Western Australia’s Energy Boom: Built to Last?
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Western Australia’s Energy Boom: Built to Last?

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Western Australia’s energy boom has seen the state outpace the rest of Australia in job creation and economic growth, helping the conservative Liberal-National coalition comfortably win re-election. The state’s traditional secessionist sentiment has been fuelled by Premier Colin Barnett, who has demanded a greater share of tax revenues from the federal government in Canberra.

Australia’s leading resource state has more than A$175 billion worth of projects agreed to or under construction. With the petroleum sector second only to iron ore, new gas projects planned include: the A$43 billion Gorgon gas project, the A$30 billion Browse LNG (liquefied natural gas) project and the A$29 billion Chevron-Wheatstone LNG project, in addition to a range of iron ore, gold and other projects.

Covering the whole western third of Australia, the state accounts for nearly 15 percent of national gross domestic product (GDP) along with over 40 percent of total exports. China is the state’s biggest consumer, “taking 42 percent of its output,” followed by Japan, South Korea, India and Thailand.

But with China’s slowdown, environmental concerns over onshore gas processing and the cyclical nature of the resource and energy industry, can the boom in the “wild west” endure?

‘Four more years’

“Four more years” was the chant at the Western Australian Liberal Party headquarters after the party’s poll victory earlier this month, and the sentiment was shared by the resource industry.

The federal Labor government’s mining tax and carbon price have proven deeply unpopular in Western Australia, with Barnett capitalizing on the dissatisfaction in securing control of both houses of the state’s Parliament.

The Australian Petroleum Production and Exploration Association (APPEA) described the outcome as a “clear cut” result which “creates a platform for the government to provide renewed leadership in capturing the benefits of growth opportunities associated with the state’s oil and gas sector.”

Congratulating the premier, APPEA’s chief operating officer in the western region, Stedman Ellis said: "The oil and gas industry is a significant contributor to the Western Australian economy and it looks forward to the re-elected Liberal National Government taking early action on its post-election policy plans.”

"The industry would place particular priority on early action to further improve the Government’s commitments to strengthening a market based approach to energy policy, extending the existing approvals tracking scheme and to establishing a biodiversity, water and cultural heritage database.”

Comments
4
Matt
January 12, 2014 at 21:35

It depends on geopolitical matters, the boom is over, have the new coal projects will never deplete the reserves. China is going to become more energy independent from the SCS and ECS, minerals in Afghanistan. India is looking to sea routes from Iran and if peace between Pakistan and India occurs then land routes open up to both Iran and Afghanistan (minerals), then the Indians have a large claim in the Indian Ocean. It all comes down to logistics and thus price, when you say a boom is over it dies a slow death and that is the trajectory. The US dollar is improving while it was low then you can sell more volume, you hire more people, more projects come online, the dollar rises less volume, less people employed, less GST, less royalties due to the volume. Mining companies are business profit driven, they have a margin of profit, to maintain that or close project, mothball, wage restraint comes it, less GST, less royalties due to less volume. You can’t replace India with China, China moves to renewables and energy independence. You would never build a surplus to fund all the future things, NBN, NDIS, health care pensions, defense. The mining tax which should have happened 15 years earlier, when it was coming in another 10 to 12 years to get the money to fund those items. But then just to live with all the big tick items, defense paid for, 60 years, NDIS, NBN just health and pensions, infrastructure, education but still be in deficit. You can run surplus every year but it won’t cover that, what did the last one buy, pinkbats, a few $1,300 checks and a few school halls. Hardly going to take care of the future, the last 10 to 12 years was to suck as much cash out before it comes to an end, to pay for the big ticket items to tax pressure of the future running of the country. Most things in treasury reports at some stage become law, however the mining tax was time sensitive, say in 8 years can’t be revisited as no longer fiscally viable. It is hard times you have to place industry in a holding pattern, various place that offered cheap labour, middle class rises, wages rise, it comes down to logistics, that is why some industry that outsourced offshore are moving back to the US. It all comes down to logistics, be it textiles, steel, manufacturing in general. You just have to ride it out keep the backbone of industry, skills, knowledge. Back to sheep, wheat. You hear a lot about the food bowl, the water in the North, Australia has bad droughts and they will only get worse, that water which has never really been touched is a strategic reserve. In good times it can be a food bowl, however in bad times, you either keep feeding the world or divert the water for your own people. Some is going to suffer and if people are reliant on that food, you divert the water, there would be a battle group floating off the coast. You either keep feeding them and let your own people suffer via drought. The key point I said you build an interconnector to Indonesia to supply energy, then onto Asia cuts cost. I said the same thing to Israel who is building the interconnector to supply energy Israel is not Australia. That would keep one competitive and make a bundle in carbon credits when the conversion to wind, solar and wave power occurs. The fact you do not have to ship LNG or whatever allows you to very completive, even Uranium reactors. That is the key thing vision and the will to do, Israel is doing it to Europe and Australia could have done it to Asia. It is banana republic sort of stuff that is what plagues Australia.

StarOne
April 8, 2013 at 07:36

Nothing in this world is built to last.

The consumption is far greater than nature can ever replace it. What takes million of years to form are being consume in a number of years. It can be seen that what is used to be extracted from land mass has now shifted to the sea bed.

After land then sea, where is the next place on earth can human tap their resources from?

Liang1a
April 3, 2013 at 08:20

China must be energy self-sufficient.  To power more than 1.5 billion cars China will need at least 35 billion barrles of oil a year or 5 times more than America.  Even if China imported 20 billion barrels of oil a year it will need to spend $2 trillion or more.  That is obviously impossible.  Therefore, China has no choice to use domestically produced wind, solar, hydro, and nuclear energy to produce electricity to power electric cars by means of batteries or fuel cells.  China has millions of tons of proven reserves of lithium and expect to find millions of tons more.  Therefore, China has all the resources to produce all the batteries and fuel cells it needs for all the cars its people drive.  Importing energy is not an option for China.

China should produce its own energy which would produce tens of millions of jobs for its own people and result in the development of its own economy.  Buying foreign energy will only impoverish China and slow its development while enriching other countries.  China should not use trade to make "friends" for protection and security.  China can only rely on its own powerful military for security.  And by relying on its own energy it will accelerate the development of its own economy which will provide the money to build a more powerful miltary to provide more certain security.

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