What the oil and gas industry tells itself

Royce Kurmelovs reports

On day two, Kevin Gallagher stepped to the main stage at the Brisbane Convention & Exhibition Centre, where the oil and gas industry was holding its annual national conference, and began his presentation with an unscripted joke. A short man with a broad Scottish brogue, the Santos chief executive did a double take at the height of the microphone left by the previous speaker and told his audience how “it’s very unusual” for him to go on stage “after someone who’s shorter than me”.

The microphone brought to bear, Gallagher began his talk on “the shape of things to come” with a series of claims: Australia needed “decarbonisation, not defossilisation”; the world will still be using oil and gas long into the future; there were “simply no alternatives today” to replace fossil fuels used in fertilisers, steel, cement and plastics; and the world needed steady supplies of oil and gas now that Russia had invaded Ukraine.

“Energy security is the foundation of national security,” Gallagher said.

“What we have on our doorstep is a prime example of what happens if the energy transition is focused only on stopping new oil and gas projects.”

In April, the Intergovernmental Panel on Climate Change declared it was “now or never” to address climate change. In 2021, the International Energy Agency said limiting global warming to 1.5 degrees, as set out in the Paris agreement, meant there could be no new oil, gas or coal investment beyond that year. According to an analysis published in the scientific journal Nature, there was more than $1 trillion in oil production assets – mostly owned by pension and superannuation funds – at risk of becoming stranded as the world moves away from fossil fuels. But Gallagher wanted Australia to double down.

“We’ve had a decade of moratorium, shutdowns and blockers on resource-rich states and territories, over 14 scientific inquiries into the safety of onshore gas development, all of which concluded that our activities can be conducted safely,” Gallagher said. “And as I have said for a number of years, the resulting scarcity of new developments today is frightening, with forecasts of tight supply over some years.”

The four-day Australian Petroleum Production and Exploration Association (APPEA) conference began on May 16 and wrapped on May 19, days before votes would be counted in the Australian federal election. There were free lunches, cocktail nights, a gala dinner featuring a performance by Vanessa Amorosi and a golf tournament on the Friday. For an APPEA member, standard entry tickets cost $1845. For everybody else it was $2295.

As an event “by the industry for the industry”, those who spoke felt they were among friends and so tended to say the quiet parts out loud. In his opening address, Senex chief executive and current APPEA chair Ian Davies declared: “The focus of our opponents on stopping fossil-fuel projects, frankly, has had no effect on consumer demand. It has had no effect on emissions reduction.” Instead, he said it “only pushed fossil-fuel developments to places such as the Middle East and Russia”. During a panel discussion, Lucy Snelling, head of corporate and commercial at State Gas, said that she thought children in schools were being “brainwashed” about climate change, and this was making it hard to recruit new workers. On the final day, MST Marquee equities analyst Mark Samter explained how, in his personal opinion, there was “zero chance we reach net zero by 2050”.

Away from the glitz of the main stage, the technical panels gave a different impression about what the industry was thinking. There were presentations on decommissioning oil assets and the future of hydrogen. One talk offered suggestions on attracting millennials into the workforce, and another for how to manage the risk of addiction and suicide among oil rig workers. There were two separate presentations on the legal risk associated with climate change, with one going so far as to offer “practical tips” about what to do when an oil company is hit with a class action lawsuit. These were not well attended.

It was the big names on the program, a who’s who of Australian politics and industry, that captured most attention. Beyond the usual suspects – representatives from Exxon, Shell, Chevron – attempting to list all the notables felt like drawing a corporate chart of the Australian government.

“Not really,” he said. “I think my request is that there be no big kneejerk factors, that there’s no big Biden-type policy announcement on day one, in closing things down, because I think that’d be very disruptive.”
It was a remarkable line, a distortion of reality that bore no relation to what had actually occurred in the United States. And, as it turned out, Gallagher’s “request” came true: hours after Anthony Albanese became prime minister, the Australian Financial Review reported that Labor had committed in writing to the future of coal and gas.

In her first interview after being sworn in as resources minister, King told The West Australian that the Labor government “absolutely” backed Woodside Energy’s Scarborough project – once described as a $16.6 billion “bet against” climate action. Gas would be the “backbone of the economy”, she said, as she shot down any suggestion of an end to fossil-fuel investment in line with International Energy Agency recommendations.

“There’s a critical misunderstanding of what the industry is,” King said. “Those misunderstandings come from places around the country that don’t really know about the industry, nor perhaps want to know.”

There was, however, one area where the oil and gas executives would be disappointed. The Australian Oilfield Golf Tournament, scheduled for the Friday, was cancelled due to the recent torrential rain falling across Brisbane.

Kylie Carre, lead analyst at Shell subsidiary QGC and chair of the golf tournament, explained that the downpour was part of a “major weather event” that had been responsible for catastrophic flooding across south-east Queensland and northern New South Wales, temporarily wiping Lismore off the map – and for flooding the Brookwater Golf and Country Club. With “great regret”, she advised that the course had been “closed for a week and still not drained”.

This article appeared in The Monthly. Royce Kurmelovs is a journalist and the author of books including The Death of Holden and Just Money.