GOT GAS? Will Scarborough be Australia’s last major gas project?
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Woodside Petroleum’s (ASX:WPL) decision to proceed with its giant Scarborough gas project in Western Australia has been controversial to say the least.
The gas major, which is set to become a global top 10 energy company after reaching a binding deal to acquire BHP’s (ASX:BHP) oil and gas assets, has been quick to promote the low carbon dioxide content (about 0.1%) of the field but this has done little to silence its critics.
Environmental groups have hit out at the company for committing to a new major gas project at a time when most countries in the world (but not Australia) have pledged to reduce their methane emissions, which incidentally is a far more powerful greenhouse gas than CO2.
Attempts are already underway to undermine the foundations that allow Scarborough to proceed with a case brought about by the Conservation Council of WA to challenge its environmental approvals already before the state’s Supreme Court.
The CCWA added that despite Woodside’s assertions, its chief executive officer Meg O’Neill had confirmed earlier this week that the project would generate 1.6 billion tonnes of CO2 in both direct and indirect emissions over its entire 30-year life.
While the company later walked back her comments, saying the correct figure was 880 million tonnes, this is still nearly double Australia’s annual emissions, according to the Guardian.
Australia’s emissions for the year to March 2021 totalled 494.2Mt, which was 5.2% lower than the previous year thanks to the impact of COVID-19 restrictions.
Using the 2019 emission figures of 533Mt, Scarborough’s direct and indirect emissions works out to about 5.5% of our annual emissions.
While surely there are other considerations in how this is calculated, it will be interesting to see how this impacts on the Australian government’s continued assertation that we are on track to achieve net zero by 2050 when its modelling is so reliant on technology that has yet to be commercialised or developed.
With all the opposition to Scarborough, it should come as a surprise that some folks have postulated it will be Australia’s last mega gas project.
They are probably right, but with one huge caveat. Scarborough is likely to be Australia’s last offshore mega gas project.
Onshore gas projects are a whole different ball game entirely and it is very likely that we see more of these being approved in Australia.
While these projects are unlikely to be on the same scale as Scarborough, they can still be potentially quite large and collectively might even rival their offshore counterpart.
Developments in the Perth Basin and the Beetaloo sub-Basin, to name two of the hottest addresses (sorry Cooper Basin), are likely to go ahead.
And the why is simple. Despite what the green lobby might want you to believe, Australia still has a massive appetite for gas.
Most of our short to medium term emissions reductions are likely to come from renewable energy replacing coal, regardless of how much certain coal-lump-carrying politicians might wish otherwise.
There’s also that matter that our Asian neighbours are still very hungry for gas with Wood Mackenzie flagging that an ongoing decline in domestic production and increased coal to gas switching to underpin intermittent renewables generation will combine to increase demand for gas imports.
That’s a recipe for strong prices and you would be a fool to think that Australian companies (and governments) won’t be keen to capitalise on that.
There might well be a push from both the supply and demand sides of the equation to clean up their emissions – through greater efficiency, carbon capture and storage, or even keeping leaks to a minimum – but this does not detract from the impact of market forces.
So have we seen the end of mega offshore gas projects in Australia? Yes, but it’s not the end of all gas projects.