Rachael Risucci, bp’s VP Australia for gas and low carbon energy, addressed delegates of the Western Australian British Energy Transition & Investment Summit, hosted by the Australian British Chamber of Commerce.
Good morning - it’s fantastic to be here today. I’m Rachael Risucci and I’m bp’s VP Australia for gas and low carbon energy.
I would like to acknowledge the traditional custodians of the lands on which we meet, the Whadjuk people of the Noongar Nation, and pay my respects to elders past and present.
Thank you to the Australian British Chamber of Commerce for hosting today’s event, and for fostering trade and investment ties between Australia and the United Kingdom for over 100 years.
bp’s history in Australia also dates back more than a century – in fact our business began locally when the Anglo-Persian Oil Company – which later became bp – got approval to store and supply fuel in Fremantle in 1919. The nature of trade between our two countries has evolved over that period, and so has the nature of the energy we have supplied.
We’re here today to talk about energy transition and investment.
We know the world needs rapid investment in lower carbon energy, but it also needs investment in today’s energy system, to deliver secure and affordable energy for Australians and our trading partners.
As the person responsible for bp’s gas business in Australia, you’d rightly expect me to say that gas has an important and ongoing role to play in the energy transition for decades to come.
It is a view consistently backed up by the International Energy Agency in its annual World Energy Outlook, and one that we see playing out in gas markets around the world. But at bp, we’re also investing in scaling up lower carbon energy, such as solar, wind, and renewable hydrogen.
For us, it’s about continuing to invest in today’s energy system while we build out tomorrows.
Western Australia (WA) is blessed with a range of magnificent natural energy resources and, over the decades, has built up industries around them.
The discovery of significant offshore gas fields in the 1960s laid the groundwork for the development of the LNG industry in the state.
bp is very proud to be one of the foundational partners of Australia’s first LNG facility at the North West Shelf which this year, celebrates 40 years since first operations.
It wasn’t easy – with LNG infrastructure needed in remote locations, a nascent market filled with uncertainty and not to mention the substantial financial investment required. It took significant technological innovation, strong industry partnerships and supportive government policy, but WA made it happen.
Going forward, WA has the opportunity to build on that reputation as an energy trailblazer – and at bp we are working hard to make that happen, whether it’s in lower carbon gas with carbon capture and storage, or the next frontier of solar, wind and hydrogen.
Collectively, we need to harness the knowledge and know-how we already have and lean into the investment required in the skills and technology needed to underpin the energy system of tomorrow.
There are some great examples where this is happening already.
Take Kwinana. Things have changed significantly since I started my career at the bp Kwinana refinery thirty years ago.
Back then, it was the largest oil refinery in Australia, capable of producing 138,000 barrels a day, and basically responsible for keeping Western Australia ‘on the move’ in terms of liquid fuels.
While we still play that role now, the site is undergoing a remarkable transition, from old school refinery to an energy hub with a liquid fuels import terminal, as well as plans for renewable fuels production from waste-based feedstock and hydrogen from electrolysers powered by solar and wind.
We believe that building on existing energy infrastructure and tapping into the know-how that we already have, makes a lot of sense.
That’s why, with our partners, we are also keen to extend the life of the North West Shelf Joint Venture and continue to make use of its existing domestic gas and LNG facilities at Karratha.
The Australian Energy Market Operator in its Gas Statement of Opportunities, is forecasting gas shortages on both sides of the country in the coming years.
In that scenario, extending the North West Shelf’s licence to operate beyond 2030 becomes crucial.
We believe developing the Browse gas field currently lying off the North West coast via a pipeline to the existing North West Shelf facilities is key to underpinning the role gas will continue to play in our energy transition. Browse is Australia’s largest discovered but undeveloped gas resource.
It has the scale and potential to provide affordable energy security through the supply of domestic gas locally and LNG to our regional customers from the early 2030’s.
We know, of course, that future gas like Browse must be produced with lower emissions.
Carbon Capture & Storage, plus operational efficiencies, and the incorporation of renewable power operations, will all need to play their part to abate and produce low carbon gas and LNG of the future.
As we look to what will help drive transition and investment, a key component will be policy.
We welcome the federal budget announcement of $22.7 billion for the Future Made in Australia Act (referred to in some quarters as Australia’s answer to the US Inflation Reduction Act).
We think it works well with the recently released Future Gas Strategy, which sets out clearly why gas is essential to a smooth and successful transition.
In the forward, Minister King acknowledges that “Under all credible net zero scenarios, natural gas is needed through to 2050 and beyond…” and that “Our trade partners……are relying on Australian Gas to transition their economies to net zero.”
So, when we talk about the investment needed to underpin the energy transition, let’s not forget the investment needed in gas and abatement technologies like CCS.
Gas as a future energy source, has a vocal minority who are quick to criticise with often misleading information, despite the clear message articulated in the Future Gas Strategy and other credible sources.
As has been previously said – the two extreme positions of “no more gas” and “a gas led recovery” do not help deliver a constructive conversation on, or understanding of, the role of gas in our future energy mix.
The gas industry for many years has contributed to the wealth and prosperity of our nation through the industries it supplies; as a significant exporter to our regional customers and contributions to our economy.
The industry has supported around 80,000 jobs and contributed over $16bn through State and Federal taxes & royalties last financial year.
The essential and valuable role of gas is clear.
The Future Made in Australia Act will require new gas supply to power Australian manufacturing, and if Australia wants to maximise the processing of its critical minerals, the country will need even more gas.
WA is the highest consumer of gas among all Australian states, utilising 40% for power generation and nearly 55% is supplied to mining and industry.
From that supply, gas is used to process food, to process critical minerals and in manufacturing.
Demand for gas in these industries will remain until commercially viable alternatives are available and gas powered generation will need to continue to maintain grid reliability during periods of low generation from renewable sources.
Australia’s gas industry can also help our regional trade partners to decarbonize through the continued supply of LNG to displace other carbon intensive fuels or through CCS, utilizing our geological stores for CO2.
These trading partners are likely to be customers and investors in our new energy industries and maintaining these trading relationships through the continued, reliable supply of LNG will be key to build confidence in the future.
There is no doubt new supply is needed and we know that untapped resources exist and need to be developed.
New exploration is also needed, as known supply is finite, and with limited supply comes price spikes and volatility in the market, driving-up prices for customers who are already struggling with cost-of-living pressures.
For the gas industry to develop new supply, meeting robust environmental approval processes for all our developments that give us the social license to operate, has never been in question.
The ask however, is for a stable and supportive regulatory landscape that encourages investment and reduces unnecessary complexity and delays.
The Government’s Future Gas Strategy provides the foundations for the changes required to streamline and underpin that new supply.
There’s no denying that the energy transition will stretch us all as we invest in today’s energy system while we build out tomorrows.
It will be a collective challenge and no single business, industry or government can solve it alone.
In Australia we have all the ingredients to succeed and play a critical role in our own and our region’s decarbonisation through our traditional resource base, bountiful wind, solar and critical minerals.
But it is not about picking winners or ideological thinking – all solutions are needed to be part of a reliable, cleaner energy system, including gas and CCS.
As the last few years have shown, the change ahead of us is immense and complex and it will take time to deliver competitive, reliable solutions in line with customer demand.
To succeed, we must further develop and harness our partnerships across industry and government and listen to the evolving needs of our customers for firstly reliable and affordable energy as well as cleaner energy options.
It will also be about setting the right policy conditions, maintain confidence that Australia will remain a trusted trade and investment partner and encourage investment to back Australia’s future energy prosperity.