Industry leaders have warned of a “big ripple effect” on Australia’s economy and international reputation after Woodside’s $19 billion Scarborough gas project suffered a major legal blow on Thursday.
Key points:
- The Federal Court ruled approval for part of the Scarborough project should not have been given
- An industry leader says the ruling could impact Australia’s reputation among investors
- She wants clearer regulations for industry to help them undertake consultation
But they also hope the case will pave the way for the development of clearer regulations to achieve better consultation with traditional owners.
Mardudhunera woman Raelene Cooper claimed a David verse Goliath style victory when the Federal Court effectively slammed the brakes on the gas giant’s plans to carry out seismic blasting for the project off WA’s Pilbara coast.
The court found an environmental plan for the blasting was invalid and should never have been given approval after Ms Cooper successfully argued she had not been adequately consulted.
Ms Cooper’s legal challenge stemmed from concerns that the release of powerful blasts of air towards the ocean floor to find gas deposits could impact whales and other marine life.
International reputation at risk
Australian Energy Producers chief executive Samantha McCulloch called on the government to clarify regulations around Indigenous consultation.
“Australia’s reputation among international investors centres on its ability to provide certainty and stability, both of which are important for our global competitiveness and valued long-term relationships with international customers and investors,” she said.
Ms McCulloch said the federal court’s decision had compounded uncertainty among investors following its decision last year to overturn approvals for the Santos Barossa offshore gas project after a legal challenge from traditional owners.
“Governments must make clear regulations for consultation that maintain high standards of consultation with stakeholders, including traditional owners, but also provide regulatory certainty when an approval is granted,” she said.
A failure to do this would threaten domestic energy security and economic returns for Australians, she said.
Decision will have ‘ripple effect’
Regional Development Australia Pilbara CEO Tony Simpson said the Pilbara is underpinned by the resources industry and the delay to Woodside’s plans would have a big economic impact.
Mr Simpson said the decision would have flow on effects for smaller operators, from bus drivers to local contractors, who rely on income from these big projects.
“It will have a big ripple effect,” he said.
Mr Simpson said it was important for industry to do the right thing and have a good relationship with traditional owners.
“One of the key issues is around our environmental approvals, I think that’s where Woodside have failed today,” he said on Thursday.
“This is probably a really good start point for the industry to make sure that you are doing all the right things.
“Woodside has not had a good relationship with the traditional owners from the start on this project and I think that’s part of the building blocks.”
Gas industry ‘dependent’ on seismic blasting
While the case centred around approval for seismic testing, it did not comment directly on the practice.
For this project, however, it does reinforce the need for Woodside to consider Ms Cooper’s concerns about the potential impact of the surveying on marine life to determine if the risks need to be further reduced, in line with regulations.
University of Western Australia geophysics professor Mike Dentith said seismic testing was a fundamental practice in the oil and gas industries and there would be significant consequences if it had to change.
“It’s an absolute primary means of mapping the geology in the sub-surface to decide where oil and gas reserves may be,” he said.
He said the industry was “dependent” on the technique, and described it as a controversial subject.
“I think there’s evidence that certainly the wildlife reacts to the surveys, but it’s a difficult subject to study and I don’t think anybody’s established what the long-term impacts actually are,” he said.
Curtin University marine science professor Robert McCauley told the ABC last month the impacts of surveys were subtle but critical, highlighting concerns around the long-term effects of seismic activities.
Mr McCauley called for more research into alternatives to seismic testing.
‘Highly contentious project’
Maggie Wood from the Conservation Council of WA said the federal court’s decision represented another question mark over the Scarborough proposal.
“From the get-go, Scarborough has been a highly contentious project, and this latest court ruling highlights that,” she said.
“We are deeply pleased to see the court recognise the importance of proper consultation with traditional custodians.
“Where proponents fail to properly consult with people and communities where they operate, they are not only failing to recognise traditional custodians’ unique and powerful connection to country but also leave their proposals exposed to legal challenges, such as this.”
Ms Wood said the result of this case also highlighted the poor decision made by the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), which granted approval for the project.
“Those planning to invest in this project, or who already have money tied up in Scarborough or Woodside more generally, must be studying this latest setback in detail and considering whether the continued delays and spiralling costs are really worth it,” she said.
“Scarborough is a highly polluting, highly controversial and increasingly expensive project which flies in the face of the international consensus against new fossil fuel developments.”
What happens now?
The court’s decision means the company cannot carry out the seismic testing until it resubmits an environmental plan which the regulator approves as being informed by adequate consultation with traditional owners.
The impact of the decision on the Scarborough project itself is not yet clear.
Woodside had argued any delays to the seismic surveying would be “disadvantageous”, with that section of work delayed until 2025 because of potential conflicts with other parts of the project.
In documents filed in the case, the company said it was already too late to use information from the testing for the first phase of its drilling campaign, but that it would be useful for “future drilling campaigns and reservoir assessment”.
At its peak, Scarborough is expected to produce eight million tonnes of natural gas a year.
The Federal Court’s decision means Woodside’s path to get there will need to change, but it remains to be seen how exactly it will achieve that.
