Townsend details Inpex’s Darwin choice, energy future

Inpex senior vice president corporate Bill Townsend has disclosed how Western Australia lost its bid to host the $60 billion Ichthys liquefied natural gas plant.

Speaking at Business News’ Success & Leadership breakfast this morning, Mr Townsend said he had a front row seat to the decision-making process to place the onshore LNG facility in Darwin.

In 2008, Inpex announced Darwin as its preferred site for Ichthys despite the Barnett government’s pitch for the Japanese company to build the multi-billion-dollar project in the state and the company's initial idea to build the facility on Maret Islands.

The Ichthys project involves extracting gas off the Kimberley coast and piping it to Inpex's LNG plant near Darwin, through the longest subsea pipeline in the Southern Hemisphere.

Travelling to the Maret Islands, off the coast of the Kimberley in WA, was one of the reasons Mr Townsend cited as a factor in Inpex's decision to choose the Northern Territory.

“I went to the Maret Islands, and to get there you have to fly through Broome on a commercial flight, then you get onto a twin engine prop to a grass field at Mitchell Plateau, and then a helicopter across. It's actually very difficult to get to,” he said.

“Meanwhile, I've flown into Darwin, it's a capital city. You can fly there commercially, you can get a taxi, you can stay at a hotel, eat at a restaurant.

“There’s 120,000 people or something there, there's a workforce.

“I returned to Perth and talk to our management here and we said, let's have a look at this Darwin option. We were still committed to the Maret Islands, but also working up a Darwin option.”

Mr Townsend said over time, Maret Islands became a less attractive option for Ichthys.

“It’s not anything to do with the Maret Islands, but because of the government here in Perth had a very, what I think is, sensible approach, which was to say, rather than have all these ad hoc LNG plants up and down the coast, why don't we consolidate them in an LNG hub,” he said.

“The challenge that we face over time was that … we were on a timeline, we saw a market window for LNG, we just signed on Total as joint venture partner, we're ramping up to get this project going.

“An LNG hub in WA is going to set us back in time in terms of timelines, it just wasn't going to meet that market window that we were chasing.”

Mr Townsend said the outcome was the best for the Northern Territory, WA and certainly for Inpex.

“It's easy to look at the decision, to produce or to construct the facilities in Darwin, as an ‘either or’ decision as if it was a single decision but in fact, it was a parallel process,” he said.

“We were developing the project from Perth, and we had the idea that we would develop them off the Kimberley coast, on the Maret Islands here in Western Australia.”

Mr Townsend said the idea to build the project in Darwin came from a pitch from then-NT chief minister Claire Martin who met with Inpex’s chief executive and top management in 2007.

“We got news from on high that this meeting had taken place, and there was one action coming out of it and that was the CEO had promised to send someone from Perth up to Darwin to have a look at what they were talking about. And I was that person,” he said.

“I went to Darwin thinking that this was really just to tick the box …bow deeply to the CEO in Tokyo and say I've completed the orders and we'll get on with developing our project in Western Australia.

“But lo and behold, get to Darwin, I discovered that the Northern Territory government has done an incredible job, they've really thought it through.

“On the top floor of what was then the tallest building in the territory, we were looking at the harbor, and there's Darwin LNG and there’s a plot of land that they said Ichthys could go in.”

A change in government in the Northern Territory initially worried the Inpex team on building an LNG plant in Darwin.

However, Mr Townsend said NT chief minister Paul Henderson took his predecessor’s pitch and put it on steroids.

“It became a really close collaboration between Inpex, and Paul and his government to deliver Ichthys,” he said.

“Over time, the WA option just sort of fell away.

“More than anything because, and it sounds funny to say given the size of the state, but there really was no land available to develop.”

Future

LNG remains a big part of Western Australia's economy with Japan accounting for 41 per cent of the state's LNG exports.

Premier Roger Cook also backed LNG's role in Western Australia and the broader region's energy future.

However, Mr Townsend said he was frustrated with the lack of energy literacy in the conversations around LNG and the energy transition.

“I do get frustrated when I sense, and I'm not accusing anyone, but even in senior government circles there are some who think that the energy transition is going to happen on Tuesday," he said.

“[They think] that net zero by 2050 means that there will be no hydrocarbons in the energy system.

“It's easy to want unicorns and rainbows and all of that but at the end of the day, the energy system is highly complex, it's so integrated into everything we do.

"In a country and a world that has cost of living pressures, inflation … if your energy goes into everything, we really need to get that right."

Mr Townsend said every country had their own energy mix, and the transition had always been progressing and evolving over time.

"It's logical to me at the moment that we as a country, and as a globe, more generally will choose, when we have the opportunity to replace existing energy production, a lower carbon option," he said.

“One of my favourite mantras is, ‘don't let perfect get in the way of the good’ because this is journey that we're on, we need to keep chipping away at it.

“I'm sorry for those who believe that the energy transition will happen on a Tuesday … but it’s going to take decades and decades to change and to turn this ship."