$77b fracking, ports and pipeline project proposed for west Kimberley


August 12, 2019 08:29:48

A network of oil wells that involve fracking in the Great Sandy Desert, connected by pipelines to new and existing ports, may become Australia’s biggest oil producing project.

Key points:

  • The discovery of up to 57 billion barrels of oil by Theia Energy will require fracking to release it from shale deep underground
  • The company is working with traditional owners on what could end up Australia’s biggest oil project
  • Traditional owners hope jobs for locals will flow from the project

Documents on the website of privately owned Theia Energy, some of which have since been removed, say they have found as much as 57 billion barrels of oil in the desert location 150 kilometres south-east of Broome.

The oil find is described as “unconventional” meaning it is locked in dense rock that will need hydraulic fracturing, or fracking, to allow the oil to flow to the surface.

Theia Energy is in negotiations with the Karajarri traditional owners of the area to gain permission to confirm commercial flow rates of oil by fracking rock over a kilometre underground.

Leading the negotiations on behalf of traditional owners is Karajarri Traditional Lands Association chairman Thomas King.

“It will probably end up being the biggest oil project in Australia,” Mr King said.

“I envisage there will be a huge benefit in such a huge project like this, but whether Karajarri people feel that is something they want to entertain still remains to be decided.”

‘$250 billion in tax revenue’

A project fact sheet produced by Theia Energy and dated 2018 suggested that of the tens of billions of barrels of oil estimated to be locked in the shale rock, six billion barrels were recoverable.

This could be worth $250 billion in tax revenue and $55 billion in royalties to Government, and would require a $77 billion capital investment, the document said.

The project aims to ramp oil production up to 100,000 barrels of oil a day which, if achieved, would easily make it Australia’s biggest oil producing project.

But in an interview with the ABC, Theia Energy’s chief operating officer, Jop van Hattum, was more cautious about the potential of the project to progress to this scale.

“There is a potential for that, there’s a lot of work to be done to see if that is all possible,” Mr van Hattum said.

“There are a lot of assumptions in the economic model at this stage.”

Mr van Hattum said a document that had been removed from the company website, which included a graphic showing new ports, pipelines and roads, was not a proposal.

“That picture is really to invite people to come along and think about how the project could be developed in the future,” he said.

“It’s not a proposal; it’s an investment brochure that outlines the potential of the project.”

Economic challenges

The Canning Basin is an enormous geological area of North West Australia that has previously been touted as having a huge potential for oil and gas.

Since a spike in interest in the Canning Basin by investors and major petroleum companies around 2011, many companies have pulled out of the region or seen severe share price declines.

But Mr van Hattum believes Theia Energy could overcome the challenges.

“We’re optimistic that we can succeed because it is a large resource,” he said.

“There obviously will be pressures on keeping costs under control.”

Professor Peter Cook studied the economic feasibility of shale oil and gas in Australia as part of a report produced by the expert panel he chaired for the Australian Council of Learned Academies (ACOLA).

“There’s no question that the economics of unconventional gas are more challenging than they are in the United States,” Dr Cook said.

“The cost of drilling in Central Australia is several times higher in an area such as Central Australia than it is, say, in west Texas.”

Transport is also a major cost challenge in the remote Canning Basin, but oil is more cost effectively transported than gas, which could tip the balance in favour of this project.

Fracking given ‘a bad name’

Also part of the ACOLA expert panel was Professor Sandra Kentish, the head of chemical and biomedical engineering at the University of Melbourne, and an expert on the environmental issues around shale oil and gas.

“There’s obvious positive economic benefits in terms of improvements in gross domestic product and all the rest of it, but there are clearly some environmental concerns,” Dr Kentish said.

While fracking has attracted popular attention as a threat to the environment, Dr Kentish said community concern over the process was misplaced.

“There was a lot of environmental damage done in the US when fracking was first introduced,” Dr Kentish said.

“But it was the unregulated nature of the way that industry was established that created a bad name for fracking.”

Dr Kentish said that effective regulation of fracking made it no more environmentally risky than other forms of drilling.

But it is the oil that gives this project its economic advantage that also presents the biggest environmental risk.

Fracking has been argued to potentially reduce greenhouse gas emissions by displacing more-polluting coal as an energy source.

But the Great Sandy Desert Project’s focus on large volumes of oil made its contribution to climate change the biggest risk, according to Dr Kentish.

“There are significant environmental concerns here in terms of producing oil that is not going to displace coal — it’s going to be used to drive cars.”

Mr van Hattum said Theia Energy was committed to minimising environmental impacts.

“There are ways to offset greenhouse gas emissions and we’re certainly committed to this project being sustainable into the future,” he said.

Fracking puts traditional owners in ‘box seat’

Many Karajarri people live in Broome and 170km further to the south in Western Australia’s largest Indigenous community of Bidyadanga.

“Employment opportunities are pretty limited as you can imagine in a community of up to 1,000 people with no industry,” Mr King said.

“We as traditional owners I guess will take advantage of any of those opportunities and hopefully add to the quality of life for people in the community.”

The West Australian Government lifted its moratorium on fracking last year after an independent scientific inquiry found the risk of fracking to people and the environment was low.

The Department of Mines, Industry, Regulation and Safety declined to be interviewed by the ABC as the project crossed many regulatory areas.

But in a statement, the Department confirmed that “Theia Energy has applied for a number of permits and approvals in relation to the Great Sandy Desert Project”.

“All applications for hydraulic fracturing exploration and production will be referred to the Environmental Protection Authority for assessment,” the statement read.

In lifting the moratorium on fracking, the WA Government also introduced a veto right for landowners and traditional owners.

This gave traditional owners the power to potentially stop projects requiring fracking, and a stronger negotiating position than in projects not involving fracking.

“The Government’s preference to give veto rights to Indigenous people has certainly put us in the box seat in relation to the bargaining power we have with companies,” Mr King said.

“My job is to ensure that we fully investigate and that we have the right professional advice … and that our members are fully informed before we make a decision on which direction to take.”










First posted

August 12, 2019 07:09:44

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