The fight to oppose the development of the Kimberley coastline has spread all the way from the red sands of James Price Point to capture the attention of the whole nation.
Like the Franklin Dam or the Tasmanian Forest campaigns before it – the battle to save the Kimberley has come to define a new generation of Australian environmental activists, many of whom have taken the opportunity to visit the Kimberley, get the red dirt on their feet, and will now feel personally connected to it for life.
But unlike the Franklin and Tassie forests, at James Price Point the commercial realities in the corporate boardrooms may be the thing that hammers the final nail in the coffin rather than grassroots political pressure.
As it stands, there is little chance Woodside will be able to make the economics stack up, let alone defy strong community opposition to the industrialisation of the Kimberley. Investors understand this. It's time Woodside and its partners took stock of the situation and gracefully conceded that the Browse Basin Gas Hub will not be developed at James Price Point.
The project has not only lost its social license but it is also caught in the centre of a radically changing oil and gas sector – meaning that the fiscal realities of a floating offshore option (FLNG), combined with the opportunity to short circuit a damaging international activist backlash – are shifting corporate heads away from the Premier's dream of a gas factory on the Kimberley coastline.
The loss of social licence was recently reflected in the WA State election where Premier Barnett's Kimberley candidate suffered a primary vote swing of -0.3%, while the state average was an 8% swing towards the government. The Greens recorded a positive swing of 10% despite a state-wide swing against them of almost -3%. The depth of feeling in Broome around the No Gas campaign was clearly the wild card.
With Japan developing a futures market in LNG similar to oil, a locked in price contract will be a thing of the past Buyers will be looking for the cheapest possible prices, further driving down the cost of LNG in what is already looking like an over supplied market. Post-Fukushima Japan is growing as one of the region's major buyers of Australia's LNG.
Despite Mr Barnett's huge expenditure of political capital in the proposed development, the time has now arrived for the Premier to gracefully concede he is on the wrong side of commercial fundamentals. Woodside's final investment decision into the Premier's preferred site is still not fully costed, just as the final environmental approval still sits with Federal Minister Tony Burke and all development cost invoices are not yet in.
Burke has already requested Woodside and the State to go back and do more work on the National Heritage-listed dinosaur track ways as well as the endangered greater bilbies. This will create more costs and uncertainty for the project and the potential for more work requested to satisfy the minister will cause only more delay and costs.
Further uncertainty has been added by a constant barrage of legal challenges to the compulsory land acquisition process and constant questioning of the conflicted WA EPA approval where four of five committee members had to declare a conflict of interest. Woodside's Browse proposal has been considerably held up by the onshore processing option.
In the meantime, the resource sector has become over crowded. The Inpex Browse project piping LNG 885km to Darwin is now in the construction phase, as is the Shell's Prelude project. In a tight international LNG market these projects will be several years ahead on the proposed Woodside development.
This moment of truth may come as soon as April 24 when Woodside holds its AGM in Perth. We already know that Woodside's investment partners Shell prefer the FLNG option, and several investor trips that the Australian Conservation Foundation has held into the Kimberley over the past two years have yielded the same message – investors have already moved on from James Price Point.
Colin Barnett may have acquired enough goodwill within the mining and political sector in WA to have been afforded a dignified silence on the issue during the recent election campaign. But if he is unable to let up now and accept that the bulk of investors have already moved on – his dogged determination of building one of the worlds biggest gas hubs at James Price Point in the Kimberley could become the defining failure of his time as Premier.
Discuss in our Forums
See what other readers are saying about this article!
Click here to read & post comments.
2 posts so far.