Energy, and ConocoPhillips are all looking to develop massive gas deposits located about 300 kilometres off the coast of Broome, in the Browse Basin.

In response to concern about the possible ad hoc development of several liquefied natural gas plants on the Kimberley coast, the Northern Development Taskforce is trying to find a suitable site for a centralised gas-processing hub.

It has started by reviewing the 43 sites that the private sector has already evaluated.

The amount of land directly affected is surprisingly small.

The taskforce report says that a stand-alone LNG plant needs about 300 hectares, while a central hub would require about 950ha.

But that's just the start.

Support infrastructure, including pipelines, jetties and workers' accommodation would extend the impact area.

Then there are the frequent shipping movements, as boatloads of LNG get transported to overseas markets.

Some environmental groups have been pushing for all LNG plants to be blocked from the vast region, though the taskforce has dismissed this view.

Other environmental groups are pushing for Gourdon Bay south of Broome as the best site for a hub, but its distance from gas fields and remoteness from infrastructure will not appeal to the project developers.

The taskforce is currently consulting with the traditional owners, who have engaged with the review process.

It is also consulting with the tourism and fishing industries, which have major concerns about the potential impact of LNG projects. In particular, they believe big projects will lure away the local workforce and make housing more expensive.

These are valid concerns, and echo some of the challenges currently facing tourism, farming and other industries in the south of the state.

The Kimberley attracts 350,000 domestic and international visitors each year and Broome is one of the state's tourism icons, so the concerns of local businesses need to be looked at carefully.

The task facing the government is to evaluate the risks relative to the enormous opportunities that would flow from big gas projects.

Perth is progressively becoming a significant regional centre for the petroleum industry, with dozens of operators and service companies establishing offices here.

The proposed Browse Basin projects will give the industry a major boost that will last well beyond the construction phase.

The operation, servicing and maintenance of these projects will provide the WA economy with sustained commercial opportunities over at least 20 or 30 years.

The current review of LNG sites adds to the risk that WA could lose a lot of the potential benefits.

INPEX, for instance, is evaluating the merits of piping its gas to Darwin, where it could build a new LNG plant alongside ConocoPhillips' existing LNG plant.

Woodside and Shell are evaluating the development of floating LNG plants, located offshore above the gas fields.

The potential losses for WA include thousands of jobs and hundreds of millions of dollars in taxes and royalties.

The stakes are high and warrant urgent focus.


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