In many ways the Environment Protection Authority and the Conservation Commission were simply doing their jobs by recommending against a significant development on what is an A-class nature reserve.
What isn’t black and white, however, is how the greater community will react to these highly damaging recommendations and what the State Labor Government will decide to do about the Barrow situation later this year. Either way, another slip at that stage and to borrow from Greek legend, the Gorgon project will indeed turn to stone.
Assuming the public comment process throws up a typical self-cancelling mix of pro-green and pro-development submissions, the Barrow Island decision is likely to be significant test of the green v development credentials of the Gallop Government.
Labor’s relationship with business has flirted back and forth over the years. Although elected to power with a green mandate more recently Labor has keenly tried to win over big business and sell itself as pro-industry. That said, last month it put the kybosh on all-day Sunday retailing.
Moreover, the carrot being dangled before Labor is the massive long-term fiscal benefits that developing Gorgon will bring to state coffers. Depending on which production scenario chosen that could be anywhere between $25.8 billion to $43.5 billion.
Whatever the call, Premier Geoff Gallop and his Cabinet won’t be able to dodge making a decision. Chevron Australia chief executive, Jay Johnson, made sure of that last week when he said: “There is no fall-back after Barrow, this is the only option.”
Getting to this decision point has been tortuously slow. It was way back in November 2001 that the Minister for State Development advised ChevronTexaco that the WA Government was prepared to consider giving access to Barrow Island after all the relevant environmental, social, economic and strategic issues had been examined.
But what’s 18-odd months when in the scheme of things when you consider Gorgon has been on the development wish list for 20 years and has soaked up more than $800 million in advancement costs?
It should also be remembered that what the government is giving is an “in principle” decision on Barrow Island. This process does not replace any requirements for formal environmental assessment which would be necessary under the Environmental Protection Act and the Commonwealth Environment Protection and Biodiversity Conservation Act.
Which means there is bound to be plenty of more green tape to push through should Labor say yes. In fact both the Conservation Commission and EPA reports are laced with references for the need for more work on impact management and risk management issues.
Which brings us to Gorgon itself. The greater Gorgon area off the Pilbara coast contains in excess of 40Tcf representing 25% of Australia’s total known gas resources. If it can be brought on-stream by 2008 to coincide with a predicted spike in gas demand from Asia and the West Coast of the United States then it could become Australia’s most significant resources project.
But it has flaws. It has been characterised as “distant, deep, dry, difficult and dirty.” In its report for the WA Department of Industry and Resources (which supported the Barrow Island development proposal), the Allen Consulting Group, said apart from the fields being far from shore and partly in relatively deep water, liquids (which provide valuable early cash flow) account for only a small portion of resource.
“The fields are ‘difficult’ because the geological structure of the Gorgon basins present some challenges to efficient depletion,” ACG said. “In terms of being ‘dirty’, Gorgon gas contains a high level of CO2, which requires more intensive processing and raises complex greenhouse issues.”
In addition, unlike the initial situation for the North West Shelf, domestic sales of Gorgon gas would depend on the ability to win customers in a highly competitive Australian gas market.
Just to confuse matters, although the GJV is seeking in-principle approval to establish gas-processing facilities on Barrow Island, the final form of the development is yet to be determined. While the LNG/DOMGAS operation proposed by the JV offers significant economic benefits, these would be even greater if a gas-to-liquids facility, such as that proposed by Sasol Chevron, were incorporated into the project.
GJV spokespeople have moved to play down the impact of the negative environmental reports released this week. They point to the outstanding environmental performance of JV manager ChevronTexeco whilst producing oil on Barrow Island. They also say its now or never given the window of opportunity with the future LNG market.
So is Gorgon a monster project with frightening competitive potential or does it have monstrous environmental problems that when properly looked at turns it into stone? Under the consideration process, the public has August 12 to lodge comments. After that it goes to a Ministerial sub-committee. If it survives that process then it comes up for parliamentary scrutiny and then full environmental assessment. There’s along way to go. The fun has just begun.
