Dirty LNG?

Dirty LNG? Share on Facebook
Western Australia's pristine Kimberley Coast is under huge development pressure and it's not just the massive liquefied natural gas processing facility proposed for James Price Point, 60 kilometres north of Broome.

by Fairfax - Monday, 31 August 2009

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 refineries and smelters.

LNG is portrayed as ''clean and green''. The oil and gas industry says, depending on the technology used, LNG used for electricity lowers 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 avoided when the gas is used to replace coal-fired power elsewhere in the Asia-Pacific region.

Save the Kimberley campaigner Hugh Brown, a former oil and gas industry consultant who moved from Melbourne 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 returning it to gas are taken into account, LNG reduces emissions by just 34 per cent compared with coal-fired power.

"Gas is a clean fuel when you just burn the gas," Brown says. "It is the liquefaction of that gas that becomes very, very greenhouse gas intensive."

And that's before other environmental impacts from LNG development are factored in, such as the potential for accidents and spills - reinforced this week after a well ruptured under the Thai-operated West Atlas oil rig, 250 kilometres off the Kimberley coast 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 leak 3000-9000 barrels a day for the next seven weeks.

WA's gas fields are doubtless key to Australia's transition away from coal.

The Chevron-operated Gorgon LNG project at Barrow Island, off WA's Pilbara Coast, which the Environment Minister, Peter Garrett, approved this week, is forecast to generate more than $200 billion in sales and a supposed $40 billion in tax revenue over 30 years.

It's an overwhelming amount of money and it's just the start with the 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 partners Chevron, Shell, BP and BHP Billiton are in a well-publicised standoff 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 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. A purely commercial decision, based on least cost and highest expected return, would mean piping the gas to existing processing facilities at Karratha - as environmentalists have advocated for years - and leaving the Kimberley coast alone.

But Premier Colin Barnett has been on a mission to promote the Kimberley option since the Japanese company, Inpex, decided to pipe its Browse gas to Darwin - an outcome he labelled ''embarassing''.

Last month in an extraordinary move, Barnett threatened to veto the Pilbara option, by withholding WA approvals needed to lay the pipes. 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 via a new 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.

Most significantly, Rio Tinto and partner Alcoa have exploration rights over a half-billion tonne bauxite deposit at the Mitchell Plateau - a project Norwegian aluminium company Norsk Hydro and BHP Billiton are eyeing off - which is one of the most sensitive and beautiful parts of the Kimberley. The resource is worth tens of billions.

Under questioning in the WA Parliament the former Labor Government conceded negotiations had 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 advertising its credentials as a responsible corporate citizen in the lead-up to the Gorgon approval, which was given despite concerns over the impact on unique endangered species including the flatback turtle, and possible leakage of carbon to be stored under Barrow Island.

Chevron has a poor track record around the world. This month, as a member of the American Coalition for Clean Coal Electricity, it was embroiled in a US congressional committee investigation over fraudulent lobbying activities to defeat the country's Waxman-Markey climate change legislation.

Investors try to factor in political risk and that includes potential community opposition. Blatchford says a lot of his campaigning efforts have been aimed at the joint venture partners.

"They're right in wanting to see all this development kept in the one area [the Pilbara],'' he says. ''They're right, there will be a huge environmental battle to protect the Kimberley."

Blatchford says Garrett will be seen as "a complete dud and a traitor to the environmental movement if he lets [Energy and Resources Minister Martin] Ferguson and Barnett run wild through the Kimberley."

The question, Blatchford asks, is whether Garrett has any clout within the Government. "Or is he just there as rubber stamp for the environment? Is he real? Or is he just hiding behind rhetoric?"