David Gillespie (Lyne, National Party) Share this | Hansard source

The Offshore Petroleum and Greenhouse Gas Storage Amendment (Miscellaneous Measures) Bill 2014 and related bills are very important, as the member for Brand has so aptly summarised. I not only support most of his observations, but I note that $134 billion worth of potential development that may be put on hold or put at risk is of great concern to everyone in this House—at least I hope it is—because it is this sort of investment that drives wealth for the nation, wealth for individuals, jobs, employment security, and energy.

We have had so much energy in our lifetime that people tend to take it for granted. It has been the delivery of energy which has driven so many of the things that we take for granted, whether it be a car, a mobile phone, a TV, or a video—all the electronics. They all come from minerals which have been dug out of the ground by the use of extensive energy. They have been smelted in furnaces that require enormous amounts of energy. All of that energy, along with lots of other inventions over the centuries, is what differentiates us from medieval times and times before then when people were energy poor and energy amounted to burning wood, or the use of kinetic energy, horsepower, cattle power—all the simple things.

As the member for Brand so aptly pointed out, we are blessed with natural gas and offshore gas in the north-west of the country, in the Browse Basin. He also mentioned that it has, unfortunately, been left in limbo because it did not pass the commerciality test. I thoroughly agree with him, but it is a very polite way of saying that it costs too much to get it processed on shore. That should be sending alarm bills all around people working in the industry in Australia. Basically, we have priced ourselves out of the market. Our researchers and universities helped deliver the LNG technology and floating platforms, but the exorbitant cost of developing the huge natural gas reserves on shore led the oil and gas industry to develop this technology. So not only have we helped in a pure scientific manner but also the costs of doing business in the LNG space in Australia have driven them to invent it. So it seems ironic that people are saying, 'All our LNG developments are potentially at risk or will not proceed.' It is a salutary lesson that you cannot cook the goose that laid the golden egg.

When there was a rush for gas and energy, a lot of terms and conditions were not what any reasonable person would have expected two or three years earlier. But our chickens have come home to roost and, now that the construction phase has finished in many of these major projects, we have had to have a wake-up call. As the member for Brand so politely mentioned, it did not pass the commerciality test. The bleeding obvious was also stated—that is, that Australia is not the sole repository of oil and gas or mineral wealth, for that matter too, and that there are huge areas to be developed in North and South America, in Africa, in Russia, in the Confederate States and in China. It is a competitive world.

When billions are being mentioned—like you or I would mention millions or hundreds of thousands—that capital has to get a good return. It is a very risky business. To build a huge LNG ship, float it out into the middle of the ocean and anchor it on the seafloor, you have billions and billions at risk. If we do not do it better here, those boats will float off and get it off for those millions of people in Asia and elsewhere around the world who need energy to keep warm, to have their electricity generated, to run their furnaces, to build cars, to build electronics and to build housing. People take it for granted. Energy has to come from somewhere, and the most concentrated form of it—whether we like it or not—is oil and gas. I am all for developing other sources of energy. We are blessed with coal as well and lots of sunlight and lots of wind, but the efficiencies of petrol, oil, diesel and gas in a concentrated form is the reason it is being used so much.

There are four bills before us and they have come about because of our very efficient Geoscience Australia people, who have identified two little outcrops—North Scott and Seringapatam reefs. They have altered the definitions of what are Commonwealth waters and what are state or territory waters, and unintended consequences have arisen. There is a lot of concern about the title and the regulation around these titles. In particular, it materially affects the Woodside Browse Basin and two licences in the Conoco-Poseidon joint venture, which have huge reserves of natural gas. Quite clearly, the state, the Commonwealth and the titleholders want to have security of tenure and they want to know the circumstances in which everything is going to operate. So it is quite urgent that we get this all sorted out, and that is what these bills are addressing.

The legislation will clarify the arrangements for how the two statutory authorities, NOPSEMA—the National Offshore Petroleum Safety and Environmental Management Authority—and the National Offshore Petroleum Titles Administrator, NOPTA, regulate these titles and the levies. If the land is being transferred over to a state or vice-versa by virtue of these developments by Geoscience Australia, they will still be able to operate. What we do not want to see is a whole logjam of current development turned on its head because of some minor regulatory confusion. We want to have everything regulated in one place in one time so that the oil and gas companies that do want to develop these huge reserves for Western Australia, for Australia and for the world will be able to get on and do it—because, if cannot, they will go and do it elsewhere. So NOPSEMA and NOPTA will be able to regulate areas that are currently being regulated by them even though the areas are transferred over to Western Australia.

There are other legal issues at play here. Many of these titles, because they involve huge areas and huge amounts of money, are often held in several names. Currently, voluntary action can be taken by one of the parties of these joint ventures without notifying the other or, vice-versa, one party can remove themselves from it without notifying the others. This will streamline that process so that they can do things jointly and everyone knows what is going on. It sounds pretty straightforward, but, as you know, law is a complex animal and we are trying to make it simple.

I look forward to these areas being developed by companies here in Australia that use Australian technology and will pay their levies to the Australian government and to the Western Australian government. The royalties will flow through to the state and federal governments and the people of Western Australia and Australia will benefit. Schools and hospitals will be built, highways will be maintained and railways will be built because the states will have income from the natural resources that the nation is blessed with. But that will not happen if we are too expensive and we price ourselves out of the market. All this regulatory red tape, green tape and industrial relations tape can, as I have said so often, cook the goose that laid the golden egg. Not only is this cluster of amendments and legislation very important; it has huge ramifications for the wellbeing of the oil and gas industry and development in Australia. I commend all the bills to the House.

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