Now that Western Australia’s moratorium on fracking has been lifted, can gas from the Kimberley prove that it is economically viable?
While grand project concepts and environmental protests often dominate the coverage of the region’s oil and gas potential, the cost of doing business in a remote area with few roads and no pipelines has been the defining force.
It was a blowout in cost that ended Woodside Petroleum’s plans for a Kimberley LNG facility at James Price Point.
And experts say it is the cost of getting a product to market that will determine the future of gas fracking in the Kimberley’s Canning Basin.
Dr Peter Moore, an adjunct professor at Curtin University, has been an executive for Woodside Petroleum and is a director for Beach Energy and Carnarvon Petroleum.
His optimism for the potential of the Canning Basin is tempered by the challenge of getting gas to market at a profit.
“I have a number of roles associated with the oil and gas industry, and I guess I’m generally supportive of it,” Dr Moore said.
“We know that they have found gas; the question of whether they can produce it commercially is a critical one though.”
Big cost, no pipe
Dr Moore welcomes the lifting of the moratorium saying it will allow work to proceed that can answer the question that will decide the future of fracking in the Kimberley.
“It costs a lot of money to develop an opportunity out there and get gas to the market because you need to put a pipeline in to get gas out and they’re expensive,” he said.
“It’s important for the country that we know if it’s commercial or not, but whether it happens or not is just going to be a matter of time and money in investment.”
The West Australian Labor Government set up an independent scientific inquiry into the risks posed by fracking after being elected in 2017 and introduced a moratorium on the controversial practice.
But in November 2018 they announced the moratorium would be lifted after the inquiry found fracking posed a low risk to human health and the environment if appropriately regulated.
The only company to have fracked wells in the Canning Basin has welcomed the lifting of the moratorium.
Buru Energy did not respond to ABC requests for an interview, but in a statement to the stock exchange the company said they looked forward to working with government to implement the recommendations of the Independent Scientific Inquiry for further regulation of the industry.
“The moratorium has been lifted on the majority of Buru’s current titles,” the statement said in part.
“We have agreed with the Government that the Broome township and water supply areas in our existing petroleum titles will form part of the Dampier Peninsula fraccing (sic) exclusion zone.”
Chairman of the WA Domgas Alliance Richard Harris said the cost of producing gas and building a pipeline from the Kimberley could be prohibitive in the short term.
“It’s a good resource. It’s just a question of getting the infrastructure in place and making the economics of that work,” he said.
He suggested that the high cost of a long pipeline could be avoided by using the gas in the Kimberley.
“Using that gas in situ to turn it into methanol, fertiliser or petrochemicals is one opportunity for proponents,” Mr Harris said.
“I’d be looking to having projects in Derby, using the gas in the Kimberley.”
Whispers of infrastructure
A major port development for Derby has been proposed by development companies owned by WA billionaires Kerry Stokes and Tim Roberts.
A concept plan describes channels dredged to a tidal lock capable of accommodating vessels up to 230 metres long, leading to an excavated basin large enough to contain the Australian Navy’s biggest ships.
The plan also lists potential customers coming from industries including tourism, fishing, livestock, oil and gas.
The companies Warburton Group and Australian Capital Equity, which hold a licence from the Derby Shire over 150 hectares of port land to investigate their development, declined to be interviewed by the ABC.
A network of pipelines and roads connecting oil wells that would require fracking in the Great Sandy Desert to new and existing ports is part of a $77 billion concept put forward by Theia Energy.
Documents on the company website, some of which have since been removed, said they had found as much as 57 billion barrels of oil in the desert location, 150 kilometres south-east of Broome.
The small Perth-based company sent representatives to China in July 2019 in search of investment, and is currently negotiating with traditional owners for an agreement before fracking their first well.
The Kimberley’s four shire councils came to together in March 2019 and voted for in-principle support of a pipeline connecting the region’s towns and mine sites with potential gas fields.
Chair of the Kimberley Zone of Councils Chris Mitchell said a pipeline was just a concept at this stage.
“The idea is that a gas pipeline could be transporting gas from the gasfields, the oilfields, down the Great Northern Highway to Broome and Derby,” Mr Mitchell said.
“There’s no business plan or any proper plans at this stage, it was just an idea put forward.”
Environmentalists like director of Environs Kimberley Martin Pritchard insist fracking remains a threat to the environment in spite of the scientific inquiry’s findings and new regulations including fracking exclusion zones.
“Places like Roebuck Plains, Deep Creek, the Fraser River catchment, the Fitzroy River, are still open to fracking,” Mr Pritchard said.
“We think with broader community consultation, as was promised, that would change.”
But deputy director of the Department of Mines, Industry Regulation and Safety, Dr Phil Gorey, said the community was consulted and fracking would not automatically be approved outside exclusion zones.
“The Government did engage with representatives of the traditional owners,” Dr Gorey said.
“Any proposal to undertake hydraulic fracture stimulation will have to go through a thorough environmental impact assessment to identify what the risks to the environment and people might be.”
Environmentalists and industry supporters also strongly disagree on the carbon emissions that would result from a Kimberley gas industry.
“The science is telling us that we should not be opening up any new fossil fuel provinces anywhere in the world,” Mr Pritchard said.
But Mr Harris said exporting petroleum products produced from gas could reduce global greenhouse emissions.
“From an emissions point of view, I think gas has a huge role to play in that it is half the emissions of coal,” he said.
But the argument over the environmental impacts of gas fracking in the Kimberley looks likely to remain mostly theoretical for the foreseeable future, with Woodside Petroleum preparing to pipe cheaper conventional gas from its offshore Browse Basin.
As long as cheaper gas was readily available in Western Australia, gas that required the added cost of fracking would face significant economic challenges.
“Browse is a project which Kimberley gas will likely have to compete with,” Mr Harris said.
“The Browse gas is probably there for the next 20 years.”