(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Clyde Russell
BRISBANE, June 6 It should be a golden age for
Australia's liquefied natural gas (LNG) producers as they sit on
the cusp of becoming the world's largest supplier of the fuel
that holds the largest growth potential among its fossil rivals.
But instead of taking a moment to reflect on its
achievements, industry leaders used their annual conference to
both lament and lambaste what they believe are unfair attacks on
LNG from a variety of sources.
In a marked change of tenor from conferences in prior years,
it seems the LNG industry now knows who its enemies are, but is
less certain how to tackle them.
Enemy number one is the rising tide of environmental
activism that is managing to sway public opinion against new
natural gas exploration and production, and also influencing
politicians that had previously been champions of the industry.
Enemy number two is coal, with LNG needing to make a
stronger case in developing countries why it should be the fuel
used to generate electricity, rather than coal, which is roughly
twice as polluting and not that much cheaper since the falling
crude oil price dragged LNG down to record lows.
Identifying your enemies is one thing, knowing how best to
fight them is another.
Andrew Smith, chairman of Shell Australia, told the
Australian Petroleum Production and Exploration Association
conference on Monday that the LNG industry is "the subject of an
orchestrated, organised and well-funded campaign to hem in its
To many in the LNG sector it's a struggle to understand why
they attract the ire of environmental activists, given the
industry's view that natural gas is a better alternative to coal
and one that can realistically be used as the world transitions
to renewable energy from fossil fuels.
The industry has been slow to realise that for some green
groups all fossil fuels are evil and must be opposed vigorously,
and they have stepped up campaigns against the extraction of
natural gas from coal seams, the method that supplies the three
new LNG plants in Queensland state.
And activists have had success, with groups such as Lock the
Gate making land access more challenging for energy companies
being one example.
They have also scored political successes, with Victoria and
New South Wales, Australia's two most populous states, both
imposing moratoriums on exploration for natural gas and the
opposition Labor Party in the Northern Territory promising to do
the same if elected.
At a federal level, the opposition Labor Party, which is
neck-and-neck with the ruling Liberal Party in polls ahead of a
July 2 general election, promising to institute a policy that
would effectively reserve some natural gas production for
If implemented such a policy would likely drive up natural
gas costs and undermine spending on exploration as well as make
it extremely unlikely that Australia would add to the 10 LNG
plants in operation or nearing completion.
NEED FOR WINNING TACTICS
But how can the industry fight, or at least lessen the
impact of, environmental activism?
Up until now they have relied on trying to counter arguments
with fact-based publications and articles and working with the
communities in which they operate.
This may help them in the rural areas where they operate,
but it doesn't defeat activists who are very skilled in using
social and mass media to publicise their views, which are often
filled with misinformation and half-truths.
In short, the industry has been playing Mr Nice Guy against
people who have no interest in dialogue, cannot be won over by
respected science and are prepared to walk very close to the
edge of legality in their tactics.
How exactly the LNG industry can take the gloves off while
still meeting corporate legal requirements is difficult to see,
but a more determined campaign may be in order if they are going
to grow in future years.
Fighting enemy number two should be easier, after all, coal
is the global bogeyman for climate change.
But this is also a challenge for the LNG industry as some of
their members straddle both camps, such as BHP Billiton
, which is Australia's biggest oil and gas producer as
well as one of the world's leading miners of coking coal.
The LNG industry should be advocating that governments
impose carbon pricing, which would hurt coal and boost natural
gas, and backing this up with investments in downstream
industries in Asia that will use up the existing LNG surplus and
create demand for future growth.
Encouraging coal-to-gas switching and preventing coal-fired
plants from being built in the first place should be an aim of
the LNG sector, and one that would help them realise the golden
age of LNG.
If the COP21 aim of no net carbon emissions by 2050 is to be
realised, natural gas has to displace coal in the next few
years, given that power plants typically have lives of around 40
years, and once built, they tend to be used.
LNG can still enjoy a golden age, even if it is relatively
short, but it needs to start winning some battles.
(Editing by Christian Schmollinger)