While Woodside moves to develop what some have labelled Australia’s last big gas project, others predict the insatiable demand for energy in Asia will ensure the gas industry is a long way from dead.
- An energy economist says while climate concerns mount, global energy requirements will demand future gas developments
- Multi-billion dollar gas processing infrastructure will force gas companies to continue to develop new gas projects
- An environmentalist says people will not tolerate future fossil fuelled energy developments
The company’s $16.5 billion Scarborough gas project seems to fly in the face of growing condemnation of fossil-fuelled energy developments and some analysts say it’s likely it will be the last project of its kind in Australia.
But Curtin University energy economist Roberto F Aguilera says that rather than Scarborough signalling the end of new gas developments, the project demonstrates that even in the face of intense pressure from public sentiment and political criticism, the demand for energy will continue to drive new gas developments.
“The development of this very large project will secure their ability to provide LNG for decades to come,” Dr Aguilera said.
Woodside’s Browse gas project has a long history of not getting up, with bitter fights with environmentalists at James Price Point, and then failed bids to use floating LNG facilities or epic undersea pipelines to the North West Shelf.
But Dr Aguilera says despite the current popular sentiments condemning the future of gas, the day may still come when Browse becomes another new gas development.
“These are very capital intensive projects so they’re not overly influenced by current events,” he said.
“[The] long-term strategy will be asking, ‘Will there be long-term demand for LNG, particularly in Asia?”
Woodside risks becoming the pariah of the coming decades as they are inexorably tied to multi-billion-dollar LNG plants that must have gas.
The Scarborough development will keep Woodside’s Pluto LNG facility in production for years to come, Dr Aguilera said, but the neighbouring North West Shelf LNG facility, also operated by Woodside, was going to need more gas to keep the $34 billion investment in production.
“Longer term they will be needing new gas reserves and production to satisfy those LNG projects,” he said.
The forces building to prevent future gas developments cannot be ignored by companies like Woodside, and are coming from multiple directions including banks, energy customers and the general public.
While making LNG carbon neutral looks to be a major challenge, according to Dr Aguilera, making some progress on improving its climate credentials is more realistic for Woodside than the impossible task of getting out of gas altogether.
“The company will have to make the case that gas and LNG is compatible with a low-carbon future,” he said.
“By using renewables like solar to power the gas developments, like the liquefaction, for example, which is energy intensive … all of this will help them to obtain that social licence to be able to proceed with future gas or LNG projects like Browse.”
Martin Pritchard, director of Broome conservation group Environs Kimberley, has fought against Woodside’s plans to develop new gas projects in the past, and he says people power will ensure Scarborough is Australia’s last big gas project.
“It has to be the last one, it shouldn’t even be the last one, but it must be the last one if it does go ahead,” he said.
He said that growing concerns about high temperatures, severe storms, and extreme droughts meant that while governments and industry might struggle to see a future without gas, the public would not tolerate future gas developments.
“People are going to start to get so fed up with it that there is going to be a very significant backlash against any new, large-scale fossil-fuel projects,” Mr Pritchard said.
“The fossil-fuel game is over, and what we’re seeing now is the last gasp of the industry, trying to get the last drops out of the ground before it completely shuts down.”
Dr Aguilera agrees the industry has a serious public perception problem but that there are more chapters still to play out in the story of global reliance on fossil fuels.
“Maybe two to three years ago gas became deeply unpopular,” Dr Aguilera said.
“But longer term I think it will be realised that achieving climate goals is very, very difficult in the absence of using gas as a transition fuel.”