|
senate vote 2017-02-08#1
Edited by
mackay staff
on
2017-02-11 05:56:48
|
Title
Bills — Offshore Petroleum and Greenhouse Gas Storage Amendment (Petroleum Pools and Other Measures) Bill 2016; Second Reading- Offshore Petroleum and Greenhouse Gas Storage Amendment (Petroleum Pools and Other Measures) Bill 2016 - Second Reading - Agree with the bill's main idea
Description
<p class="speaker">Christopher Back</p><p>I am delighted to continue my comments on this bill and to draw to the chamber's attention that it is always easy in 2017 to say, 'The North West Shelf is there. Gorgon, Wheatstone and Ichthys are there. The Queensland projects are there.' They were not always there.</p><p>I draw attention to the chamber that back in the 1970s Sir Charles Court, the absolute dynamo of Western Australia and Australian industry, negotiated with the federal government that there be a fairer sharing of the royalties and the income that would come from the possibility of a North West Shelf. Remember, Woodside had made no investment. There was a prospectivity but there was no wealth. It is easy in this year to look back and say, 'Look how much money we have all made out of it,' and, 'We're rushing towards being the world's biggest exporter of LNG,' but in the 1970s there was nothing there. A huge risk was taken. Quite correctly, Sir Charles Court said to the Prime Minister of the day, 'We in Western Australia are going to take the risks. We're going to be doing the work. You will enjoy the royalty benefit of the LNG that might come'—might come!—'from the success of a North West Shelf.' As a result of that, a decision was taken at the time that should there be any gas and condensate found there would be no tax at all to the company on condensate to give them an incentive. That was done so that in the possibility of there being some success from that exploration they would at least have a motivation and an incentive. As we know, along came Prime Minister Rudd, and he put paid to what had been a long-established principle.</p>- The majority voted to agree with the [bill](http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/r5714)'s main idea, which means the bill can now be discussed in more detail. In parliamentary jargon, they voted to [read the bill for a second time](http://www.peo.gov.au/learning/fact-sheets/making-a-law.html).
- ### Main idea of the bill
- The bill is rather technical. According to the [bills digest](http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1617a/17bd023), its purpose is to:
- * *clarify apportionment arrangements relating to certain petroleum deposits that straddle state and Commonwealth jurisdictions*; and
- * *ensure the capacity of the [National Offshore Petroleum Safety and Environmental Management Authority](https://en.wikipedia.org/wiki/National_Offshore_Petroleum_Safety_and_Environmental_Management_Authority) (NOPSEMA) to refund fees paid to it where necessary*.
<p>The importance of this bill before us is that it takes into account the sharing of royalty income between the Commonwealth government and the state, or states. As we know, on the seabed hydrocarbons move. They might be in state waters. If they are within or around an island they may be in Commonwealth waters. As extraction takes place the hydrocarbons move. This is part of the reason for the Offshore Petroleum and Greenhouse Gas Storage Amendment (Petroleum Pools and Other Measures) Bill coming before us.</p><p>I am delighted that Senator Moore yesterday courteously supported this bill on behalf of her party. She made some very good points about resources and their contribution, and about the efforts in Western Australia of the member for the Pilbara, Mr Grylls, who would be absolutely torpedoing future investment—in that case in the iron ore industry—as a result of ill-founded and poorly thought out claims made for his own cheap, political advantage.</p><p>As a result of the efforts of Charles Court and others the decision was taken at that time that there should be some preference for domestic gas supply. Why would that be? Simply because at that time the risk was on the people of Western Australia. Charles Court negotiated what was called a take or pay agreement—in other words, should Woodside proceed and should they find gas, then there would be an automatic market for that gas. At that time, of course—as I know myself—in WA there was no reticulated supply of gas. So the people of Western Australia and indeed Alcoa, the aluminium company themselves, took an undertaking that they would purchase in advance significant proportions of that natural gas. So today we have a scenario in place in WA where at least 15 per cent of all new LNG supply is guaranteed for domestic gas.</p><p>Mr President, I would humbly request through you that I have some silence or at least quiet if that is possible.</p> <p class="speaker">Stephen Parry</p><p>Yes. Could I just invite all senators if they are holding conversations and if they do not need to be in the chamber to hold those conversations outside the chamber so that we can hear Senator Back in silence. It is disruptive.</p> <p class="speaker">Christopher Back</p><p>Thank you very much. I would have liked to have contributed to how the UN went from my time in 2013. Maybe we can continue that discussion at a later stage.</p><p>I was just concluding on the observation that in Western Australia now, as a result of the risk taken by the Western Australian community through the then-Premier Charles Court, that the risk associated with the development of North West Shelf Gas was taken by the people of WA and Alcoa. Of course, today it is wonderful. We have a Pilbara to Bunbury gas pipeline. Gas is reticulated everywhere. If states like Victoria and South Australia and Queensland do not get their act together in terms of gas exploration and extraction, there is already talk of there being huge storage facilities either offshore Victoria or on land to provide gas for Victoria from elsewhere. I had a discussion recently with our new ambassador to Japan, the Hon. Richard Court, son of Sir Charles. He and I discussed the prospect of whether there could indeed be a gas pipeline across the Nullarbor so that we could supply these other states who seem to be most intransigent when it comes to guaranteeing a supply of product that will guarantee to keep the lights on in those states. South Australia is already in a parlous state with its ill-founded decision to move towards a wind turbine dominated supply. My good colleague Senator Hume is kind enough to sit here and support me in this contribution. Already Victoria has discontinued or is discontinuing coal-fired power and Victoria will find itself in the same position that South Australia is in today.</p><p>I want to draw to attention in relation to this whole question of the offshore gas that is the subject of this bill just how important is the scale of the operations that have been going on offshore WA and in Queensland onshore with the supply being exported from Gladstone. The two big projects of which the Chevron company is the major promoter, Gorgon on Barrow Island and Wheatstone at Exmouth, are together a $100 billion project, part of $200 billion of investment in Australia in LNG. Let me put it into perspective, if I may. In today's dollars the entire Snowy Mountains scheme is $8 billion. We quite rightly are very proud of the Snowy Mountains scheme, the time that was undertaken and the use of people displaced out of Europe. Snowy Mountain is of course a phenomenal project and is even today delivering hydroelectricity for which we should all have enormous hope in the future.</p><p>But the Snowy Mountains scheme was an $8 billion project in 2016 dollars. Between them, Gorgon and Wheatstone are a $100 billion project. It is important to reflect on this, for those who seem for some reason or other to be dismissive of LNG and its contribution to the Australian economy. Let me share something with the chamber and with those who might be interested. I mentioned there was $200 billion of investment in LNG. That is a third of all investment coming into this country. In terms of revenue for government, oil and gas production and exploration in 2011-12 put $30 billion into the Australian economy, contributing two per cent. But as we move to being the world's largest exporter of LNG in 2018-19, that figure of $30 billion will increase to $65 billion of revenue by 2020. That represents 3½ per cent of Australia's GDP.</p><p>As for all the allegations that the resources sector does not seem to make its contribution in company taxes et cetera, in 2011-12 the industry paid to the Australian government $8.8 billion in income tax, corporate taxes and resource royalties. But the news gets even better. By 2020—in only three years time—that $8.8 billion paid directly into the Australian economy increases to $12.8 billion; that is nearly $13 billion of income tax, corporate tax and royalties paid into our economy. What does that build? For example, that contribution would build six new state-of-the-art major teaching hospitals in cities or towns around Australia. I am often told, 'It doesn't contribute much by way of jobs.' There have been 103,000 jobs created. I see the minister for resources nodding his head. He now has, on behalf of the government and the people of Australia, the responsibility and the accountability to take that case for industry into this place. Over 100,000 high-paying jobs have been created, principally for Australians. I know of your support, Acting Deputy President Sterle, for the resources sector in our home state of Western Australia.</p><p>But it gets better than that. Yes, it is true that Gorgon, in terms of its establishment and construction, is coming to a close. It has three gas trains. Trains 1 and 2 are up and running now; train 3 will be by the end of this year. I was privileged, along with Mr Gary Gray, Ms Melissa Price from the electorate of Durack and others, to be on Barrow Island for the first shipment of LNG to leave Western Australia from the Gorgon project. At Wheatstone, there are two trains. One of them will be operating in full by the middle of this year; the other one will be by about the middle of next year. What is interesting is that, for the next 40 years, an LNG ship will leave Western Australian waters every 72 hours.</p><p>Yes, it is the case that there is a petroleum resource rent tax. It is designed so that the costs of establishment—the exploration and bringing into production these huge projects—can be accounted for up-front and so that there is encouragement to invest and to continue to invest in this country. Yes, it is the case that there is then a delay in some of the returns to the federal government by way of royalties. But let me make two points. The first is that in Western Australia particularly—I cannot speak with any experience about Queensland—a lot of the gas reserves, whilst they are enormous, are marginal in terms of cost. I hope the minister is taking careful notes. Because they are marginal this is the incentive to go ahead and invest on the North West Shelf—Woodside with Pluto and Chevron with Gorgon and with Wheatstone—and the new facilities offshore: Scarborough and Browse. These are terms with which you are very familiar, Mr Deputy President Sterle.</p><p>The other point I want to make is that Australia is a very high-cost location into which investment can be made. Even the Gulf of Mexico is infinitely cheaper than Australia. The South China Sea and offshore Brazil are very attractive locations. I say to my colleagues who are making decisions at this time in terms of the review of the petroleum resource rent tax, 'For heaven's sake, do not bite the hand that feeds you.' I go back to the comment I made a moment ago. With just one company, Chevron, there will be an LNG ship every 72 hours for 40 years. We are all aware of the excellence of the North West Shelf—the work undertaken by Woodside at Rankin and North Rankin and more recently at Pluto. Woodside have the opportunity with Sunrise in the Timor Sea. They have the opportunity on the Browse Basin.</p><p>I come now to the outlook for the future and I refer to the new concept of floating LNG. We know of the enormous vessel—the largest vessel ever built by the Shell company in Korea—Shell <i>Prelude</i>. How is the <i>Prelude </i>project different? Shell have combined in the one floating structure their hundreds of years of expertise in shipping, the construction of LNG facilities and the conduct, maintenance and operation of LNG. This will be on their project offshore WA. Where is the excitement for us? This is a world first and it is in our patch. We have followed the rest of the world—Stavanger in Norway, Houston in Texas and Aberdeen in Scotland. This time around we are the first. Australia, Australians and Western Australians have the opportunity to get in on the ground floor in terms of the operation and conduct of the new Shell <i>Prelude </i>project. In the event that it succeeds we will see more floating structures. Why? Because, unlike a fixed structure, if and when supply runs out, you can move that vessel, that whole LNG platform, to a new location and continue well into the future.</p><p>How exciting is this in our world? We have the capacity with our TAFE and higher education institutions in WA and indeed nationally to lead the world in this new floating LNG technology. Coming back to the bill that is before us, you can now understand the importance of this place legislating to ensure that, wherever that floating LNG structure is placed, we know in advance what the sharing will be in terms of revenue through royalties to the state and to the federal government.</p><p>In the few minutes left available to me I make a plea on behalf of Western Australia. These projects in the Pilbara are a long distance from Perth. We know that the community of WA has to invest heavily in roads, housing, schools and communities to support the people who run and operate these projects. In a scenario in which the royalty income comes back to the federal government for the benefit of all Australians there must be a provision for the people of the state who spend the money so that the overall community of Australia can benefit. That is the critically important point. We must think nationally but we must act locally so that we continue to attract, continue to see and continue to enjoy the benefits that will come to us over many years.</p><p>The final point to be made is that today is the day on which the Woodside company will be launching their first ever LNG-powered PSV—a platform supply vessel—in Fremantle. It is more the pity that we cannot be there to enjoy it. It is the first time in the southern hemisphere. Of course, the big ships that operate backwards and forwards are themselves powered by LNG. It is a good luck story. I support this bill and I commend it to the Senate.</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>
|