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Ladies and Gentleman
It is a pleasure to address you today as the Minister for Resources and Energy in the Australian Government.
It is an exciting time to be the Minister because resources and energy are the engine room of the Australian economy today – driving global economic growth unprecedented in world history.
Nowhere more so than on our doorstep in the Asia-Pacific – home of the world’s four largest economies – China, India, Japan and the United States.
The 21st century is Asia's century – and Australia is brilliantly positioned to be a very important part of it.
APPEA's conference theme – "Energising Change" – reflects our times.
Together with increasing concern about climate change, the insatiable thirst for energy means that energy security is one of the big issues confronting Australia and the world today.
For access to energy resources is the key to continuing economic growth and the challenges of meeting global energy demand – in a sustainable way – are daunting.
Australia's place in the world in this debate is front and centre.
For we are one of the world's energy superpowers – a very sobering reality that comes with enormous responsibility, not only for our own energy security but for the energy security of the region.
Australia not only has to look to its own future when it comes to energy security and cleaner energy sources and technology, it has to be part of the solution to economic growth in the region – and its environmental impact.
Almost 20 per cent of our total exports are energy resources – and that is growing.
"Energising Change" is about seizing the opportunities we have to unlock the wealth of Australia's vast resource potential, particularly our natural gas.
Not only for the benefit of the Australian community but for our friend, Japan, which has been with us from the beginning in developing the Australian resources sector.
And for the hundreds of millions of people being lifted out of poverty in developing Asian nations – like China and India – also highly valued and growing trade and investment partners.
"Energising Change" is about choosing the right pathway to energy security – through open and transparent global markets for resources and energy trade and investment.
Through cooperation on cleaner energy technology and the development of carbon markets over time.
The success of peaceful globalisation in the 21st century will rest on the free flow of capital, skills and labour, and open engagement within the community of nations.
FOREIGN INVESTMENT
We have built our own strong Australian companies that operate around the world.
But we are also a country built on foreign investment and we are delighted that foreign companies want to invest in Australia.
Our support of foreign investment is longstanding and non-discriminatory, particularly when it is in our national interest and facilitates the development of Australia’s resources for the benefit of Australians.
Australia’s foreign investment policy is to assess investment proposals in a transparent way and to this end the Treasurer recently released assessment guidelines used by the Foreign Investment Review Board.
Open and transparent investment frameworks – underpinned by our democratic principles and commitment to strong governance arrangements – are the key to investment confidence in our nation.
Let me say, however, that strong governance and public accountability is not an excuse for burdening industry with unnecessary red tape, over-regulation or central planning.
The planned Productivity Commission review of petroleum industry regulation, now formally on the COAG reform agenda, has my full support.
And I know it has the support of the industry.
It is vital that we make headway in reducing the timeframes, complexity and compliance costs of regulation of upstream petroleum approvals.
We cannot afford to have unnecessary red tape undermine the international competitiveness of our industry or Australia's reputation as an attractive investment destination.
2008 OFFSHORE ACREAGE RELEASE
In this spirit, I am pleased to launch today the Australian Government's 2008 Offshore Petroleum Exploration Acreage Release.
This is a key part of the Government's strategy to encourage both home-grown and international investment in petroleum exploration.
The 2008 release offers 35 areas across five basins, including some in highly prestigious neighbourhoods.
The 2008 release will also shine the light on some of the nation's new exploration frontiers.
John Hartwell, Head of the Resources Division of my Department, will provide more details in a session after lunch today and I encourage you to attend.
The Australian Government knows that Australia faces strong competition from other nations offering alternative petroleum exploration and project development opportunities.
It is a real challenge to find the next Bass Strait – or anything like it.
The Australian Government is looking to focus the exploration industry's attention on new frontiers.
Geoscience Australia's current pre-competitive work is highly respected by the petroleum exploration industry for its provision of leading-edge, low cost, high-quality information.
We are committed to Geoscience Australia's continuing work in this area and it will form part of the exploration incentives package I have asked my Department to prepare in consultation with the industry and the Treasury.
AUSTRALIA'S OIL AND GAS OUTLOOK
With only about a decade of known oil resources remaining at today's production rates, Australia is looking down the barrel of a $25 billion trade deficit in petroleum products by 2015.
I am pleased to see new oil projects such as Enfield, Puffin and Stybarrow come into production and help address this issue.
But it is vitally important to encourage exploration in our frontier basins because they are the most likely places where a big new oil province may be discovered.
Just as it is important for us to continue to examine alternative fuel industries, including the potential to convert some of our vast gas resources to synthetic fuels like clean diesel.
And I am pleased to see a number of major international companies now expressing interest in this industry here in Australia.
The primary focus of my Department's work this year will be to undertake a National Energy Security Assessment which will include our future liquid fuel outlook.
This assessment will provide the basis for a new Energy White Paper.
While we are oil challenged, Australia is a world-class gas province.
We have been finding gas faster than we produce it for a quarter of a century and we have well over 110 years worth of remaining resources at today's production rates.
Significantly more if we include the vast potential of coal seam methane where Queensland is leading the world in production technology.
"Energising Change" is about creating the partnerships necessary between governments and the industry – producers and customers – to get more major gas projects off the ground.
This is an enormous challenge in an escalating cost and tightening investment and labour environment.
But the rapidly growing LNG market in the Asia Pacific – and the Indian rim – will not wait for us.
The Gorgon, Browse, Ichthys, Wheatstone, Pilbara LNG, Darwin Phase 2 and the Gladstone projects could result in Australian LNG exports of over 60 million tonnes per annum by 2015.
This would rank Australia as the world's third largest LNG exporter, behind only Qatar and Nigeria.
This promising outlook does not include exciting new discoveries in the north and north-west of Australia such as Caldita, Chandon, Clio and Thebe – or more remote fields such as Scarborough.
When their time comes – as it surely will – they will also contribute to Australia's future wealth.
They are part of Australia's future – and no responsible government can sit idly by and allow them to be stranded.
The Productivity Commission review of regulatory and approval processes is a very important opportunity for governments to streamline major project development processes for investors.
But there are many other challenges beyond approvals processes.
As a nation, we must ensure future investment in infrastructure as well as as skills, training and greater workforce participation.
The labour force challenge is also a great opportunity for us to advance the social and economic inclusion of Indigenous communities, many of which are located on the doorstep of the oil and gas industry.
On that front I am pleased to be part of the Pilbara Industry Community Council which has a strong focus on Indigenous training and employment as well as broader community issues.
I look forward to working with the industry members and the Western Australian government to address what I regard as Australia's most pressing challenge today.
That is – the Indigenous disadvantage that stands in stark and shameful contrast to the 21st century health, wealth, education and opportunity of mainstream Australia.
Bringing Indigenous Australia into the mainstream when it comes to health, housing, education, employment and social outcomes and opportunities –has to be at the top of our policy agenda.
I congratulate APPEA for its National Skills Shortage Strategy, directed at increasing training and employment opportunities for Indigenous Australians as well as women and mature age personnel.
While the focus is often on governments to resolve the challenges faced by the industry, the reality is it requires a mighty – and constructive – partnership between us.
"Energising Change" is not just about innovation in government policy and fiscal and regulatory frameworks.
It is about new ways of doing business, new ways of cutting costs and new ways of finding value.
I am particularly encouraged by some of the business models proposed for the Gladstone LNG projects which diverge from traditional vertically integrated projects on the west coast and involve creative value propositions to make the business attractive for all market participants.
The enormous interest in LNG from coal seam methane in Queensland – with four projects on the drawing board in Gladstone – an idea that was but a pipe dream just a few years ago – is itself testimony to the creativity of your industry.
Creative and competitive tension between companies and joint ventures is a good thing for the industry and for the market.
But not at the expense of stranding Australian resources and denying the benefits to the Australian community and the growing economies of our neighbours.
That is why my Department will be rigorously applying the test of commerciality to retention lease renewals and conducting a review of the retention lease system for the Ministerial Council on Mineral and Petroleum Resources.
"Energising Change" is also about expanding the ways in which we use our gas resources – for LNG exports, as a domestic fuel for Australian industry and power generation, and for new export industries like ultra-clean GTL (gas to liquids) diesel.
Balancing our desire to grow exports while ensuring there is sufficient gas available at a fair market price to meet the needs of Australian industry and consumers is a great challenge.
New gas developments such as Kipper, Blacktip and Reindeer will help meet Australia's domestic gas demand.
But more needs to be done, particularly here in Western Australia, and I intend to work closely with the industry to facilitate more commercial domestic gas projects in the next few years.
CLIMATE CHANGE
No discussion of energy security is complete without considering sustainability and climate change.
The Australian Government is serious about acting responsibly on climate change and has committed to reducing Australia's greenhouse gas emissions by 60 per cent on 2000 levels by 2050.
The Government is also serious about being economically responsible and reducing emissions in the lowest cost manner.
The introduction of a domestic emissions trading market is a core element of the Australian Government's plan to reduce emissions.
While I know this is the source of considerable concern within the industry, the Government recognises the issues faced by trade-exposed industries such as LNG and has committed to address them.
I am also very aware of the significance of scheme design and other climate change measures, including the renewable energy target, for the future of the domestic gas market.
And I intend to work closely with my colleague, Senator the Hon Penny Wong, to find a way through these issues.
My own Department is working hard on clean energy technology development and the establishment of a regulatory framework for geosequestration.
I was pleased to launch the Otway Basin Project just last week – Australia's first demonstration of deep geological carbon storage.
And I am hopeful that amendments to the Offshore Petroleum Act 2006 will be considered by Parliament later this year to establish a world-first regulated carbon capture and storage regime in Australia.
The legislative model developed by my Department will protect the rights of existing petroleum title-holders, while allowing secure tenure for future carbon capture and storage projects subject to a multiple marine use regime.
The legislation also provides for a system of managing greenhouse gas injection and storage projects to ensure safe and secure CO2 storage.
I know the industry has some concerns about the legislation and I would encourage you to participate in the consultation process which I expect to occur over the next few months.
SAFETY
In closing, let me say a few things about the operational aspects of the industry.
There is nothing more important than a safe and secure working environment for all those involved in this industry.
None of us wants to see another Piper Alpha tragedy.
As most of the petroleum industry would be aware, the National Offshore Petroleum Safety Authority (NOPSA) Review team has completed its formal consultation processes.
I am pleased the Review Team found that NOPSA and the safety case regime are supported by all stakeholders.
However, there are still too many people being injured on the job and I am disappointed to learn that the Review Team concluded that there needs to be more action from industry when it comes to safety perfomance.
The Australian Government holds the safety of all personnel as critically important and I urge you all to use the NOPSA review findings as a basis for seeking continuous improvement.
At a time of rapid growth in the industry, coupled with skills and labour shortages, lower experience levels and lots of new entrants to the industry, attention to training and compliance with safety procedures on the job is vital.
There is no room for complacency.
CONCLUSION
"Energising Change" is about a strong and healthy partnership between government and the industry – and the innovation we can achieve to grow this important sector of Australia's economy together.
My door is always open and I look forward to working closely with you over the coming years.
I congratulate APPEA on bringing the industry together for this event and wish you every success for the remainder of the conference.