Thursday, 9 June 2016

Turnbull Government will increase support for gas industry and coal seam gas exploration if re-elected on 2 July 2016

It has come to my attention that a number of people living on the NSW North Coast believe that the threat of coal seam gas mining in the Northern Rivers region has gone away because communities so successfully resisted Metgasco Limited’s commercial plans to create gasfields in our midst.

Unfortunately, although the immediate threat may have abated the longer-term threat remains all the same, as these excerpts from the 6 June 2016 address to an Australian Petroleum Production and Exploration Association (APPEA) conference by Minister for Resources, Energy and Northern Australia Josh Frydenberg clearly show:

I’d like to acknowledge my fellow speakers, APPEA Chairman, Bruce Lake, APPEA Director and Country Chair for Shell Australia, Andrew Smith, and the Honourable Dr Anthony Lynham MP.

I would also like to acknowledge APPEA more generally, and its CEO in particular, Dr Malcolm Roberts, for their constructive engagement and contribution to good policy that is in the national interest.

It’s great to join you for your annual conference, my first since being appointed Minister for Resources, Energy and Northern Australia.

Since that time I have always sought to:

·         highlight the incredible contribution you make to Australia’s economic performance;
·         be a passionate advocate for the work your members do to support jobs and grow the Australian economy;
·         celebrate the successes of the industry, including first gas at APLNG and Gladstone LNG on the East coast and at Gorgon on the West coast; and
·         champion the extraordinary innovation in the sector, from Shell’s Prelude FLNG facility to the autonomous underwater vehicles operating on the ocean floor at the Pluto project.

These early experiences have highlighted the importance of building on Australia’s strong international reputation as a reliable energy supplier and attractive place to invest, as well as the innovative and resilient nature of the people working in the sector….

Importantly, our LNG export capacity will continue to ramp up through several new projects which have recently commenced production and further projects which are under construction and due to come online over the next few years.

These projects together total around $200 billion in capital investment.

They include three Coal Seam Gas based LNG projects in Queensland (Queensland Curtis LNG, Gladstone LNG and Australia-Pacific LNG) which commenced production over 2015 and early 2016….

The continued sustainable development of the nation’s mineral and energy resources is a priority for the Turnbull Government.

Our policies will:

·         cut red tape, including streamlining environmental approvals processes;
·         drive jobs and growth by cutting taxes;
·         create new market opportunities;
·         de-risk exploration;
·         support innovation; and
·         increase community engagement and understanding.

We stand by our record since being elected.

The carbon tax is gone; so is the mining tax.

In just two years, we have cut more than $4 billion per annum in red tape.
The Coalition remains committed to one-stop-shops for onshore environmental assessments and approvals, having achieved it for offshore petroleum activities in Commonwealth waters…..

At the same time as we create new export opportunities, we are very focused on attracting greater investment by de-risking exploration.

We understand that exploration is a necessity for the industry – and that’s why we are committed to making Australia as competitive as possible.

As announced in the Budget, the Government will provide $100 million to fund the Exploring for the Future programme to be delivered through Geoscience Australia over the next four years.

Exploring for the Future will produce a resources prospectus covering targeted areas of northern Australia and parts of South Australia.

This programme will deliver new pre-competitive geoscience to assist industry in better targeting onshore areas likely to contain the next major oil, gas and mineral deposits…..

Firstly, our Growth Centre Initiatives.

National Energy Resources Australia (NERA) was launched earlier this year, and is one of six industry-led Growth Centres.

The Growth Centres are tasked with driving collaboration, innovation, and international competitiveness in targeted areas of competitive strength and strategic priority in the Australian economy.

The sector focus for NERA is oil, gas, coal and uranium – Australia-wide – and covering the full breadth of industry activities from exploration and development, construction, drilling, production and operations, to decommissioning…..

The Coalition has committed $15.4 million over four years to NERA with an additional $17.2 million for Project Funds to be matched by industry on projects with sector impact…..

APPEA plays an important role in enhancing the transparency around industry activities. At the last COAG Energy Council, I proposed and the Council agreed that APPEA would produce an annual unconventional gas activities report to provide a consistent, national information source on activities across all jurisdictions.

Among other things, this report will include, where available, the number of wells drilled, the number of land access agreements in force, the extent and type of community engagement, and the contribution unconventional gas activities make to government revenues.

But we must also acknowledge that there are members of the community that have raised concerns about the processes involved in developing gas from unconventional sources.

These concerns must be discussed and addressed if we are to successfully develop the new gas supplies necessary to support Australian homes, businesses and the broader economy.

The Coalition has been consistent in its support for the responsible development of unconventional gas strongly underpinned by the best available science……

To further our commitment to better inform the community of the scientific evidence in this area, today I announce that the Turnbull Government will make $4 million available for the CSIRO to undertake further research and to engage with the community using the Gas Industry Social and Environmental Research Alliance, or GISERA model….

State-specific research programs will be established in partnership with State Governments and industry that wish to work with the Turnbull Government to address community questions.

In particular, GISERA will address community concerns by:
conducting new research in key areas such as surface and groundwater, agricultural land management, biodiversity and socioeconomic impacts and opportunities;

·         establishing a Regional Advisory Committee;
·         implementing a communications program using trusted science-based information;
·         generating advice for governments and industry;
·         improving community understanding of the benefits and impacts of onshore gas development; and
·         strengthening the linkages to key stakeholder groups in gas development regions.

We know that there is no substitute for community engagement and robust science if we are to bring more gas to the market.

I look forward to working with my State and Territory counterparts, and the companies operating in each state, to expand GISERA wherever there are communities that would benefit from scientific research into unconventional gas activities…..

It is clear that your industry is absolutely critical to the continued strength of the Australian economy.

As we now continue the transition to the production phase of the current resources boom, and look to take advantage of future opportunities, we must not compromise all the hard work and investment that has got us to this point.

Sadly, under pressure from the Greens, the Labor party has managed to destroy the vital bipartisanship which existed for over a decade under Ian MacFarlane, Gary Gray and Martin Ferguson in this area of national economic importance.

Resources Minister Josh Frydenberg has acknowledged as recently as last month that the gas market needs to be reformed but, on the back of the ACCC report, has suggested the answer lies in pipeline regulation and moving away from blanket moratoriums on "certain" gas developments – meaning bans on CSG developments – which should instead be managed case by case. 

The big environmental issue of the last NSW election was coal seam gas. And while the gas industry and its lobbyists keep waiting for the controversy to go away, gas looks set to play a major role in the federal election too.

To recap, the NSW government's support of CSG hit the Nationals hard at the state election. They lost one formerly safe seat and lost another. The Libs took notice – CSG info sessions were then held in Northern Sydney Liberal branches.

The government killed off some gas projects, hoping to put gas on the – ahem – back burner, but recent events continue to turn up the heat in NSW and beyond…..

It's a point worth thinking about. No matter how much gas we produce, our prices are now linked to the Asian market.

The gas industry knew this, of course. In fact, companies like Santos boasted to investors that opening up gas exports would mean they could charge Australian gas users global prices.

The industry said nothing, however, to governments. The Economic Impact Assessments submitted to state planning agencies barely mentioned the impact on Australian gas prices.

Australian manufacturers have been hard hit. They now compete with foreign buyers of gas and can pay double or triple previous contract prices. The ACCC found that for a period no gas suppliers would make gas available to Australian manufacturers. 

Deloitte Access Economics found that the increase in gas prices as a result of CSG exports could cost manufacturers $118 billion by 2021, most of which will go to the gas companies in a $81 billion windfall.

The salt in the wound for manufacturers is their lobbyists let this happen. After insisting CSG was an "exciting opportunity", last year Innes Willox, head of the Australian Industry Group admitted that they had "sleepwalked into gas exports".

With so much interest in gas issues and voters clearly ready to punish politicians who get gas wrong, there is plenty at stake in the coming election.

The Greens position is simple – they oppose all CSG and most other gas developments.

The Coalition is in a difficult spot. Pro-industry Liberals are unlikely to sign up for anything the gas lobby doesn't want, but it isn't their voters that are likely to care.

The Nationals are still smarting from their electoral losses in NSW. They're the ones that will get burned if Greens and Labor can make local angst on gas count in federal electorates.

Labor senses this, pledging to extend the "water trigger", which makes more gas projects likely to need federal environmental approval. The gas industry responded with immediate condemnation.

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