‘Resource policy is too important to politicise’

GARY GRAY, the federal resources and energy minister and Labor MP for Brand, responds to last week’s THINKING ALLOWED where Phil Mercer of White Gum Valley bagged him for not doing enough for jobs in the industry.

Your Liberal Party contributor Phil Mercer made a range of factually inaccurate claims last week.

He claimed Labor pressed for an offshore, rather than onshore, processing plant for LNG at James Price Point. That’s nonsense.

And it’s telling that he makes no mention of the Barnett government’s mismanagement of the environment assessment process for James Price Point, resulting in the Supreme Court ruling it unlawful.

The reality is there has been support across governments for onshore processing because it offers more jobs and investment. Every government wants it.

However, in April 2013 the Woodside Joint Venture announced an onshore processing plant at James Price Point was not commercially viable. The international consortium, including Shell, said “no go”.

At that point, WA did not have a project onshore or otherwise.

So the Woodside Joint Venture, like Shell before it, has opted to consider a different type of development—floating structures to harness the enormous gas reserves in sea beds off WA.

And as Peter Coleman of Woodside plainly said last week, in opting for a floating LNG plant for the Browse gas fields, the joint venture wasn’t deciding between onshore or offshore facilities. There was only one option—offshore.

So what does floating LNG processing offer to WA?

A good pointer is Shell’s plans for a floating LNG processing plant on the Prelude gas fields.

Shell is already building its floating structure in South Korea and it will be one of the world’s biggest floating structures.

The company expects that its single floating platform will provide 350 direct and 650 indirect jobs.

Over the life of the project, Shell expects to purchase $12 billion of Australian goods and services, pay $12b in tax and earn $3b a year in export revenue.

It expects 200 contracts worth around $200 million to be awarded by 2017, and 80 per cent of them will be local content contracts.

Broome will be the base for drilling activities, aviation and infield supply vessel (tugs) support.

There will be many other benefits—like Prelude’s headquarters in Perth, partnerships with local institutions, government and industry to capture value from Prelude operations, and future LNG growth in WA.

Together with the Australian Government, other oil and gas companies, service providers and universities, Shell is proposing to create an oil and gas industry innovation precinct that will foster innovation for the development of oil and gas in WA.

UWA is recognised for its world-leading research when it comes to offshore foundation systems and oceanography.

Apart from the collaboration between UWA and Shell engineers in the design of the Prelude mooring system, the establishment of the Shell EMI Chair (under Winthrop Professor David White) aims to continue to build knowledge to widely benefit Australia’s offshore industry.

Shell is also investing the Kimberley region focusing on education to drive early-stage capability in skills and workforce development, particularly for disadvantaged and indigenous people.

And what of Woodside’s plans?

Woodside Joint Venture is proposing to construct up to three floating LNG processing structures, each of similar size to the one Shell is building.

So Woodside’s project will require around 1000 direct jobs—that is two to three times the predicted long-term employment of the previously-proposed onshore base at James Price Point.

That means jobs and careers in the new maritime engineering, processing and operations jobs for 30 or 40 years to come.

For Australia, it means a productivity step change and greater capital efficiency, particularly at a time when our key markets in north Asia are under threat from Russian pipeline gas and from LNG out of east Africa and North America.

Shell and Woodside are only the starters in the technology change which will ultimately see half-a-dozen floating platforms off WA, offering thousands of permanent jobs and billions of dollars in contracts for local companies.

Resource policy is too important to politicise: investments are generational in nature and the petty politics played by Mr Mercer only damages the reputation of WA and our resources sector.