Cooking With Gas
The annual oil and gas industry conference is typically an opportunity for company reps to come together and talk about infinite growth and endless profits. But the tone at this year’s APPEA conference was decidedly different — it felt like an industry under siege. And rightfully so, given the contribution of the oil and gas sector to global emissions.
Various industry representatives railed against “professional activists” and the “noisy few”, armed with “megaphones or iPhones”, soiling the good reputation of the oil and gas industry on Facebook and Twitter. Apparently, the industry needs to “find its voice” and “tell its story”.
But the oil and gas industry has never been a passive player in Australian politics. It wouldn’t have spent $300+ billion on new projects over the last decade without willing governments gifting them tax holidays and relaxed regulatory approvals.
Perhaps the most telling remark from the conference came from Shell Australia’s Zoe Yujnovich, when she declared that “our campaigning has barely begun”. The oil and gas industry already operates with light touch regulation in most states; it recently warned off carbon pricing in Western Australia, and killed off the carbon tax in 2014 — this is an industry well accustomed to campaigning.
Much of the messaging at the conference was fairly predictable:
- Australian gas is reducing emissions in Asia
- Moratoriums on onshore gas development in NSW & Victoria must be lifted
- Carbon capture and storage (CCS) will solve the industry’s emissions problem, and
- Gas is clean — it just has an image problem
The plenary session of this year’s conference focused on how to tackle this ‘image problem’, with the launch video proudly proclaiming: “It’s time to tell our story. On our terms.” Over the three day conference, CEOs from various companies offered their ideas about how to promote and prolong an industry that is becoming increasingly unpopular.
Here is what APPEA and the companies had to say:
APPEA CEO, Andrew McConville
APPEA’s recently appointed CEO Andrew McConville’s opening plenary was about “navigating the future”. And while his speech hasn’t been made public, in comments to Bloomberg, McConville made the usual “gas has a role to play in the transition” argument. He also suggested that the industry needed to work harder to undo negative perceptions promoted by climate activists and enviro groups.
“We have to do more. Whether we agree with these views or not, they are the views that these particular groups hold on climate change. For us as an industry, their perception is our reality. So we need to understand that and work to try and address the concerns.” Bloomberg — 24 May 2019
Shell Australia chair and APPEA chair, Zoe Yujnovich
Shell Australia chair Zoe Yujnovich stole many of the conference headlines. She argued for a carbon tax, while also calling for bans on onshore gas development to be lifted, pipelines to be fast-tracked, and claimed that Australian gas could lift “hundreds of millions of people” out of poverty.
She also gave the rest of us a brief glimpse into how oil majors think about elections. Yujnovich said that “in the wake of the election… we have a real opportunity to drive real change”, and that the industry should “plant the seeds of positive public debate” around energy. But Yujnovich saved her best lines for climate activists:
“Armed with megaphones or iPhones, an increasing number of professional activists and increasing numbers of ideologically driven volunteers are waging a virtual war with religious zealotry.”
And warned, ominously:
“Our campaigning has barely begun”
AFR — 28 May 2019, Reuters — 28 May 2019, SMH — 28 May 2019, The Australian — 28 May 2019, The West Australian — 28 May 2019
BP vice-president for carbon management, Gardiner Hill
BP’s Gardiner Hill talked up his company’s investments in gas (rather than oil) and low carbon technologies. He also made the clearest case yet for a carbon price:
“It’s free to emit CO2 to the atmosphere. It doesn’t feel right, it shouldn’t be like that, it really needs to be a cost to change people’s behaviour.” The West Australian — 29 May 2019
Woodside Energy CEO and APPEA deputy chair, Peter Coleman
Woodside CEO Peter Coleman repeated his claims from his company’s AGM in early May, that Australian LNG is reducing emissions in Asia, although it’s not clear to what extent gas is also preventing the uptake of renewables.
Coleman revisited his criticism of the WA Environmental Protection Authority (EPA) for daring to propose regulations earlier this year that would have required new, heavy emitting projects to offset their emissions:
“The EPA must not compound the error it made when it failed to consult ahead of issuing the Guideline in March by simply reissuing the same Guideline”.
See our write up of how Woodside and others ensured the EPA’s guidelines were withdrawn within a week of being proposed.
Like Shell’s Yujnovich before him, Coleman said that addressing climate change and providing electricity to the billion people who still live without it was a “balancing act”. He also argued that the industry had to demonstrate its contribution in order to retain its “social licence”. And perhaps somewhat surprisingly, Coleman hinted that Woodside may in fact be looking at life beyond oil and gas:
“What are the no-regrets actions we can take now that set us up for the long-term, regardless which scenario turns out to be correct? Should we build new businesses outside of hydrocarbons?” woodside.com.au
Origin Energy CEO Frank Calabria
Origin Energy CEO Frank Calabria said that Australia’s position as the world’s largest LNG exporter could only be maintained through “policy continuing to support the development of gas resources”. Calabria argued for bans on onshore gas development in NSW and Victoria to be lifted, and spoke positively about his company’s prospects in the NT’s Beetaloo Basin. He went on to claim that Australia “will help the economies of our trading partners” by helping them switch from coal to gas. Sticking with the theme of storytelling, Calabria heaped praise on the gas industry’s marketing campaign, Brighter, but admitted communication was still a weakness:
“We need to be able to counter the simplistic and negative claims of our opponents with simple, clear messaging in response and the election result should give us comfort that there is merit in continuing to progress the argument, even if, at times, it feels like we are not heard.” originenergy.com.au
Santos CEO Kevin Gallagher
Santos has been trying to develop its coal seam gas fields in Narrabri for nearly a decade, so it was no surprise to hear their CEO making the gas for “blanket bans” to be lifted, allowing for each project to be assessed on its merits. Like Origin’s Frank Calabria, Gallagher also spoke positively about his company’s plans for the McArthur Basin in the NT. Later, in a panel discussion, Gallagher made his own contribution on “messaging”:
“What is criminal is how badly we’ve sold the message of gas here in Australia as an industry. We have to work better as an industry, more together, to get that narrative out. It’s not a pitch, it’s a fact: you cannot move to a cleaner world without gas as part of that solution.” santos.com
Here is what the politicians had to say:
WA Premier Mark McGowan
Western Australia is one of the few states without a genuine climate policy, and the state’s emissions have steadily increased for the last decade. Speaking ahead of the conference to The West Australian, WA Premier Mark McGowan was keen to promote his state’s plans for the expansion of the LNG industry, without any consideration of what that means for WA or Australia’s national emissions profile:
“Western Australia is a world leader in LNG and one of my Government’s key priorities is to grow our State into a global LNG hub, to unleash thousands of new jobs for Western Australians.” The West Australian — 27 May 2019
Queensland Natural Resources Minister, Anthony Lynham
In recent years, Queensland has become gas country, with both major political parties supportive of expanding the coal seam gas industry. Queensland Natural Resources Minister Anthony Lunham used the APPEA conference to announce that Senex had been awarded a gas exploration contract for 153 square kilometres. Echoing industry views, Lynham believes concerns over fracking are misplaced, and more work needs to be done to counter them:
“Fracking remains a sensitive issue, and there is much work for us to do in dispelling the fear and providing the community with more information on this practise” SMH — 28 May 2019
Federal Resources Minister, Matt Canavan
Conference attendees may have had to wait until the third and final day to hear Federal Resources Minister Matt Canavan, but he didn’t disappoint, as he took a swipe at climate activists, big banks, the WA EPA, and even gas companies themselves, for being bullied by a “noisy few” on Facebook and Twitter. Canavan rebuked the gas industry for calling for a carbon price, claiming it would “smash” Central Queensland. He claimed that gas companies’ tokenistic efforts to reduce emissions were out of touch with the general population, because they were too ambitious:
“From my perspective, this takeover from a noisy few has led to positions being taken by senior entities that are out of step with mainstream Australia.”
And finally, he gave an indication of what we can expect from the re-elected Coalition government for the next three years:
“I think the people have clearly rejected any action on climate in this country which goes beyond what’s being done in the rest of the world.”
AFR — 30 May 2019, Brisbane Times — 30 May 2019, The West Australian — 30 May 2019
Following Canavan’s remarks, The Australian’s Business columnist John Durie criticised Matt Canavan for being out of touch with big business, which you could say is slightly out of character. The Australian — 30 May 2019
Here is what the investors’ representative had to say:
IGCC CEO, Emma Herd
One of the few contrarian voices at the conference was the CEO of the Investor Group on Climate Change (IGCC), Emma Herd. Representing large investors responsible for more than $2 trillion in assets, Herd said investors saw climate change as an opportunity as well as a risk. Herd called for a “net zero” emissions economy, and criticised the lack of policy ambition to get there:
“The problem we have in Australia is a lot of our national policy settings are still really not dealing with the crux of the problem. We are a trade-exposed, carbon-intensive economy in a global economy which is rapidly moving to decarbonise. How do we manage that? And what’s our plan?” AFR — 29 May 2019
Postscript
New Shadow Federal Resources Minister, Joel Fitzgibbon
As the ALP licks its election wounds, newly appointed Shadow Resources Minister Joel Fitzgibbon indicated that the ALP was listening to the gas industry’s demand to lift moratoriums on onshore gas development:
“We must stick to the science on gas projects. If we don’t manage to get more gas out of the ground soon we’re going to be facing a crisis in our manufacturing sector and higher energy prices.” The Australian — 3 June 2019
Lobbywatch is a project run by ACCR which aims to illustrate the negative influence of lobby groups on climate and energy policy in Australia.
