Woodside's massive gas extension explained
Sam Hawley: Woodside is on a winning ticket. It's had the life of its massive gas project in Western Australia extended by 40 years. That's great news for the oil and gas giant that will export almost all of the gas overseas. But what's in it for us? And what about the climate? Today, Jo Lauda from the ABC's climate team on why the Albanese government has approved the extension, even though we're meant to be going renewable. I'm Sam Hawley on Gadigal land in Sydney. This is ABC News Daily.
News report: To some breaking news for you now. The life of Australia's largest oil and gas project will be extended to 2070 with Environment Minister Murray Watt to give the long-awaited environmental approval for the Northwest Shelf Project.
News report: The decision has left Indigenous custodians and environmental groups devastated.
Murray Watt, Environment minister: Whatever decision I make, there'll be lots of people unhappy. It's
Anthony Albanese, PM: Net zero, not zero. Net zero.
Protestors: Stop! Woodside! Stop! Stop! Woodside! We will challenge this at every level in every court. The climate movement is united against this project. It's an absolute climate bomb.
Sam Hawley: Jo, the newly elected Labor government says it has this plan to tackle climate change. But one of its first decisions since it was re-elected was to extend the life of one of the country's biggest gas plants. And I thought we were meant to be quitting gas.
Jo Lauder: Yeah, this was a really interesting first major decision for the government. And I think like you, a lot of people are really confused. So we can step through it a bit. So I guess to start with, this is the Northwest Shelf Gas Project. And so since the 1980s, gas has been extracted from basins off the Pilbara coast in northern Western Australia. This area is home to one of the largest deposits of gas in the country. And it's also where we find this gas plant. So it's the biggest, it's the oldest gas plant in Australia, the Northwest Gas Shelf. And it's run by a company, Woodside Energy. So the gas plant was due to close in 2030 until Senator Murray Watt, under his first major decision as Environment Minister, he approved that extension until 2070.
Sam Hawley: Wow, that's another 40 years, so that's quite some extension, isn't it, Jo? And the thing is, it has an extraordinary Indigenous history as well, doesn't it, this area?
Jo Lauder: Yeah, so it doesn't just have huge gas reserves. This area is also home to an estimated one million petroglyphs. And so these are rock carvings and art, and these are believed to date back as far as 50,000 years, Sam. So really, really significant history. And so for years, local elders and scientists, they've been raising really significant concerns about the direct industrial emissions, the air pollution that's come from these nearby industrial plants and what that is doing to these rock art and how it might be degrading the surfaces of it. And so there's some suggestions that the effect of those emissions are so significant that the rock arts could be lost in 100 years.
Sam Hawley: So this facility has been given the green light to run for another 40 years, and part of that, according to the government, is because LNG, liquefied natural gas, plays a key role in our energy mix. So it's supposed to be a reliable source of energy, right, throughout this transition to renewables?
Jo Lauder: Yeah, so gas is going to play a role in our electricity mix going forward and also for heavy industry, which is a big part of WA's economy. And interestingly, in terms of what the world actually needs going forward, if we're going to hit our net zero targets, the International Energy Agency says we actually don't need any new or expanded coal, gas or oil projects to stay under those targets. But at the same time, you know, the Woodside's chief executive, Meg O'Neill, says that this extension of the Northwest Shelf beyond 2030 will secure reliable energy for decades to come.
Meg O'Neill, Woodside Energy CEO: I think it's time that the opponents of our industry face up to the fact that they are making the energy transition harder and riskier by slowing down investment and trying to take practical options off the table.
Jo Lauder: And it's also something the Prime Minister, Anthony Albanese, said as well. He really talked up the role of gas as part of the transition. And that's what he said when the extension was approved. He also pointed out, you know, WA does still use a lot of gas in its electricity mix and WA has a domestic gas reservation policy. And so Woodside is meant to keep 15 per cent of the gas for the local market. And that's something the Prime Minister really talked to when he was defending this decision.
Anthony Albanese, PM: In Western Australia, they are closing their last coal-fired power station at Collie in 2027. They are moving to renewables backed by gas. And that will be a really important part of the transition that will occur.
Sam Hawley: But that's WA. What will it mean for gas supply for the rest of the country?
Jo Lauder: Not a lot. So none of the gas from the Northwest Shelf is going to be reserved for the East Coast. And this is where people would have heard about a looming potential gas crunch, especially in Victoria and, you know, like the cold estates. So for the domestic market, for the East Coast, we'd have to buy it. And then even then, the WA network isn't connected via pipelines to the east. So it involved like a complicated process of shipping it. But really, the overwhelming majority of this gas is for export markets. So more than 85 per cent will be going to mostly Asia. So Japan, as well as China and South Korea. So the Northwest Shelf is largely an export project.
Sam Hawley: Right. OK. But hang on. This sounds all very good for Woodside that will presumably make a lot of money from exporting this large amount of gas. But what do we actually get out of it as taxpayers?
Jo Lauder: Yeah, it's a really good question. And so the Australian Institute, a think tank, they estimate that the Northwest Shelf extension is going to be receiving all up around $215 billion dollars of royalty free gas over that lifetime. And so at the same time, you compare it to the fact that Woodside paid $175 million in the petroleum resources rent tax on the Northwest Shelf project in 2022/2023. That's according to the Australian Tax Office. But also Woodside says, you know, across its whole business, it is amongst one of Australia's biggest taxpayers. So it says it paid more than $4 billion in taxes, royalties and levies in 2024. But the other issue as well is that this is a gas processing plant, but the gas has to come from somewhere from those different gas fields and the existing gas fields that are currently supplying it are running out. And so a bigger part of what Woodside's ambition is here is getting an extension. So there are plans in place to develop new fields and especially one called the Browse Basin.
Sam Hawley: OK, so just tell me about this Browse Basin then. Where is that exactly and what do they want to do there, Woodside?
Jo Lauder: So Browse is one of the country's biggest untapped gas basins and resources projects. So the gas reserves there are really significant. It's enough to meet the equivalent of Australia's demand for like 20 years. But it's quite remote. It's really far away. It's in a reef. And that's one of the biggest reasons it hasn't been developed up until this point. And actually, Woodside still needs to get approvals for Browse. It's before the Environment Minister, Murray Watt. And so that is to explore for gas beneath that marine reef system and then also to build a pipeline to connect the basin to the northwest shelf. So that's really the next stage here in this like this bigger project.
Sam Hawley: OK, so Woodside has got this 40 year extension to its WA gas plant. But what it really wants now is access to the Browse Basin. And the concern about that is, is that the basin itself stores, Jo, a huge amount of carbon.
Jo Lauder: Yeah. And understandably, like there's been a lot of opposition to this project from different climate groups. And it's something that is really concerned a lot of people. So the northwest shelf is already Australia's third highest emitting facility in the country. It produces around six million tonnes of greenhouse gas emissions each year. And that's just what's directly produced at the facility. But on top of that, climate groups have labelled that potential extension of the Browse Basin that we were just talking about. They've called it a carbon bomb, which is their quote, because it's really emissions heavy. And this is even for gas, which is already a fossil fuel. It's got quite a lot of carbon dioxide. It accounts for about, I think it's around 12 percent of the field's reserves. And that's really high even for gas projects. And so environmental groups claim that this project could lead to up to 1.6 billion tonnes of carbon dioxide equivalent emissions over its lifetime. And that's more than three times Australia's annual emissions output. So it's a really high number.
Sam Hawley: Yeah, it's a lot. So could that then, Jo, delay our commitment and our target to meet net zero by 2050?
Jo Lauder: So this is a million dollar question. And to understand that, you kind of need to know how we account for our emissions. So under Australia's emissions laws, actually all of them around the world, we only count the direct emissions. So this is in this case from extracting and processing the gas at the Northwest shelf. But because most of this gas is for export, as we were saying, the emissions that come from, you know, after the gas is sold, it's shipped and then it's burnt at its final destination. They don't count towards Australia's emissions. So towards our targets, they're what you call scope three emissions. So they're counted as emissions in the country where they're burnt. So as we said, you know, Japan, South Korea, China, they will count towards their emissions. So some estimates, if you added up the total from all of them, the total lifetime emissions from this project, some people have said it could be equivalent to a decade of Australia's current emissions. At the end of the day, you know, no matter where the emissions are counted, climate change is a global issue. So even burning that gas elsewhere, ultimately it still will affect Australia's climate.
Sam Hawley: And a lot of people have actually been asking how this project got approved considering Australia's position and the government's position on climate change. Was it actually factored in to that decision? Was it discussed before this project was given the green tick?
Jo Lauder: No, Sam, this is a really interesting quirk with Australia's environmental laws because under the current environmental legislation, climate change isn't actually a deciding factor. So it's not something that they are forced to weigh up the environment minister when they're looking at the project. And so a lot of experts have called out this, they've called it a massive loophole. And it means that Australia is still approving fossil fuel projects like this without explicitly considering the climate harm. And the environmental legislation is really old. It came in under Howard. And it was actually back in 2005, even back then, this was considered a loophole or an issue with environmental laws. There was a proposal to fix this by the shadow environmental minister at the time in 2005, Anthony Albanese. So he actually put a proposal before the parliament to fix what he called a glaring gap in the laws because climate change wasn't considered under these laws.
Anthony Albanese, former Shadow Environment minister, 2005: The climate change trigger will enable major new projects to be assessed for their climate change impact as part of any environmental assessment process and will ensure that new developments represent best practice. We know that the Howard government has been considering and procrastinating on a climate change trigger since 1999.
Jo Lauder: But you know, we're 20 years later. It's still the same issue that that loophole, that gap hasn't closed. And so instead, what has happened is Senator Watt has said the approval of this development is subject to strict conditions. The main one that they're focused on is around direct emissions or the direct air pollution that comes from the plant. The other thing is the Northwest shelf is regulated under our climate laws called the safeguard mechanism. But what happens is each plant has a limit. And so each year that goes down under this legislation. And if the plant doesn't come under their target, they have to buy offsets or credits. And that's what Woodside did last year for the Northwest shelf. So it'll continue to be regulated under the safeguard mechanism.
Sam Hawley: So, Jo, what do you think? How would this be going down around the world among countries who are moving towards net zero? Is this really a good look for us?
Jo Lauder: No, it's really not a good look. And I think a big part of that is this 2070 number this year. I think it's come as a real shock to lots of Australians as well, because I think the idea of net zero by 2050 is pretty firmly fixed in people's minds. And this approval is for 20 years past that. The other thing, Sam, is that Australia is really ramping up its efforts at the moment to become the host of next year's UN Climate Summit, COP 31. And these are major events. And there'll be so much scrutiny and focus on Australia's climate action. We've just recently had the latest figures out about Australia's emissions and it's not looking great. So our reduction efforts, they're kind of stalling. So they were slightly lower in the last quarter of last year. It was like 0.05 of a percent. But we're at the point where emissions need to drop if we're going to hit our 2030 target. And to get there, we're going to have to have consecutive years of pretty significant drops of around 3.6 percent or more. And so that's a really big ask where emissions are flatlining at the moment.
Sam Hawley: Jo Lauder is a reporter in the climate team with ABC News. This episode was produced by Sydney Pead. Audio production by Adair Sheppard. Our supervising producer is David Coady. I'm Sam Hawley. Thanks for listening.
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