What Lies Beneath

A cataclysmic environmental disaster waiting to happen, or a once-in-a-generation opportunity to safeguard Australia’s oil supply as well as boost the national economy to the tune of billions? There are complex issues surrounding drilling in the Great Australian Bight, and the stakes are high.

AusBiz Magazine - April/May 2019

Words by: Ian Lloyd Neubauer 

It’s one of the most important whale, shark and tuna nurseries on the planet – an utterly pristine marine environment with biodiversity thought to be on par with or possibly even excel that of the Great Barrier Reef. During a recent study researchers gazetted 1,267 species, a third of which were altogether new to science. 

Yet few people have heard of the Great Southern Reef, probably because it’s really, really hard to get to. It’s concealed one to three kilometres below the surface of the Great Australian Bight, in treacherous waters braced by sea cliffs up to 120 metres high. 

The Bight is also rich in oil. BP forecasts the region could yield as much oil as the Mississippi Delta and committed $1.4 billion to prospecting in the Bight this decade, but pulled out in 2016, when global oil prices hit rock bottom.

But oil has already begun to bounce back and Australia is keen to get a piece of the action. The Federal Government has even promised foreign oil companies that in the event of a catastrophic oil spill, they’ll be able to claim a tax deduction for the clean-up, essentially passing the bill on to taxpayers. 

That hasn’t played well with greenies or the 10,000-odd people who work in fisheries and tourism in the Bight – industries that generate $10 billion annually in economic activity. Late last year, Greenpeace published an oil spill simulation leaked from Equinor, a Norwegian energy giant that plans to start drilling the Bight as early as next year. The simulation showed a spill could dump 4.3 million barrels of oil – 30 per cent more than the BP Deepwater Horizon spill in the Gulf of Mexico in 2010 – into the ocean. Thousands of kilometres of coastline could be affected, including Kangaroo Island, Tasmania’s World Heritage-listed areas, and as far north as the beaches of Sydney.

“Our biggest concern is the Bight is so remote and has some of the deepest water in the world as far as drilling attempts go, so if we get a spill on the lines of the Deepwater Horizon, we’re all stuffed,” says Andrew Neighbour of Kangaroo Island Marine Adventures. 

He is one of many residents up in arms after Australia’s national offshore oil and gas regulator NOPSEMA approved an application by PGS Australia to conduct seismic surveys – the precursor to offshore drilling – only 90 kilometres west of Kangaroo Island, in a patch of ocean that intersects one of Australia’s most fertile rock lobster fishing grounds and migration routes for endangered blue whales. “After nearly wiping them out, Australia’s whale population is experiencing a resurgence. The last time they did seismic testing in South Australia a dozen sperm whales beached themselves – so we don’t believe it’s as harmless as they say,” he says.

Fuel security

Federal resources minister Matt Canavan has predicted an oil industry in the Great Australian Bight could transform the South Australian economy, create thousands of jobs and generate billions in income.

And the minister’s message has not been lost – not even among the people of Kangaroo Island. “There are just as many people on the island who are for drilling as there are against it,” concedes Neighbour. 

But it’s not just voters who lost their jobs following the hollowing out of South Australia’s car and steel industries who should favour drilling in the Bight: Canavan argues the issue is important to anyone who cares about the country’s rapidly diminishing fuel security. 

Since the start of this decade, Australia’s net petroleum stockholdings have fallen from our International Energy Agency obligations of 90 days’ worth to just 50 days. According to the Federal Department of Mining and Energy, this amounts to about 21 days of petrol for cars, 18 days of diesel for trucks and 20 days of aviation fuel. 

Reserves would be burned much faster in the event of war. Take, for example, the growing threat of a US-China conflict in the South China Sea – a region home to shipping routes Australia depends on for 55 per cent of its fuel. Any kind of conflict there would see food, medicine and all basic consumables become scarce in a matter of weeks.

“The Great Australian Bight is one of the world’s most prospective oil and gas basins,” Canavan says. “We should do all we can to see it developed because that will bring jobs and help improve fuel security.”

But that’s nonsense, according to retired air vice-marshal John Blackburn, who’s been lobbying the Government to improve fuel security for five years. “Guaranteed flow of oil is what’s important,” Blackburn says, pointing out that just 20 per cent of Australia’s crude oil is refined onshore. “You can drill as much bloody oil as you like, but if we don’t ensure we’ve got a refinery industry and distribution capability on road, rail and sea to move the stuff around, it doesn’t matter.”

Nevertheless, both the Liberal National Government and the Opposition, if they win the next election, are likely to green-light drilling the Bight. There’s just too much money at stake. Oil and gas are the single largest contributors to Australia’s $50 billion marine economy, far exceeding fisheries and tourism. There’s also the vote-pulling argument that a robust Australian oil industry could keep domestic energy bills lower – unlike renewables such as wind and solar with their colossal start-up costs. 

“Our energy mix is changing; the role of renewable energy is increasing and our industry is very much a supporter of that,” says Matthew Doman of the Australian Petroleum Production and Exploration Association. “But we will use a lot of oil and a lot of gas for decades to come.”

0.014 per cent

Norwegian oil giant Equinor has downplayed the importance of the oil spill simulation published by Greenpeace, saying it was part of an unfinished environment plan based on a combination of 100 different worst-case scenarios. The company also claims it has drilled “65 deepwater wells safely” and draws on 45 years of experience “successfully working in similar offshore environments.”

But investigation shows Equinor has caused oil spills in Arctic waters near Norway while trading under its old company name StatoilHydro. In 2010 workers on a North Sea oil rig had to be evacuated as rescue engineers worked around the clock to control a huge build-up of pressure that had the potential to blow up the entire rig. But Statoil’s safety protocols held fast and disaster was averted. In 2015 seven cubic metres leaked into the sea from a hose, and in 2016 there was a fire on a Statoil oil rig. The anti-drilling camp argues these incidents show Equinor’s experience comes from taking risks in places where other companies won’t go. It also puts into question Equinor’s statistical modelling for an uncontrolled oil spill from an underground well – 0.014 per cent or one for every 7,100 wells.

“It’s extraordinary that we’re about to put this ecosystem at risk when we know so little about it,” says Greenpeace’s Nathaniel Pelle. “Wherever there is drilling, then accidents are inevitable. It’s only a matter of how bad they are and where and when they occur.”

But Equinor country manager for Australia Jacques-Etienne Michel said the company will only drill in the Bight if it is assured it can do it safely. “By the time we drill, we will have spent more than two years planning this project to satisfy ourselves that we can operate safely and in accordance with Australia’s strict environmental and regulatory requirements,” he says.  

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