New oil and gas projects under threat due to a ‘broken’ regulatory system
The Australian Energy Producers (AEP) lobby group believes billions of dollars in new oil and gas projects are under threat thanks to a “broken” regulatory system.
AEP chief executive Samantha McCulloch has come out fighting after a shock court decision found that part of Woodside Energy’s (ASX: WDS) environmental plan for the giant Scarborough gas field off the Western Australian coast was invalid.
The Federal court has agreed to delay part of Woodside’s Scarborough survey plans after a legal challenge brought by traditional owner Raelene Cooper, arguing that she was not adequately consulted.
Ms McCulloch says the Scarborough delay is an example of a “broken offshore environmental regulation system.”
Challenges to regulatory clarity
The AEP declared that important energy projects which are following the rules, consulting in good faith and being granted approvals by the regulator are being impacted because unclear regulations and the application of them are effectively changing the goal posts. The time delays and costs incurred are substantial.
“More obstacles are being put in the way of critical energy developments, risking the new supply needed to deliver domestic energy security, emissions reductions and substantial economic returns for Australians,” the energy body said.
The AEP noted that comprehensive and effective consultation with Traditional Owners and landholders has been an important part of the work of Australia’s oil and gas industry going back decades.
“Regulations which provide clarity and certainty for industry while maintaining consultation obligations are desperately needed.”
“Governments must make clear regulations for consultation that maintain high standards of consultation with stakeholders, including Traditional Owners, but also provide regulatory certainty when an approval is granted.”
Increasing uncertainty for investors
According to the AEP, investors in Australia’s resources sector are facing increasing approvals uncertainty after the Scarborough s court decision, compounding the uncertainty stemming from last year’s decision against a regulatory approval for the Santos Barossa Project.
In an opinion piece, Ms McCulloch, said the Federal Court’s finding that the national regulator did not have the power to approve part of Woodside’s $16.5 billion Scarborough gas project off Western Australia was bewildering and not an isolated incident.
“Last year, Santos experienced a similar situation when the regulator’s approval for its $5.8 billion Barossa Project off the Northern Territory was set aside by the same court.”
NOPSEMA holding decision review
Australia’s independent expert regulator for all offshore energy operations, NOPSEMA, said it is now reviewing the reasons for the outcome to ensure future regulatory actions are in accordance with the decision.
“NOPSEMA recognises the important role that First Nations people have in giving input to, and participating in, the protection of the environment and cultural heritage,” the regulatory authority said in a statement on the decision.
“NOPSEMA was not reasonably satisfied that all environmental risks and impacts had been identified and therefore the Scarborough seismic environment plan could not be accepted without applying conditions.
“The Authority took a decision to seek advice to support the delegate proceeding to make a decision given potential ambiguity in the reading of the environment regulations.”
NOPSEMA provided procedural fairness to Woodside by enabling a review of the draft conditions prior to the decision being issued. This was in accordance with administrative law requirements. Woodside did not seek a review of the grounds of acceptance with conditions.”
Regulatory log jam
Interviewed on radio, Ms McCulloch said the industry needs clarity around what the regulatory requirements are.
“We’re talking about, you know, hundreds of millions, billion-dollar investments, and you cannot make those investments when your approval can be overturned.”
Ms McCulloch noted that there is a significant logjam in terms of projects seeking to move forward.
“So you know, this is really damaging Australia’s reputation as being a reliable, stable investment destination. And I think we also need to recognise that we need this investment in gas; gas is playing such an important role in terms of our energy transition.”
“We’re relying on it more and more, not just for in power generation where it’s backing up renewables but also for supporting our manufacturing sector, supporting in the future processing [of] critical minerals. There’s a really important role for gas to play.”
“We need to be investing in supply. That is actually the key also to ensuring that we’ve got affordable you know, reliable supply for the domestic market and bringing down some of the costs of gas at the moment. It’s all contributing to a very high-cost, unreliable investment environment in Australia.”