“The hottest play on the planet,” Keith Pitt calls it. Resources Minister Pitt and his government are keen to open up the Northern Territory to gas fracking but, if the NT’s Beetaloo Basin is so “hot” for investors, then why do they need public money to drill it? Even more bizarrely, the industry has made it clear that it does not want public subsidies but Pitt and Co appear determined to throw public money at the gas companies anyway. Callum Foote and Michael West report on another extraordinary case of corporate welfare, environmental destruction and the political donors and large US hedge funds who we are all subsidising.
They just don’t get it. Or if they do, are they are so compromised by donations from multinational oil and gas companies they are prepared to risk both the planet and the financial future of Australians?
Egged on by the toadies in the financial press, the Australian government is pushing ahead with plans to open up the Beetaloo Basin in the Northern Territory to fracking. Make no mistake, this is a carbon bomb.
If the Beetaloo development proceeds it will unleash up to 1.2 million tonnes of greenhouse gases, blowing Australia’s Paris targets out of the water. Such is the stranglehold however that the gas industry has over governments in Australia – both state and federal – that they are throwing money at the gas industry when even its peak body APPEA has plainly said it does not want or need.
We will get to that grotesque paradox shortly. Firstly, a reminder of the sheer madness of ramping up Australia’s oil and gas developments when the rest of the world is fleeing fossil fuels for both climate and financial reasons.
- gas is almost as destructive to the environment as thermal coal in terms of emissions,
- the epic flight of capital from the oil and gas industry proceeded apace last year with dozens of institutions globally exiting gas investments.
- gas use in 2020 is down 21% from the 2014 peak, indicating structural rather than cyclical decline,
- wind and solar use keeps rising as the cost of renewable energy keeps falling sharply
- US renewable energy consumption has just exceeded coal for the first time in over 130 years
- even the top energy regulator Clare Savage has questioned the future of gas networks.
Undaunted by reason however, politicians continue to assist this sunset industry to make as much money as possible before the curtain falls.
“The Beetaloo Basin has been described as the ‘hottest play on the planet’ with the potential to be a world-class gas resource, transform the Northern Territory economy and generate 6000 jobs by 2040,” according to Resources Minister Keith Pitt.
Who knows from which “independent expert’s report” Pitt is obtaining his 6,000 jobs estimate. Gas is capital intensive, not labour intensive but the real story here is corporate welfare.
“If the Beetaloo really was the “hottest play on the planet”, IEEFA gas analyst Bruce Robertson told Michael West Media, “wouldn’t all the gas companies be lining up to drill exploration wells and not need taxpayers hard earned dollars?
“Why would the government need to subsidise the “hottest play on the planet”? Origin energy is farming down its interest in the Beetaloo, as noted in its investor presentation 2020.
It’s not often that Robertson, one of Australia’s leading renewables voices, finds himself in agreement with the gas lobby, but in this case he is gobsmacked that the government seems to be tossing money at the gas sector which even its peak body has said it doesn’t want or need.
In an Australian Financial Review article, APPEA executive Keld Knudsen (Director Northern Territory and Exploration at APPEA), said that the industry hadn’t sought government subsidies to carry out drilling.
Interestingly, the AFR article was written at 3.59 on December 17 and revised at 5.35 to exclude the paragraph below:
“But he played down any expectation of early production: “The Beetaloo sub-basin still requires billions of dollars of investment in high-risk exploration and the construction of production wells, gas processing and pipeline infrastructure to get the gas to market – and this will take a number of years”.”
“What this tells us is that the industry did not seek subsidies for high-risk drilling in the Beetaloo, according to APPEA, but got $50m anyway.”
As the drilling is high risk and development is years away, this waste of public money does not even fit with the government’s pronouncements on an immediate “gas fired transition” of the economy.
“Mr Knudsen says that there is unlikely to be early production because the Beetaloo requires “billions of dollars of investment in high risk exploration”,” says Robertson. “Note the government is spending $50m … will it end up throwing hundreds of millions down holes?”
Even more bizarre is that Origin is selling while the government is talking it up.
“Why would Origin sell down its Beetaloo interests now if it was the “hottest play on the planet”. What gives the minister such confidence that Origin appears to lack?
“For a “gas fired recovery” to work it must stimulate investment in the next few years to create jobs.”
The revised version of the AFR in question says: “Most analysts expect any commercial production from the basin would only start in the second half of the decade”.
“The initial exploration drilling program will be carried out by highly specialised fly-in-fly-out workers so will not stimulate employment in the NT,” says Robertson. “The second half of the decade, subject to highly speculative drilling success, is hardly a plan for stimulus for the economy coming out of a Covid 19 epidemic.”
It seems the Resources Minister Keith Pitt may have borrowed his “Hottest play on the planet” line directly from some lines from the managing director of Tamboran Resources, the speculative explorer which stands to benefit from the public subsidies.
“Joel Riddle, chief executive of Tamboran Resources, described the exploration area in the NT as “the hottest play on the planet”, based on much better than expected flow rates from testing at the Tanumbirini-1 well last week and the ready market for gas on the east coast and in Asia.”
Could it be true that the real winners from this plan to subsidise gross environmental destruction are not even Australians? This:
“Tamboran, backed by two large US funds, is heading for an ASX sharemarket listing early next year, either through an IPO of up to $195 million or a reverse takeover of a listed junior. It is one of several players working – amid opposition from environmental groups – to firm up a potentially huge gas resource in the NT that could prove to be Australia’s answer to the US “shale gale”.
Why do Tamboran’s wealthy foreign investors need public subsidies from Australian taxpayers?
Tamboran’s two cornerstone investors are US funds Baupost Group and Lion Point Capital who had a track record of backing successful shale plays in the US and “have the risk tolerance to support an accelerated pilot development” in the Beetaloo.
Tambouran, which has 25% of the project with large political donor Santos as the major stakeholder, is also backed by Rich Lister Paul Fudge, who made billions from the sale of coal seam gas acreage during Queensland’s CSG boom.
“Essentially the explorers in the Beetaloo are big enough or have big enough backers to go it alone without the government if the prospects really are that bright,” says Robertson. “The lobbying must have been pretty intense by these billionaires. It even seems to have taken APPEA by surprise!”