PERTH (miningweekly.com) - Australian Petroleum Production and Exploration Association (Appea) outgoing chairperson Ian Davies has called for urgent investment into the oil and gas sectors, and legislative reforms.

In his address to the Appea annual general meeting, Davies said that the gas shortages and rising energy prices felt this year had been driven by underinvestment in supply since 2015, followed by the demand cliff which occurred in 2020 during the first year of the Covid-19 pandemic, and was further exacerbated this year by sanctions against Russia’s invasion of Ukraine and Russia’s retaliation by holding Europe’s energy security to ransom.

“The resulting global energy crisis comes at a time when the 2050 deadline for net-zero emissions is edging ever closer, yet the world is headed in the wrong direction. Greenhouse-gas emissions were their highest ever in 2021 as global electricity markets switched back to coal.

“Even though renewables were added at record levels in 2021 and their contribution to the global energy mix has never been greater, 80% of the world’s energy still comes from fossil fuels, the same as 45 years ago. And in Australia, 92% of our energy mix still comes from fossil fuels.

“So, if the world is serious about net zero, then it has to be serious about decarbonising these existing energy sources through technologies like carbon capture, use and storage (CCUS),” Davies said, noting that there was no scenario in which net zero by 2050 did not rely on CCUS.

“Despite three decades of striving to replace fossil fuels with cleaner energy technologies, there is still an enormous way to go. That’s because the technologies are not yet there, economically or at scale, for us to simply walk away from fossil fuels today – we have to have something to transition to.

“The alternative is energy shortages and the very high prices that come when supply cannot keep up with demand,” he said.

He noted that while the war in Ukraine is part of the global energy problem currently, energy prices have been rising for over half a decade because of underinvestment in new supply, as the world had underestimated the ongoing strength of demand for fossil fuels, undervalued supply diversity outside of OPEC countries, and overestimated the capability and timeframes of renewables and other technologies to replace fossil fuels.

“Australia should be at the top of the queue to develop new supply, having signed up to the Paris Agreement, with among the highest environmental standards in the world, a commitment to free trade and open, competitive markets, and with more than 200 years of resources at current production levels.

“But this is not the view of some in our society who are not only calling for bans on new oil and gas development, but are mounting sophisticated, well-funded legal challenges and campaigns against our industry,” Davies said.

He pointed out that currently in Australia, there were sanctioned offshore projects in both Western Australia and the Northern Territory that had vessels and equipment on standby at a cost of millions of dollars a day, and that investors were questioning the safety of their investments and a total of 35 Environment Plans were in limbo while the regulator and proponents assessed how they could achieve certainty of project approvals going forward.

“The regulatory streamlining intended in 2014 by the establishment of the National Offsore Petroleum Safety and Environmental Management Authority as the sole environment regulator in Commonwealth offshore waters has in practice added complexity, time and uncertainty to approvals processes. Reform will have to be a priority for the industry in 2022,” Davies said.

He warned that the demonising of the gas industry, and government and regulatory decisions that did not support the billions of dollars in investment that were needed to support the energy transformation would push up energy prices, put Australia at risk of a food crisis, threaten the reliability of the country’s energy system, and jeopardise the very emissions reduction targets Australia is working to achieve.

Appea has meanwhile elected Woodside CEO Meg O'Neill as the new chairperson for the industry body, with Beach Energy’s Morné Engelbrecht elected as vice chairperson.