Mr HATTON - 2001-06-05
There has been recent comment in the media about the location of gas processing and methanol production plants. In this mornings media, Litchfield Shire President Gerry Wood criticised the location of these plants at Middle Arm and indicated he wanted proposed plants established at Gunn Point, a view which the Opposition Leader appeared to support.
Could the Chief Minister please inform the House of the government’s preferred location for these plants and could he give us the reasons the government holds that view.
ANSWER
Mr Speaker,I thank the member for his question because it gives me an opportunity to clarify what is the true situation and why it is very important we stay focussed on the achievement of gas onshore to Darwin.
Firstly, when we consider gas onshore we have to go back some years when both Shell Woodside and Phillips were working to two totally different agendas. It was always Phillips’ intention to create an LNG plant in Darwin at Middle Arm if they achieved gas onshore, and they were looking for both LNG and domestic customers. Completely separate to that, was the Shell Woodside plan centred primarily on Methanex to land gas at Gunn Point. They were pursuing those separate objectives.
Since that time as members would be aware, and I hope Territorians are aware by now, in November last year the joint venture arrangements were put in place whereby the total Timor Sea fields would be developed as one cooperative joint venture. Also there has been the decision that the pipeline would be landed onshore at Middle Arm providing that those joint venture arrangements move through to fruition and we see a market established and gas onshore.
But at the same time whilst they’re working together to get gas onshore with the one pipeline at Middle Arm, they are still looking for separate markets and that gets us down to a couple of fundamentals that we all have to be very clear on. That is, from the Phillips point of view for their project to succeed they need two major customers - firstly, the LNG customer in El Paso and other LNG customers they might develop over time and, secondly, GTL resources who are a Methanex customer who will be co-located with their LNG plant at Middle Arm.
From the Shell Woodside perspective Methanex is a critical factor in achieving a domestic gas supply separate to LNG because they have to not only be part of the LNG market but they also need to convince their shareholders that to commit to such a large project they need to have confirmed domestic customers separate to LNG. So what I am saying to you is we come down to, at the very least, two but certainly three foundation customers who have to be pursued vigorously – El Paso with the LNG plant, Methanex as the major foundation customer for Shell Woodside, and GTL Resources as an additional domestic customer for Phillips.
There is no doubt in my mind that whilst at the outset Gunn Point was considered a suitable site when these were separate joint ventures, diligence is still being done by Shell Woodside on Gunn Point in case the whole project and joint venture arrangements fall apart. They have to look in some years to come at a separate market to Phillips and look at the feasibility of Gunn Point.
But the real issue at the moment is building a gas pipeline, landing gas onshore, and having sufficient customers to achieve that objective, to achieve the gas pipeline to be built beginning in the last quarter of 2002. That is why I get very angry when you hear people such as Gerry Wood who purports to be a concerned environmentalist, and I accept that - but for God’s sake get yourself informed as to what really you are talking about. I have great doubts that he speaks as the President of Litchfield Shire. This is a person who already has his election posters printed, will stand as an Independent for the seat of Nelson, and is trying to get a profile as an Independent on this particular issue. It is about time he declared his hand clearly because it is very important that we know where people stand, we know what profile they are trying to establish and they are not out there scaremongering people to the point of destroying a billion dollar project.
I was disappointed that the Leader of the Opposition started to run with that sort of line ...
Ms Martin: Oh, rubbish! Don’t you tell fibs.
MrBURKE: This is not a time for fighting, it is too serious.
I emphasise the fact that Gunn Point was a feasible option whilst these were separate ventures with separate markets. We now have a totally different scenario. There is no doubt that GTL Resources will lodge at Middle Arm with Phillips with the LNG plant. That is indisputable. I can tell you now that notwithstanding any outstanding due diligence that Methanex are conducting, there is no way known that they will lodge at Gunn Point on their own, miles from anywhere, with a separate harbour, on their own with a separate methanex plant, when their major competitor is at Middle Arm with less on-costs and lodged right in where they can get their market much closer to the port. So let us accept a couple of factors that emerged very quickly.
Methanex will want to go to Middle Arm; GTL will want to go to Middle Arm; the LNG plant will want to go to Middle Arm. These are very clean industries and I would ask the Leader of the Opposition and Gerry Wood to really investigate the technology changes that have occurred, the size of these plants, the buffer zones that are around them, such that Middle Arm is a totally acceptable location for those industries.
Any further gas development in the future that might involve gas manufacturing industries that come as a result of gas onshore, will go out to Gunn Point and that area will be developed over time. But the Territory government, and I would hope with Labor’s support, should be centred on this fact.
Let’s get the foundation customers in, let’s help them through this very sensible arrangement, let’s get them to commit their billions of dollars, let’s encourage them into Middle Arm because that is where they will undoubtedly want to go and let’s not frighten them off because we have got enough factors working against them at the moment in terms of the fiscal arrangements not being decided, the billions of dollars of commitment that they are about to commit against competitors in the Middle East and elsewhere.
We are at the point of getting major development for the Northern Territory for many years to come. It is just totally irresponsible for the likes of ill-informed egg farmers who could not even survive as an egg farmer, going out there trying to say he understands the gas situation and Gunn Point is the most appropriate position. If Methanex go to Gunn Point, I can tell you now this Territory government will be asked to spend millions and millions more money to establish them at Gunn Point. In any case they will not come because the ask will be too high that the Northern Territory government could not support it and they will go the Middle East.
Let us encourage the foundation customers in the Middle Arm and we might get a gas project.
Could the Chief Minister please inform the House of the government’s preferred location for these plants and could he give us the reasons the government holds that view.
ANSWER
Mr Speaker,I thank the member for his question because it gives me an opportunity to clarify what is the true situation and why it is very important we stay focussed on the achievement of gas onshore to Darwin.
Firstly, when we consider gas onshore we have to go back some years when both Shell Woodside and Phillips were working to two totally different agendas. It was always Phillips’ intention to create an LNG plant in Darwin at Middle Arm if they achieved gas onshore, and they were looking for both LNG and domestic customers. Completely separate to that, was the Shell Woodside plan centred primarily on Methanex to land gas at Gunn Point. They were pursuing those separate objectives.
Since that time as members would be aware, and I hope Territorians are aware by now, in November last year the joint venture arrangements were put in place whereby the total Timor Sea fields would be developed as one cooperative joint venture. Also there has been the decision that the pipeline would be landed onshore at Middle Arm providing that those joint venture arrangements move through to fruition and we see a market established and gas onshore.
But at the same time whilst they’re working together to get gas onshore with the one pipeline at Middle Arm, they are still looking for separate markets and that gets us down to a couple of fundamentals that we all have to be very clear on. That is, from the Phillips point of view for their project to succeed they need two major customers - firstly, the LNG customer in El Paso and other LNG customers they might develop over time and, secondly, GTL resources who are a Methanex customer who will be co-located with their LNG plant at Middle Arm.
From the Shell Woodside perspective Methanex is a critical factor in achieving a domestic gas supply separate to LNG because they have to not only be part of the LNG market but they also need to convince their shareholders that to commit to such a large project they need to have confirmed domestic customers separate to LNG. So what I am saying to you is we come down to, at the very least, two but certainly three foundation customers who have to be pursued vigorously – El Paso with the LNG plant, Methanex as the major foundation customer for Shell Woodside, and GTL Resources as an additional domestic customer for Phillips.
There is no doubt in my mind that whilst at the outset Gunn Point was considered a suitable site when these were separate joint ventures, diligence is still being done by Shell Woodside on Gunn Point in case the whole project and joint venture arrangements fall apart. They have to look in some years to come at a separate market to Phillips and look at the feasibility of Gunn Point.
But the real issue at the moment is building a gas pipeline, landing gas onshore, and having sufficient customers to achieve that objective, to achieve the gas pipeline to be built beginning in the last quarter of 2002. That is why I get very angry when you hear people such as Gerry Wood who purports to be a concerned environmentalist, and I accept that - but for God’s sake get yourself informed as to what really you are talking about. I have great doubts that he speaks as the President of Litchfield Shire. This is a person who already has his election posters printed, will stand as an Independent for the seat of Nelson, and is trying to get a profile as an Independent on this particular issue. It is about time he declared his hand clearly because it is very important that we know where people stand, we know what profile they are trying to establish and they are not out there scaremongering people to the point of destroying a billion dollar project.
I was disappointed that the Leader of the Opposition started to run with that sort of line ...
Ms Martin: Oh, rubbish! Don’t you tell fibs.
MrBURKE: This is not a time for fighting, it is too serious.
I emphasise the fact that Gunn Point was a feasible option whilst these were separate ventures with separate markets. We now have a totally different scenario. There is no doubt that GTL Resources will lodge at Middle Arm with Phillips with the LNG plant. That is indisputable. I can tell you now that notwithstanding any outstanding due diligence that Methanex are conducting, there is no way known that they will lodge at Gunn Point on their own, miles from anywhere, with a separate harbour, on their own with a separate methanex plant, when their major competitor is at Middle Arm with less on-costs and lodged right in where they can get their market much closer to the port. So let us accept a couple of factors that emerged very quickly.
Methanex will want to go to Middle Arm; GTL will want to go to Middle Arm; the LNG plant will want to go to Middle Arm. These are very clean industries and I would ask the Leader of the Opposition and Gerry Wood to really investigate the technology changes that have occurred, the size of these plants, the buffer zones that are around them, such that Middle Arm is a totally acceptable location for those industries.
Any further gas development in the future that might involve gas manufacturing industries that come as a result of gas onshore, will go out to Gunn Point and that area will be developed over time. But the Territory government, and I would hope with Labor’s support, should be centred on this fact.
Let’s get the foundation customers in, let’s help them through this very sensible arrangement, let’s get them to commit their billions of dollars, let’s encourage them into Middle Arm because that is where they will undoubtedly want to go and let’s not frighten them off because we have got enough factors working against them at the moment in terms of the fiscal arrangements not being decided, the billions of dollars of commitment that they are about to commit against competitors in the Middle East and elsewhere.
We are at the point of getting major development for the Northern Territory for many years to come. It is just totally irresponsible for the likes of ill-informed egg farmers who could not even survive as an egg farmer, going out there trying to say he understands the gas situation and Gunn Point is the most appropriate position. If Methanex go to Gunn Point, I can tell you now this Territory government will be asked to spend millions and millions more money to establish them at Gunn Point. In any case they will not come because the ask will be too high that the Northern Territory government could not support it and they will go the Middle East.
Let us encourage the foundation customers in the Middle Arm and we might get a gas project.
Last updated: 09 Aug 2016