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New APPEA Chief Confronts Brave New World
In taking on the Chief Executive role of APPEA, David Byers has embarked on a mission almost as daunting as his new past-time, surfing. But while being on an unstable wave can sink you in an instant, Byers brings a level-headed approach to the headship of Australia's oil and gas industry lobbyist.
Byers and his three kids started surfing lessons when they bought a beach house at Inverloch when he returned eight years ago from the US where he worked for oil giant ExxonMobil.
Unlike his surfing prowess, though, Byers comes to his APPEA role as a seasoned veteran. A law and economics graduate, Byers started in BHP Billiton's graduate program before joining Woodside at a critical time in the history of Australia's gas industry - when the then-small Australian player, as part of the North West Shelf joint venture, was constructing the country's first LNG hub.
Byers was involved in Woodside's community affairs and labour relations, and left just before the project's first LNG cargo set sail around March 1989. It was a heady time for the Australian gas industry. LNG was ground-breaking in more ways than one. Today, it's a routine fact that gas contracts are long-term, but at the time it was all about oil - a commodity that is traded on a daily basis. LNG, on the other hand, had a much longer-term view, even back in the 80s.
"It was a very new industry. In fact I remember Woodside had a number of secondees in from Shell in those days, and a lot of the engineers were brought in from fairly exotic locations around the world because it was such a new industry to Australia", he said.
The JV's first customers were Japanese power utilities, which has parallels to today - Chevron recently signed binding Sales and Purchase Agreements with Tokyo Electric Power Company for the delivery of LNG from its Wheatstone natural gas project for 20 years.
This is not a case of history repeating itself. For Byers, this speaks volumes as it is a reminder that, despite all the talk about the growth of China as a trading partner to buy Australia's energy, Japan has been a "stable and strong customer of Australian LNG since the beginning of the Australian LNG industry".
Byers, 51, started in October 2011 in the unenviable job of heading the lobby group for the oil and gas industry in Australia, facing fierce opposition over CSG's development in NSW and rapid expansion in Queensland to service the latter's four multi-billion dollar LNG projects. In an 'exit interview' with PESA News
Resources, his predecessor Belinda Robinson said CSG in NSW was in danger of being "still-born", but was confident that facts would win the day in an emotive debate that involves agriculture producers whose families have been on their land for generations.
Byers - who left ExxonMobil in 2007 after 17 years to be CEO of the Committee for Economic Development of Australia (CEDA) and subsequently an executive in charge of corporate and international affairs for Airservices Australia - is not afraid of a bit of controversy. It comes with the turf.
He says graduates considering an oil and gas career should not be deterred by the hammering that the industry has been copping of late.
"It doesn't matter what kind of industry you're in. If it's big and important enough, it's always going to be complex, and on occasions attract its fair share of criticism. At the end of the day this is a vital industry; you can't have economic growth without having viable sources of energy. Being in an internationally significant industry which is a major contributor to Australia's economic future, that's a pretty appealing prospect for any young graduate to be thinking about", he said.
He acknowledges the challenges ahead - especially in staying ahead of a rapid (and some would say rabid) flow of media. For some perspective, much of the controversy over CSG is being fed like petrol on a fire by a US 2010 documentary called Gasland, a populist film that tells grossly untrue horror stories from a completely different industry.
A major change Byers has witnessed since he's returned to the resources industry is the increased visibility, with CSG being an onshore resource.
"Operating onshore rather than offshore means you have a very prominent industry; we've got more issues across more jurisdictions. There was a time when APPEA was involved mostly in Federal Government issues. Now, with a thriving onshore industry, it requires the industry body to be across developments in state legislation and regulation", he said.
In the nearly five years he's been out of the resources game he has witnessed exponential growth in the number of players in the industry, and the size of investment has just undergone a "phenomenal change".
"When I became Chief Executive of CEDA, there were two operating LNG projects - Darwin LNG and the North West Shelf project - and Gorgon was looming large on the horizon. There was nothing like the number of projects under development today, and not much in the way of active examination of the CSG-LNG industry", he said.
A major challenge for APPEA, he said, is "keeping up with the rapidity of the media cycle and the instantaneous way in which information moves. We see that played out in the public debate over CSG".
"It becomes very difficult to be able to get some of the factual information out there into the public domain. From an industry perspective, there has been a lot of legislative and regulatory scrutiny of the various project proposals. It becomes very difficult to go out there and explain in a factual way all of the mechanisms which are in place in the face of this very, very emotional tide of commentary on the industry", he said.
APPEA and major companies have produced studies to back up industry's environmental and economic credentials, but influential players are sceptical when industry funds these reports. The day before PESA News Resources spoke to Byers, Independent Tony Windsor was flexing his balance-of-power muscle over the Federal Government by stating he won't back its controversial mining tax unless a comprehensive scientific study of the
environmental impacts of CSG is undertaken. Windsor also said the Commonwealth should take over state mining leases.
One of the things Windsor cited was the fact that energy giant Santos part-funded the environmental study that gave it the all-clear to drill in the Liverpool plains in northern NSW.
Byers said the idea that the states cannot regulate their resources sectors is misinformed and Windsor's policy suggestions pose legal and practical problems.
"The suggestion that there are no viable processes at state level is simply wrong", Byers said.
"If you look, for example, where you've got three projects very well advanced in Queensland - all of them have had to complete very substantial work under state and federal legislation to have environmental assessment statements finalised that cover potential impacts on the environment.
"A very comprehensive piece of legislation in Queensland - the Oil and Gas Act - provides a very strong regulatory framework. Similarly in NSW, despite what you would read, there is a very strong legislative framework in place. Mr Windsor is effectively suggesting that the state governments cannot control this issue without Federal intervention. But there are viable state provisions which govern the ability of project proponents to put their projects together. Quite apart from the regulatory arrangements that apply, as an industry we are confident that
we can co-exist successfully with agriculture and certainly, we are keen to work with farmers to show that.
"Giving the Commonwealth the power to take over state mining leases is a big issue to take on if you think about that for more than a moment. The states have rights of ownership of the resources onshore and have their own mechanisms to safeguard standards and obtain royalties from the production of those resources. They have therefore had a history of developing mechanisms to ensure that mining industries are being appropriately regulated. More importantly, they have the skilled and experienced people in regulatory positions equipped to do it.
"This is an issue with broader effects than just the oil industry. It's also one which affects the hard mining and coal industries, where there have traditionally been viable state regulatory regimes in place. There seems to now be an assumption that none of those things have been effective or even matter.
"There are some things - and NOPSEMA (National Offshore Petroleum Safety and Environmental Management Authority) is a good example - where yes, you can see some benefits from having common standards applicable across the country. But as a basic principle, I don't think we should just default to the position that everything should be bumped up to the Federal Government. In reality, the experience base and the history of dealing with these issues has been in the state jurisdictions.
"The public in general is a lot more sceptical of institutions these days. So I think the task in front of the industry is to be able to work with community groups and other bodies like academic institutions, to show that industry is capable of developing approaches in the broader interest. One of the critical things that it takes to make these big capital projects successful is to show that you can work with communities.
"It's a high-stakes industry. The benefits for Australia are huge, the increasing economic significance of the industry is for all to see, and it's also an industry which is global. Australian resources and projects are having much more of an influence globally as a vital part of the energy supply chain. So it's a very important industry and vital that we get all of the settings right. Part of that will be to ensure that we bring the community with us in understanding the importance of having a viable oil and gas sector and seeing the benefits that it brings."
Windsor's criticism over Santos part-funding the environmental study also needs to be seen against a bigger picture, he said.
"As a general principle, I think you have to stand on the basis that the work (research) is done by third parties who attach to it their own professional competence and qualifications. It's put out there in the public domain so other people with similar professional qualifications can assess the study findings, poke holes in it, or see whether there have been things missed", he said.
"With an environmental impact study, we're not talking about a flimsy process. These are very detailed documents which are subject to public and regulatory scrutiny. While the study may have been part of the requirements to develop the project and therefore required to be commissioned by the company, it's out there for all to see. The public will form their own impressions and regulatory authorities will determine whether it meets their requirements."
Also in the public sphere is the debate over whether Australia should just be exploiting its natural resources, when alternative sources of energy like renewables are on the cards.
Byers' response again takes in the bigger picture.
"Over the long-term we will need all energy sources - traditional hydrocarbon sources and renewables, such is the projected growth in global demand", he said.
"Competing energy sources are assessed on factors like reliability, performance and affordability. Sources that are reliable, affordable and perform well will be preferred, hence oil and gas - and coal - have been the dominant energy supply sources. Their scale is such that this looks set to continue for the foreseeable future.
"When it comes to projections of future energy supply options, people often fail to factor two variables into their projections [of remaining energy sources]. The first and most important of these is technology. Technological breakthroughs may come for renewables but equally they are occurring for oil and gas. For example, shale gas probably wasn't even on the spectrum a decade ago in the US, which was looking at LNG importing terminals in the early 2000s. There has been a tremendous change now with the development of these unconventional resources, because technology has evolved to develop those resources commercially.
"The second variable is price. One of the issues with renewables is that they are often high cost. In the absence of technological breakthroughs, when that cost is combined with certain performance issues (such as intermittency of wind), at least for the foreseeable future, hydrocarbon-based sources like oil, gas and coal have the edge. In fact the International Energy Agency has recently issued a report - its projections talk about a 'golden age of gas'.
There are also claims that Queensland's rapid CSG expansion has all happened too fast, too soon, without the environmental checkpoints built in first. Byers says this is wrong.
"I took a recent trip to Brisbane and met a number of people - from government, to project proponents to landholder representatives. I also met with the Chair of the Surat Basin CSG Engagement Group, and I came away with the strong impression that a lot has been done in Queensland. There is a strongly established legislative framework, codes of conduct in place to look at how to work out arrangements for access to properties and how best to work with landholders and the like. After all, the CSG industry has been producing gas for 15 years in Queensland and it supplies 90% of Queensland's gas", he said.
"By my observation, there may have been a few bumps on the road but it seems to me that the Queensland Government has paid a lot of attention to ensure the industry progresses in a good time frame while having processes in place to resolve issues that arise.
"I'm aware that not everything has gone smoothly in Queensland and we need to learn from those experiences, but we also need to recognise that Queensland has essentially pioneered the industry in Australia."
