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McGowan reinforces backing for Scarborough gas project despite election’s climate concerns

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Sean SmithThe West Australian
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Woodside Energy’s Pluto LNG Plant near Karratha.
Camera IconWoodside Energy’s Pluto LNG Plant near Karratha. Credit: Woodside/RegionalHUB

WA Premier Mark McGowan has reinforced his backing for the huge Scarborough gas project in the face of growing calls since Saturday’s change of Federal Government for the development to be blocked.

Suggesting Scarborough was a fait accompli, Mr McGowan underlined that the go-ahead for future gas projects would focus on their promises to reach climate change goals with the aid of carbon offset programs and the contentious use of carbon capture and storage.

“Those approvals are all done,” Mr McGowan said of Scarborough, which is being developed by Woodside Energy at a cost of $US12 billion ($16.5b).

“There’s significant offsets of the emissions from that project and obviously those issues will have to be worked through,” he told journalists on Wednesday.

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“But offsetting emissions and making sure we have carbon capture and storage are going to be important parts of what happens with gas projects in the future.”

Emboldened by sharp swings on the weekend, the Greens and newly-elected teal candidates have demanded tougher climate action from the Albanese Government, with Greens leader Adam Bandt arguing that allowing Scarborough to proceed would make it harder for the new government to meet its emission reduction targets.

However, it seems unlikely the Government will pick a fight in WA given Mr McGowan’s personal popularity and the hefty State swing to Labor he is seen as helping orchestrate in Saturday’s election.

Woodside has already approved the project, but climate activists argue there is no place for the development in the transition to cleaner energy.

Oil and gas companies are already warning that any tougher action on Australia’s carbon emissions should be considered in parallel with the need to guarantee energy security.

Woodside chief executive Meg O’Neill suggested that customers cared less about emissions if they couldn’t secure their energy needs.

Customers wanted “energy that’s reliable, affordable and lower carbon”, Ms O’Neill told the World Gas Conference in South Korea. “But if it’s not reliable or affordable, lower carbon goes out the widow.”

“Customers are doubling down and saying ‘let’s start with security and reliability, because we need energy to keep our lights on, to keep our homes warm, to keep our businesses running’.”

WA’s oil and gas companies believe they can work within the Government’s potentially tougher climate change agenda, despite the renewed pressure from activists to halt fossil fuel developments.

The Government has already rejected demands for more aggressive decarbonisation policies that would threaten the likes of Scarborough, but there are warnings that approvals for new oil and gas projects could become tougher.

Strike Energy, which is evaluating the potential to use Mid West gas to make fertiliser, expects new developments to face even more scrutiny and consumers to demand more accountability over the merits of future projects.

Managing director Stuart Nicholls said Strike’s proposed urea project would reduce Australia’s reliance on imported fertiliser and support the nation’s food security.

“Strike’s fertiliser development would reduce carbon impact of Australia’s urea consumption by 60 per cent, while providing security of supply and competitive prices”, Mr Nicholls said.

“The question everyone is now asking is, ‘is the carbon worth the cost?’.

“It’s going to become harder for fossil fuel developers and producers, particularly in coal but a bit less less so in oil and gas, to justify their role in the energy landscape, particularly in electrification.

“We have got world-class renewable energy in this country and we can easily displace a lot of the electrons that we consume with forms of sustainable energy.

“However, our heavy and manufacturing industries are much harder to electrify and that is where Strike’s gas has a meaningful role to play in a low carbon environment”.

Credit Suisse energy analyst Saul Kavonic said while energy companies would likely find it tougher under Labor, he was not expecting any major policy changes, at least in the short term.

“”We expect tougher emission baselines, greater pressure toward lowering domestic gas prices (and) new fossil fuel project approvals may face even more hurdles,” he said.

“But we don’t expect any major shifts in policy to the detriment of the energy sector near term.

“The Albanese Government will need to accommodate the Left and the Right factions within Labor, just as they need to accommodate energy security with energy transition, fossil fuel tax revenue and jobs with new green opportunities.

“The Right factions within the ALP are likely to resist major lurches left on environmental policy if it places blue-collar jobs at risk.”

Carnarvon Energy, which is working towards a go-ahead for its Dorado oil discovery in the Bedout Basin while advancing a renewables diesel project, said it hoped for “a sensible, pragmatic government that supports companies like ours that are looking to proactively” make the energy transition.

“We want to be an active supplier of energy to customers throughout the whole transition process,” chief executive Adrian Cook said.

“In the near term, the practical reality is that the majority of people driving petrol diesel cars are farmers, miners and truckers, and there is a need to provide that sort of fuel.

“But as we are investing right now, we are looking to also provide greener, lower carbon intensity fuels.”

Woodside has suggested that while it is still waiting on the details of a potential strengthening by Labor of the safeguards mechanism that monitors Australia’s biggest carbon emitters, a tougher regime would not affect its existing decarbonisation commitments.

Major gas producer Chevron also professes to be unfazed by the change of government.

“Chevron has been in Australia for 70 years and has worked with all Federal governments,” it said

“We look forward to working constructively with the new Government and continuing to provide affordable, reliable, and ever cleaner energy.”

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