Woodside debates 'unfair' LNG claims as conflict looms

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This was published 4 years ago

Woodside debates 'unfair' LNG claims as conflict looms

By Nick Toscano and Hamish Hastie

Oil and gas giant Woodside is pushing back against activists targeting natural gas emissions as a large-scale protest campaign threatens to disrupt plans for a gas hub in Western Australia.

Woodside's $50 billion Burrup Hub liquefied natural gas concept, which includes its Scarbrough and Browse projects off the coast of WA, has become the target of a protest campaign organised by the Conservation Council of Western Australia. The council's Piers Verstegen said Burrup Hub if approved would be the nation's "most polluting fossil fuel mega-project" with four times the yearly carbon footprint of the proposed Adani coal mine, and vowed to launch a public campaign to cause difficulties by encouraging public submissions.

Australia's Woodside is approaching a critical juncture as it embarks on final investment decisions.

Australia's Woodside is approaching a critical juncture as it embarks on final investment decisions.Credit: Michele Mossop

"The staggering carbon footprint of the Burrup Hub translates directly into investor risk, which has not been adequately disclosed to the market by Woodside," Mr Verstegen said.

On Thursday, Woodside chief executive Peter Coleman called the comparison between coal and natural gas "manifestly unfair" and "disingenuous", pointing to the International Energy Agency latest finding that global emissions from power production had flattened last year due to both growth in renewable energy and advanced economies switching from coal-fired power to natural gas.

"If the world is going to achieve its carbon targets, then the world must switch to gas because it's the only industrial-scale fuel available at the moment to decrease the carbon footprint," he said.

"Anyone trying to tag the lifecycle emissions of gas with coal really is disingenuous in what they are talking about."

Energy generated by burning gas is far less emissions-intensive than coal, with gas considered by many to be the critical "transition fuel" that can help nations lower their emissions while gradually shifting to greater use of renewable energy. However, concerns around natural gas in Australia centre on the leaking of methane — a more potent greenhouse gas than carbon dioxide — during gas extraction, as well as the significant amount of emissions generated from shipping LNG.

Mr Coleman said the volume of objections to its gas development were "not at ridiculous numbers". "We continue to work through that," he said. "There is some work for us to do, but we have a good relationship with the conservation groups in WA."

His comments came as Woodside's half-year profit, released on Thursday, plunged 75 per cent after the company took a $1 billion hit at its undeveloped liquefied natural gas project in Canada's British Columbia. The write-down at the Kitimat LNG asset, jointly owned with Chevron, caused Woodside's net profit to sink to $US343 million ($509.1 million) for the year to December 31, from $US1.36 billion in 2018. The company cut its final dividend to 55¢ a share, down from 91¢ a year earlier.

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Mr Coleman described 2019 as a "pivotal year" for Woodside, delivering a solid performance while laying foundations for the future. The company is approaching a critical juncture, analysts said, as it embarks on making final investment decisions for key LNG growth projects.

But they warned projects could be "challenged" due to weakening LNG market fundamentals including the growing supply from the United States, Qatar and Mozambique and subdued Asian demand outlook, which were eroding returns.

"Nevertheless Woodside isn't blinking," RBC Capital Markets analyst Ben Wilson said, pointing to the company's prediction it would invest more than $4 billion this year should Scarborough and Pluto expansion proceed as expected.

Ahead of a deadline next month, Woodside is yet to finalise a deal with BHP, its partner on the Scarborough project for the processing of the gas through the Pluto LNG plant. BHP said on Thursday the project had progressed to "feasibility study phase" - the last stage before a final investment decision.

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