Gray forced to explain his offshore strategy
Mr Gray was appointed to the portfolio following Friday's resignation of Martin Ferguson, but quickly discovered on Monday that assumptions about some of his policy preferences were firmly-entrenched.
Mr Gray was forced to immediately downplay suggestions that he would campaign for offshore development of the Browse gas project, which is being developed in the Kimberley by Woodside Petroleum, Royal Dutch Shell and smaller joint venture partners from Japan and China.
Approvals granted by state and federal governments require the gas hub to be constructed at the environmentally-sensitive James Price Point near Broome, but the companies involved - particularly Shell - are understood to want to process the gas using a modern floating vessel.
Mr Gray was recently reported as supporting Shell's offshore ambitions when he praised Australia's oil and gas industry for adopting technological developments like floating LNG processing and coal seam gas production.
"Australia is at a unique intersection in gas processing and also in the context of developing unconventional gas sources ... Ten years ago we were having this conversation. The only global gas liquefaction technologies were onshore technologies," he told the West Australian on March 12.
"We now have not only unconventional gas being converted to LNG in Queensland, but we also have development of offshore floating processing ... That takes Australia to literally the technological cutting edge of the growth export industry on the planet, energy. That is a great future to have for our kids, it is a great future to have for our resources."
Speaking to Fairfax Media, Mr Gray stressed that those comments were not meant to be interpreted as support for offshore development of Browse.
"My words had been taken to meaning something that was a little different to what they were when they were offered up," he said.
But when asked to clarify which option he preferred for Browse, Mr Gray was non-committal.
"I will be the decision-maker on the extension lease for James Price Point and consequently it just isn't appropriate for me to comment specifically on that project and on the Browse development," he said.
Mr Gray's ambiguous stance on Browse is at odds with WA Premier Colin Barnett, who has insisted he will not support the project unless the processing hub is built onshore.
The issue is likely to flare again in coming months, as the joint venture partners make a final investment decision on the onshore concept.
The notion that Shell might be the beneficiary of Mr Gray's appointment to the position of Resources Minister is ironic, given he is credited with stifling Shell's attempts to takeover Woodside in 2001. Woodside hired Mr Gray to help lobby the Howard government into disallowing the takeover.Mr Gray succeeded, and spent the next six years with Woodside before entering Federal Parliament as the minister for Brand in 2007.
Frequently Asked Questions about this Article…
Gary Gray immediately downplayed suggestions he would campaign for offshore development of the Browse LNG project. He said his earlier comments praising floating LNG and other gas technologies were not meant as specific support for moving Browse offshore, and he remained non‑committal on which option he preferred.
Browse is a reported $30 billion gas project in the Kimberley region being developed near James Price Point. The joint venture includes Woodside Petroleum, Royal Dutch Shell and smaller partners from Japan and China.
James Price Point, near Broome, is the environmentally sensitive site where state and federal approvals currently require the Browse gas hub to be constructed. That onshore requirement is controversial because some joint venture partners prefer offshore floating processing instead.
Floating LNG processing refers to modern vessels that process gas offshore rather than onshore. Gary Gray praised the industry's adoption of floating LNG technology; for investors, the choice between onshore and floating processing is material because it influences project design, approvals, partner preferences and the timing of final investment decisions.
WA Premier Colin Barnett has said he will not support the Browse project unless the processing hub is built onshore. His insistence is at odds with suggestions some companies want offshore floating processing, creating a political and regulatory hurdle the joint venture must navigate.
The article says the issue is likely to flare again in coming months as the joint venture partners make a final investment decision on the onshore concept, so investors should watch announcements from the partners and the government in the near term.
Some commentators suggested Shell might benefit from Gray’s appointment, but the article notes this is ironic because Gray previously helped block Shell’s 2001 attempt to take over Woodside and then spent six years working for Woodside before entering federal parliament.
Gary Gray said he will be the decision‑maker on the extension lease for James Price Point, which gives him a central role in approving or denying the onshore option for the Browse development, and he indicated it wasn't appropriate to comment specifically on the project while holding that authority.
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