Woodside, Canavan pile on WA government to dump EPA guidelines


Speaking at the Australiasian Oil and Gas Expo in Perth on Wednesday Ms O’Neill said the EPA was wrong to intervene in emissions targets at a state level, which she believed should be handled federally.

“They were wrong to volunteer up a policy that is effectively ‘net zero immediately’ on projects in WA – a wildly disproportionate share of the national task under either of the policy bookends,” she said.

“If this guideline is allowed to stand, it leaves WA unfairly exposed and at a competitive disadvantage to other states. It is vital for investment in WA that the state government strongly and unequivocally rejects the EPA’s guideline.”

Mr Canavan described the new carbon emission guidelines as a “brain explosion” and called on the WA government to formally reject them.

Speaking to media near Woodside’s Perth headquarters on Wednesday, Mr Canavan said the guidelines ‘defied common sense’.


“It is the wrong time to impose these new requirements on a sector that can contribute to greater job growth, greater prosperity in this state. What we need now is for the WA government to rule this out in all forms possible,” Mr Canavan said.

He warned the EPA guidelines would impact existing projects.

“Existing facilities often have to go back for approval for changes, variations, de-bottlenecking etc. So they could potentially be caught up in it,” he said.

New Macquarie Group reaserch warned the potential for the guidelines to delay Woodside’s West Australian Browse and Scarborough LNG projects was high.

Using current European carbon prices, Macquarie analyst Andrew Hodge said LNG companies in WA could expect to be slugged with carbon costs of up to $US6.6 billion if the EPA guidelines were passed.

He expects this figure to rise sharply as new projects come online.

Ignoring carbon is a luxury we believe LNG developers no longer have.

Macquarie Research analyst Andrew Hodge

“Using BP and Shell’s future carbon price expectations – of $US40 a tonne – this rises to around $US10.2 billion,” Mr Hodge said.

“We believe that policy uncertainty, unease amongst joint venture partners and pressure from investor groups is highly likely to delay [Woodside’s LNG projects at] Browse and potentially even Scarborough.”

He said, despite the additional cost to LNG projects, an emissions cap was necessary and shareholder activists would pressure companies to be more transparent on emissions.


“Ignoring carbon is a luxury we believe LNG developers no longer have, and though corporates have chastised WA’s EPA, we believe the EPA has come up with a solid compromise to treat carbon emissions,” Mr Hodge said.

“Many companies use what we would classify as a loophole in Scope 1 [direct emissions] targets by excluding joint ventures, even when they hold significant stakes and possess veto rights, on the basis they are not the operator.

“However, given the pressure around transparency, we would expect this will not last.”

The WA government is hosting a roundtable discussion with all WA LNG companies, the Chamber of Minerals and Energy and the Australian Petroleum Production and Exploration Association on Thursday morning.

Covering energy and policy at Fairfax Media.

Hamish Hastie is WAtoday’s business reporter.

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