The oil and gas sector has strongly criticised the state government’s new resources sector strategy, saying it failed to focus on policies needed to achieve future success.
The oil and gas sector has strongly criticised the state government’s new resources sector strategy, saying it failed to focus on policies needed to achieve future success.
The Australian Petroleum Production & Exploration Association has labelled the strategy a missed opportunity, describing it as a collection of already-announced initiatives, most of which related only to the minerals sector.
APPEA director Western Australia, Claire Wilkinson, said the strategy lacked any forward-looking initiatives or tangible objectives and did not acknowledge the critical role that a reliable and affordable supply of energy, particularly that of natural gas, would play in future resource developments.
“WA cannot rest on its successes of the past and must strive to have in place the right policy frameworks to attract investment and develop new supplies of affordable and reliable natural gas to underpin the rest of the WA economy,” she said.
APPEA’s comments followed the release of the strategy paper this morning by Mines and Petroleum Minister Bill Johnston.
Like many government strategy papers, it basically pulls together a summary of current policy settings.
These include the exploration incentive scheme, which helps small mining companies, along with plans to streamline project approvals and support for new sectors such as battery minerals.
Mr Johnston also highlighted the focus on having an environmentally and socially responsible industry.
“The McGowan government is committed to ensuring a best-practice regulatory framework remains in place to ensure the responsible and sustainable development of our state’s resources,” he said.
Ms Wilkinson said the strategy failed to provide industry with a clear understanding of the government’s priorities for the future.
“I don’t think I’m being overly critical,” she told Business News.
“We are trying to be constructive.”
Ms Wilkinson noted that gas generated more than 60 per cent of the electricity produced in WA and could support future economic growth, but only if the state had the right policies.
“In future decades, gas is well placed to support the growth of renewables, development of low-emission technologies, and enable new energy sources such as hydrogen, but in some areas the policy settings are continuing to drag on WA’s investment competitiveness where capital is needed to bring new gas supplies to market,” Ms Wilkinson said.
“We would also like to see efficient regulatory processes between different WA government agencies to reduce duplication, and regulatory changes to enable low emission technologies such as greenhouse gas storage and hydrogen to be undertaken in WA.”
The release of the strategy coincided with the government announcing an additional $61.5 million in funding for the renewable hydrogen sector.
However, Ms Wilkinson said the government was too narrow in its strategy, which focused on renewable hydrogen, aka green hydrogen.
“It’s not talking about the broader hydrogen spectrum,” she said.
This includes so-called blue hydrogen, where gas rather than renewables are used to produce the hydrogen.
Ms Wilkinson added that new gas supplies could support developments in WA such as ammonia, urea, and methanol production.
She also criticised the government’s policy on hydraulic fracture stimulation (fracking), including what she called a lack of regulatory clarity.
“This has had material impacts on exploration programs where HFS is required, with companies delaying their work programs whilst awaiting details of the regulations under which their activities will be assessed," Ms Wilkinson said.
“These delays are costing the economy and costing jobs and reduce the attractiveness of WA as a place to invest when capital can easily find opportunities in other countries where costs are cheaper.”
APPEA expressed similar concerns in a recent submission to a state parliamentary inquiry.
The Chamber of Minerals and Energy of Western Australia also called for more action on regulatory reform.
“We look forward to seeing more tangible progress from the state government’s Streamline WA initiative,” chief executive Paul Everingham said today.
“We want to see meaningful deregulation and removal of duplication across a variety of policy areas, to provide strong incentives for mining and resources companies to make efficient large-scale investments that drive our sector.”
The overall tone of its statement today was muted.
For instance, it simply “acknowledged” the release of the strategy: this was a revealing choice of words, as industry lobby groups almost invariably “welcome” the release of such papers.
Mr Everingham said it was vital that industry, government and communities continued to collaborate to unlock the potential of the $140 billion of projects currently in the sector’s pipeline in WA.
“It’s also crucial that our sector has access to the right people, with the right skills, at the right time to capitalise on the considerable opportunities in front of us,” he said.
The Association of Mining & Exploration Companies, which represents small and mid-sized companies, welcomed the release of the report.
“AMEC has been advocating for cutting red tape and streamlining the process for opening new mines and it is excellent to see the government making this a priority,” chief executive Warren Pearce said.
“New mines mean many new jobs, and wider benefits for the state.”
In response to APPEA’s comments, Mr Johnston said the lobby group did not appear to be in touch with its members, as WA was attracting unprecedented levels of future-facing investment into the resources sector.
APPEA’s members include Woodside Petroleum, Chevron, Shell and Buru Energy and its board is chaired by Santos chief executive Kevin Gallagher.
“APPEA needs to recognise that technology is rapidly moving past them,” Mr Johnston said.
“If gas projects are not invested soon, they may never be.
“The WA government continues to support investment in gas projects, but new technologies like hydrogen risk leaving APPEA behind.
“APPEA’s members who talk to me recognise that fact.
“As minister, I have regular contact with APPEA members on their WA investments, and APPEA’s comments don’t match what their members are telling me.”
The government also defended its record on project approvals and regulation.
The Department of Mines, Industry Regulation and Safety claims to have cut its assessment timeframes from 30 to 15 business days, for exploration programme of work applications.
The government is currently developing the Streamlining (Mining Amendment) Bill 2021 to simplify approval processes for mining companies.
