Energy in Transition

Peter Coleman, CEO and Managing Director Woodside APPEA Perth, 15 May 2017

Firstly, I would like to acknowledge the Traditional Custodians of the land on which we meet today, the Nyungar Wadjuk people. I would also like to pay respect to the Elders past and present and extend that respect to other Aboriginal Australians who may be here with us today.

This conference comes at a crucial time for our industry, as the role we play in the supply of energy attracts widespread attention.

It is timely for us to discuss our responsibilities and to consider what is at stake, for LNG operators and for those who rely on us.

It should be a time of opportunity for gas, as energy markets search for reliable supplies of low emissions energy.

It should be a time for gas to shore up its position in Australia's energy mix.

It should be a time for Australia to celebrate its abundant and diverse sources of energy, with gas playing a central role.

It is regrettable that it is instead a time when the concept of energy security is featuring in the national debate because it is in doubt, when manufacturers in the eastern states are complaining they cannot source supply. It is regrettable that our industry's tax contribution is being called into question.

It is regrettable that it is seen as a time of crisis, particularly considering it is a time globally of abundant and cheap gas.

The manufacturers are not the only ones who lose out in this scenario. Our whole industry loses out if gas is no longer seen as a reliable and available energy source, if we as producers are seen to be creating problems for the community rather than solving them.

In those circumstances, our social licence to operate is at risk.

Unfortunately, those smaller explorers, whose activities are vital to our industry's future, also risk getting caught up in the cross-fire. Exploration is already in dire straits. We should all be concerned if it becomes even harder for small- to mid-cap explorers to attract backing. There must be explorers and seismic companies questioning whether there's a future for them in the Australian industry. Perhaps it's time for the industry to consider that the future might look pretty grim without them.

Naturally, some of the issues that have dominated recent headlines will have a tendency to divide industry, depending on where you sit and whether or not you are directly affected.

Quite rightly, there are many here today who are feeling under significant pressure and a little aggrieved by the way our industry is being portrayed in national debates. But equally,

there are others who may be scratching their heads and wondering what went wrong and how we ended up here.

Now is not the time for us to revert to tribal behaviours that could leave our industry vulnerable to populist campaigns. Now is the time for us to unite as an industry and define our common purpose, mindful of the need to explain to the community how they benefit from our activities.

We need to convey to the community that we understand they own the resources. As resource developers, we commit to being responsible stewards of the environment. But over and above this, we have a responsibility to make a contribution to energy security, as well as a social contribution and an economic contribution, including through creation of jobs and payment of taxes.

I have spoken at previous APPEA conferences about how we need to be vigilant about maintaining our social licence to operate and ensuring we meet the growing expectations of government and the broader community. We have seen this year what happens when those expectations are not met.

The unfolding energy crisis on the east coast in recent months has fundamentally challenged Australia's understanding of its status as an advanced economy with high living standards.

It started, of course, with blackouts in South Australia, exposing flaws in the models of power generation and distribution through jurisdictions that are interconnected but often pull in different directions.

The issues extend well beyond the availability of gas.

But the growing uncertainty over energy security shone a spotlight on the constraints of east coast gas markets, revealing manufacturers' anxieties over escalating prices and supply shortages. This highlighted dual challenges: state government exploration and development bans were restricting new supply, while the rapid growth in exports from the east coast hoovered up much of existing production.

The exploration and drilling bans are symptomatic of a trust deficit that has emerged between our industry and the broader community. The imbalance between exports and domestic gas has made this situation worse.

It is clear we need to consider how we can regain the trust of the public. If we are to get onshore development back on track, we should think about whether a first step might be for APPEA to consult and agree on a code of conduct for land access and use that recognises and assuages landowners' concerns. We need to commit to a clear set of principles and processes to enable us to work with land owners and affected communities. Similar codes exist elsewhere in the world.

As an industry, we have been proud to carve out a role for Australia as a leading LNG export nation, but those boasts sound hollow if we cannot supply customers at home.

To put it bluntly, we need to ensure some of the resources we develop are available for Australian consumers, and available at a price that is sustainable for both the customer and the producer.

Woodside Petroleum Ltd. published this content on 15 May 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 15 May 2017 03:04:18 UTC.

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