Archive for June, 2016

Can do (much) better.

Just over 2,000 attendees at the Australian Petroleum Production & Exploration Association’s 56th annual conference in (a cold and windy) Brisbane today got an early ear-warming from Shell’s top manager in Australia, country chair Andrew Smith, boiling down to advice that the industry performance in the national debate just isn’t good enough.

Smith told the forum’s opening session that “we must all put our heads above the parapet and contribute” to deal with “a well co-ordinated, well-funded, misleading and often dishonest political campaign against the natural gas industry” that, he said, has led to an erosion of public sentiment and “cracks in bipartisan political support we have historically enjoyed.”

Speaking on the same platform as federal Resources & Energy Minister Josh Frydenberg and in the absence from the conference of a senior federal Labor spokesman — Gary Gray having retired from politics and the ALP not taking up an invitation to provide an alternative — Smith posed the question: “How do rebuild acceptance of our industry so that it can grow?”

The business, he observed, despite being a “significant driver” of economic growth here for more than a century and despite “bringing billions of dollars of capital to monetize Australian resources, create jobs and revitalize regions,” finds its place in future national prosperity under question and investments “increasingly less welcome.”

He put “complacency and manipulation” at the core of this situation: industry complacency in believing that it could “simply woo” communities with new projects and well-paid jobs and in believing that, if this didn’t work, governments would step in to sort things out — and community complacency in thinking prosperity could be guaranteed regardless of whether or not industry investment took place. The manipulation, he added, comes from activists “who have demonized both investors and workers.”

Smith identified the great divide in Australia today as being a root issue: Sydney and Melbourne being on an economic growth trajectory fueled by property investments and a booming service sector and resource-reliant Western Australia and Queensland (along with regional economies across the country) depending on more energy-related development to complement traditional industries like agriculture.

Despite the obvious benefits for remote and often-disadvantaged communities, he complained, “we still face a significant social challenge” in pursuing energy developments.

He called on the industry to face this “head-on, through open dialogue.”

He could hardly pursue this line without tackling the elephant in the room — how a fossil fuel business can continue to thrive in a carbon-constrained future — and he challenged his colleagues to “stand up and show real leadership and, perhaps more importantly, honesty.”

Smith noted that “it would be too easy to take a totally adversarial position” against activists and argued that “in truth, our own unwillingness to be involved in frank dialogue with people who oppose our industry has helped create momentum” against future development.

Examples of industry leaders arguing the virtues of well-regulated (fossil energy) investment have been “too few and far between,” he said.

The energy system has to evolve to meet both growing global demand and pursuit of net-zero emissions over the course of this century, he added, and “getting there will require many of us to get out of our comfort zone.”

The situation, he said, needs a “seismic shift” that requires collaboration within industry (“which does not come naturally”) and long-term political vision.

Many in Brisbane’s cavernous Convention Centre today may not accept it, Smith said, but renewable energy will “play¬† critical role” in the future energy mix here and internationally — while there also has to be wide community understanding that low-carbon oil and gas are needed to partner with renewables to deliver the full range of necessary energy products.

“Despite the claims of activists that a path to a completely renewable energy sector is within reach,” he declared, “oil and gas will remain integral (to energy supply) — especially where high energy density or very high temperatures are required in transport or industrial processes.”

Most credible projections, he went on, also see a vital future role for coal, “but we need to rethink (its) uses outside metallurgical applications and efficient new power generation using black coal.”

At this point Smith delivered a blast against ongoing use of brown coal in Victoria to generate electricity, saying “it strikes me as absurd that a national rich in gas persists (in this).”

However, as he pointed out, Victoria and New South Wales are continuing to stifle development of onshore gas reserves, arguing that a “well-regulated gas supply is the only reliable way to displace the dirtiest power generation” in partnership with renewables. Neither Labor nor the Coalition in Victoria are showing the political will to make this happen, he added.

The challenge lies with the industry at this juncture, Smith said, requiring it to shed complacency and to work harder to secure “the positive sentiment required for our social licence to operate.”