APPEA CEO Samantha McCulloch Discusses Safeguard Mechanism with MixFM Darwin Host

Topics: Safeguard Mechanism reforms, Beetaloo Basin and Barossa project, east coast energy security, importance of natural gas in a cleaner energy future, economic importance of Beetaloo Basin development

Katie Woolf: The oil and gas industry has raised concerns that the Federal Government's changes to the Safeguard Mechanism, which we spoke about earlier this morning, ignore the key role of natural gas in meeting Australia's climate goals. Now the Australian Petroleum Production & Exploration Association says that the sector is committed to net zero by 2050 and economy-wide policy to drive down emissions. We heard from the Environment Centre NT a little bit earlier this morning. Kirsty Howey says this is really the sounding of the death knell for the Beetaloo and Barossa projects. But joining me on the line right now is APPEA's Chief Executive, Samantha McCulloch. Good morning to you, Samantha…

Samantha McCulloch: Good morning, Katie, thanks for having me.

Woolf: Thank you so much for your time this morning. Can you explain the Federal Government's changes to the Safeguard Mechanism and what they mean for your industry?

McCulloch: The changes that were announced yesterday put some increasing obligations on the industry including on projects that are already very well developed and well advanced. So it's change the rules of the game for what are really substantial investments. As an industry, we are committed to net zero. Our APPEA members have identified their own net zero targets, some earlier than 2050 - 2040 or 2030 in some cases. So the industry is already investing to reduce emissions. We're investing in technologies like carbon capture and storage to deliver those deep emissions reductions. But having the rules of the game change on a fairly frequent basis at this point in time is a concern for these investments.

Woolf: What do those changes - to use your words - having those rules changed, what does that mean for projects like the Beetaloo?

McCulloch: In the case of the Beetaloo, the developments will now have to ensure they are net zero for all their direct emissions. But actually in practice the developers in the Beetaloo were already targeting this and planning for this and the Beetaloo has very low CO2 concentration in the gas. For your listeners who might not be aware, when you produce gas often there can be CO2 in the field, naturally occurring. That CO2 is very, very low in the case of Beetaloo - 1% to 3%. So addressing those emissions is something the industry was already planning on doing.

Woolf: So does it sound the death knell for projects like the Barossa and the Beetaloo as the NT Environment Centre have said?

McCulloch: Look, how these changes effect projects differ from project to project. But in general, I would say the Beetaloo (impact) is very much in line with what project developers were planning to do. In fact, the Beetaloo is just such an important economic and energy security opportunity for the Northern Territory, but also for Australia, that it's really important that we see these projects go ahead. This is a huge resource that can deliver enormous economic benefits - up to 6000 jobs for the Northern Territory – while helping to meet energy security domestically. We have organisations like the ACCC and the Australian Energy Market Operator warning of gas shortfalls but the Beetaloo could be operating from as early as 2024 and supplying gas into the domestic market. It's an opportunity that we should absolutely be developing and supporting.

Woolf: This is where I always find it really sort of interesting and I guess difficult for the regular Joe to get your head around. On one hand, you've got the Environment Centre that this sounds the death knell for the likes of the Beetaloo. Then on the other hand, we can all see what's going on on the east coast and we know there has been some real issues when it comes to energy and then the cost of power and the concerns with some of those coal-fired powered stations closing down and what it means for the transition. So there's probably people out there who are feeling a bit confused?

McCulloch: Yeah, Katie, the practical reality is we need more gas to support our net zero pathway. So we need more gas as we move away from coal-fired generation, as we try to phase out coal-fired generation, as we deploy more renewables – wind and solar – we need gas as that reliable back-up partner to be there when renewables are not available. So we're seeing this already now particularly on the east coast where demand for gas is actually increasing for power generation. And then we still need gas to fuel our manufacturing sector. Gas is an important feedstock for so many of the things we make and produce in Australia and it will continue to be relied upon in industry as a reliable fuel. And, of course, the industry is playing a leading role in terms of developing cleaner fuels like low-carbon hydrogen as well as technologies like carbon capture and storage, which are really critical to put us on that path to net zero.

Woolf: So Sam, just on the Beetaloo, where are we at in terms of that project. How soon are we anticipating when things are going to get underway?

McCulloch: Look this is a really exciting opportunity for developers in the Beetaloo targeting gas production from as early as mid way through next year. There is plenty of activity happening there. We are waiting for some final recommendations from the Pepper Inquiry from the Northern Territory Government. But with that resolved, the development will be able to go ahead in the coming years. As we're discussing, this is really important not just for economic activity in the Northern Territory, but in terms of supporting domestic supply and energy security in the Territory and also along the east coast of Australia.

Woolf: APPEA Chief Executive Samantha McCulloch, we really appreciate your time this morning. Thanks for your time.

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