Woodside's North West Shelf approval just a stepping stone to enable Browse project

Australia Broadcast Center

4 days ago

When all the hype and the fury is stripped away, the decision to extend the life of the gigantic North West Shelf gas plant boils down to one thing.
"It's really all about Browse," says RISC Advisory boss Martin Wilkes in relation to the huge gas field off the Kimberley coast of Western Australia.
Browse is one of the country's biggest untapped resources projects, with gas reserves large enough to meet the equivalent of Australia's entire domestic demand for almost 20 years.
To the Western Australian government and the state's industry, it represents energy security, jobs and billions of dollars of investment.
And for some of the world's biggest oil and gas companies — not to mention Australia's flag-bearer, Woodside — Browse presents as the last great hurrah for the country's gas export industry.
But the problem is Browse is a long way from anywhere.
It's also full of carbon.
What's more, it has no shortage of detractors.
For those reasons, it has always remained an elusive development for its backers since being discovered more than half a century ago.
The North West Shelf is therefore the only viable pathway to development Browse has left, according to those in the industry who have followed the project for decades.
"They want to bring Browse back to the North West Shelf, which has been on the cards for a pretty long time, really," Mr Wilkes explains.
"And that development has nowhere to go unless they got an extension of the North West Shelf.
"It's a big gas field, but it's in the middle of nowhere.
"That's why it hasn't been developed — it's hard."
By provisionally extending the licence for the North West Shelf to operate another 40 years to 2070, Canberra has thrown Browse a lifeline.
But in doing so, it has also set itself on a collision course.
That's because Browse is likely to be the mother-of-all environmental fights — a pivotal clash between those seeking an end to new fossil fuel mega-project and those in the opposite corner.
Alex Hillman from the Australasian Centre for Corporate Responsibility (ACCR) says the resistance to any bid to develop Browse will be fierce.
"It's insane," Mr Hillman says of the decision announced on Wednesday.
"This will get people marching on the streets.
Climate groups have labelled Browse a "carbon bomb", claiming the project could lead to emissions of up to 1.6 billion tonnes of carbon dioxide equivalent over its lifetime — an amount three times Australia's annual pollution output.
In anticipation of this charge, Woodside and its project partners in Browse have pivoted in recent times to say they'll try to capture and bury much of the carbon contained in the Browse gas fields.
Indeed, the carbon content of Browse is in its own right significant.
Carbon dioxide accounts for as much as 12 per cent of the fields' reserves — far higher than most projects and utterly dwarfing Woodside's Scarborough development, which has a carbon content of less than 1 per cent.
Mr Hillman says there are big questions marks still hanging over the effectiveness and viability of carbon capture and storage technologies.
He points to the well-documented challenges at the Gorgon LNG project off the Pilbara coast, where US behemoth Chevron has struggled to make the technology work.
Even if Woodside could do a better job, he says it would barely make a difference, noting the lion's share of emissions from gas projects come from the burning of the fuel — not the release of carbon from the fields.
And on this score — the measure of so-called scope 3 emissions — he says the Browse partners aren't proposing to do much of anything at all.
"The vast bulk of emissions is still in the scope three for customers," Mr Hillman says.
"If Woodside manages to implement carbon capture and storage and it manages to do it successfully … it's still only a tiny impact on the total facility's lifetime emissions."
Others take a different view.
Steve Lewis is an industry veteran whose consultancy, BrightSource, helps gas users such as mines buy the fuel.
Mr Lewis says to understand the enduring appeal of Browse it's first necessary to get a handle on the composition of WA's economy.
He notes that gas is still the main fuel used for so much of the state's industrial base, from mineral processing to mining.
And much more than other states, he says the west is still heavily dependent on gas to generate electricity — a dependency that's only likely to grow deeper amid efforts to get out of state-owned coal by the end of the decade.
While gas accounts for only a tiny share of the electricity mix on the eastern seaboard, he says in WA its more like a third.
Such is WA's need for gas, he notes the state uses more of the fuel in its own economy than all of the eastern states combined despite having a much smaller population.
"Western Australia has a long history of gas usage going back to the 80s," Mr Lewis says.
"It's very significant for the state."
According to Mr Lewis, the North West Shelf itself marked the beginning of WA's modern gas industry and, more broadly, Australia's presence as an LNG superpower.
But he notes the fields which have underpinned the North West Shelf and its colossal importance — the facility once accounted for 1 per cent of Australia's economy — are in terminal decline.
To that end, Mr Lewis says the decision to extend the life of the gas plant is aimed at solving two problems — keeping a huge, valuable asset alive for longer and enabling the development of another one.
By piping Browse gas 900 kilometres south and processing it through the North West Shelf, he says Woodside et al would avoid the need for a new LNG plant that would come at huge cost.
Secondly, and by extension, they would also pay less in processing — or "tolling" — fees to the Shelf than they would in depreciation at a vastly expensive new LNG plant.
After all, he says, the costs of building the North West Shelf have already been recovered by its owners.
"It's all about encouraging more gas supply into the state by using existing infrastructure," he says.
"And that's an economically efficient way to develop gas fields and gas projects — to use existing infrastructure to toll new gas to ensure there's enough gas for the state going forward."
In the absence of Browse, Mr Lewis reckons WA is headed for structural shortages in gas that could have painful consequences for the state's economy.
Aluminium refineries that are WA's biggest users of gas could struggle to survive, he warns, shortfalls would lead to sky-high prices that would also make it harder to build gas-fired generators needed to help replace retiring coal plants.
Perversely, Mr Lewis says a raft of new critical minerals processing plants required for the energy transition could also be hit — or left on the drawing board.
"It becomes pretty challenging," Mr Lewis says, if Browse is never developed.
"The market operator forecast is there won't be sufficient supply from around 2028, 2029 onwards unless significant new amounts of gas come into the market.
"And that's really just a function of existing fields in decline."
For Mr Wilkes and Mr Lewis, an extension of the North West Shelf's operating licence is one thing, but access to enough gas to keep its giant refrigerators turning natural gas into LNG is another.
There are already indications about what might happen in the event of a failure on that front.
Last year, Woodside shut one of these refrigerators — or trains as they are known in the industry — that had been part of the original development more than 40 years ago.
"There are several implications, aren't there," says Mr Wilkes when asked about what would happen if insufficient amounts of gas are found to replace depleting supplies at the North West Shelf.
"One is that facility gets dismantled and abandoned earlier than it would have done otherwise.
"Another is the gas never gets to market, never gets produced."
For Mr Hillman from the ACCR, that would be best outcome.
He reckons the dogged pursuit of Browse by its corporate and political backers flies in the face of commercial common sense, saying the project comes with huge risks and may never be profitable.
Worse still, he argues, Browse would make a mockery of Australia's ambitions to stamp out greenhouse gas emissions and decarbonise by the middle of the century.
"This just enables Woodside to continue making bad decisions with investor funds," Mr Hillman says.
"It enables Woodside to chase this dream of investing in this project which it's been trying and failing to do for years.
"We don't think Browse stacks up financially, but that doesn't mean the project won't happen.