Battle looms over Kimberley development
Paddy Manning SMH August 29, 2009 WESTERN Australia’s pristine Kimberley Coast is under huge development pressure, and it’s not just the big liquefied natural gas (LNG) processing facility proposed for James Price Point, 60 kilometres north of Broome. LNG is the thin edge of a wedge meant to open up development of bauxite, coal, base metals and other resources of the West Kimberley region – and ultimately power alumina and lead/zinc refineries and smelters. LNG is portrayed as ”clean and green”. The oil and gas industry says, depending on the technology, LNG used for electricity generation drops greenhouse gas emissions by 50 to 70 per cent compared with coal. The industry also claims that for every tonne of greenhouse gas generated here from LNG production, between 4.5 and 9 tonnes are saved when the gas is used to replace coal-fired power elsewhere in the Asia-Pacific region. Save the Kimberley campaigner Hugh Brown, formerly a Melbourne-based oil and gas industry consultant who moved to WA and took up nature photography, says such figures are ”absolute rubbish”. A full life-cycle analysis by the International Energy Agency in 2002 found that once liquefaction, shipping and regasification were taken into account, LNG reduced emissions by just 34 per cent compared with coal-fired power. ”Gas is a clean fuel when you just burn the gas,” says Brown. ”It is the liquefication of that gas that becomes very, very greenhouse-gas intensive.” And that’s before other environmental impacts from LNG development are factored in, like the potential for accidents and spills – reinforced recently after a well ruptured under the Thai-operated West Atlas oil rig in the Timor Sea. At a meeting in Broome on Wednesday, Brown told a federal parliamentary inquiry into the impact of climate change on coastal communities that the West Atlas rig could be leaking 3000-9000 barrels a day for the next seven weeks. West Atlas is now ”out of sight, out of mind”, with a 20-kilometre exclusion zone around the rig, but Brown asks, ”What if that spill was on the Kimberley Coast?” WA’s gas fields are doubtless key to Australia’s transition from coal. The Chevron-operated Gorgon LNG project at Barrow Island, off WA’s Pilbara Coast, which Environment Minister Peter Garrett approved this week, is forecast to generate more than $200 billion in sales and $40 billion in tax revenue over 30 years. (Some of the numbers are rubbery, like the $50 billion sale of Gorgon gas to PetroChina this month, claimed as Australia’s biggest trade deal by Energy Minister Martin Ferguson. Analysts immediately questioned whether gas prices would go high enough to justify the figure.) It’s an overwhelming amount of money, and it’s just the start, with the Pluto, Wheatstone, Ichthys and Browse fields all planned to start producing over the next decade. The challenge is to minimise the environmental impact of all this development – and the cost. Woodside and its joint-venture partners, Chevron, Shell, BP and BHP Billiton, are in a well-publicised stand-off over the Browse fields, billed as Australia’s next North-West Shelf. Having successfully launched the Gorgon development, Chevron is now focusing on front-end design at its Wheatstone field, with gas to be processed nearby at Onslow. Woodside will process gas from its Pluto project at Karratha on the Burrup Peninsula, where gas from the NWS is already processed. Woodside wants to process Browse gas at James Price Point, which was selected as the preferred greenfields site after a three-year process involving all levels of government. Garrett will soon announce a decision on final environmental approvals and then it’s down to the Browse joint venture to press the investment button. Ordinarily you’d expect the joint venture would make a commercial decision, based on least cost and highest expected return. That would mean piping the gas to existing processing facilities at Karratha – as environmentalists have advocated for years – and leaving the Kimberley Coast alone. But WA Premier Colin Barnett has been on a mission to promote the Kimberley option since Japanese company Inpex gave up on the precinct and decided to pipe its Browse gas to Darwin – an outcome he labelled ”embarrassing”. Last month, in an extraordinary move, Barnett threatened to veto the Pilbara option, by withholding state approvals needed to lay the pipes. ”Recognise the policy position and deal with it,” he told Woodside’s joint-venture partners. But even a determined Premier can’t tell companies where to invest. Brown says Barnett’s real agenda at James Price Point is broader than LNG – it is to open up development of the West Kimberley region along the lines of a blueprint laid out in a 2005, industry-backed report for the WA Department of Industry and Resources. Rey Resources plans to export thermal coal from its Canning Basin deposit in the Kimberley region via a port to be built in Derby. Kagara has spent more than $36 million on a drilling program at the lead-zinc deposit at Admiral Bay over the past 18 months. Apparently the plan is for the ore to be taken by road train to the port at Broome. But there are concerns about possible lead contamination risks. Most significantly, Rio Tinto and partner Alcoa have exploration rights over a half-billion-tonne bauxite deposit at the Mitchell Plateau, one of the most sensitive and beautiful parts of the Kimberley – a project Norwegian aluminium company Norsk Hydro and BHP Billiton are eyeing off. The resource is worth tens of billions. Under questioning in the WA Parliament, the former Labor government conceded that negotiations had already been held with Norsk Hydro about the possibility of constructing an alumina refinery and aluminium smelter. Save the Kimberley’s Kevin Blatchford says the James Price Point decision is a ”very important part of the whole industrialisation of the Kimberley”. Chevron is in the unlikely position that it could make a difference. The company has been heavily advertising its credentials as a responsible corporate citizen in the lead-up to the Gorgon approval, which was given despite concerns over the project’s impact on endangered species, including the flatback turtle, and the possibility of carbon dioxide that will be stored under Barrow Island leaking. Chevron has a poor track record. This month it found itself embroiled in a US congressional committee investigation over fraudulent lobbying activities to defeat the country’s Waxman-Markey climate change legislation – it was involved as a member of the American Coalition for Clean Coal Electricity. Investors try to factor in political risk and that includes potential community opposition.