Australia not facing up to reality of energy resources

June 17, 2004

MARK COLVIN: When the Chairman of a huge multinational oil company like Shell expresses fears for the planet because of fossil fuels, people sit up and take notice.

The Shell Chairman, Lord Oxburgh, has made headlines with his remarks that, “No one can be comfortable at the prospect of continuing to pump out the amounts of carbon dioxide that we are pumping out at present”.

Lord Oxburgh told Britain’s Guardian newspaper that sequestration – the technology that John Howard decided to invest millions in, in his energy statement this week – could be the answer.

But the Shell Chairman admitted that the timescale for that technology might be impossible.

Greg Bourne retired as regional president for BP Australasia last year, and now chairs the Sustainable Energy Authority in Victoria and sits on the New South Wales Greenhouse Advisory Panel.

Talking about Lord Oxburgh’s statements, I asked Greg Bourne first whether sequestration – burying the carbon underground – would work.

GREG BOURNE: We know that sequestration work in oil fields where we can take basically a very clean gas and capture it quite easily, and then pump it down into a reservoir which will readily accept it, because we’ve taken oil out of it.

We know it works there, we do it in lots of other parts of the world.

MARK COLVIN: But what about smoke stacks from coal burning power stations for example?

GREG BOURNE: Very much harder, and indeed, basically, to try and capture the gases from the smoke stacks of existing power stations such as the ones we have here in Australia is just far too expensive, it really is far too expensive to try and do that.

MARK COLVIN: So what do you say then about an environment policy which is predicated on the idea that sequestration is going to come on line fairly soon?

GREG BOURNE: I believe it completely misses the point.

There are three things that we really need to be doing.

Certainly one is looking at ways to reduce emissions from fossil fuel generation, and part of that will include the transition to combine cycle gas turbines, for example, because gas is obviously so much cleaner.

The second part, without doubt is stimulating the renewables and the zero emission energy sources.

And the third one is an economy-wide drive on energy productivity.

MARK COLVIN: Now this is coming from you, somebody who’s been most of his life in the oil industry?

GREG BOURNE: Absolutely. And indeed, you know, when I look at BP strategy and I look at Shell strategy, you can see that both of the companies have gone further and further into gas as one of the cleaner fuels as part of the transition to a, a very, very different future, and investing in the renewables part of the world.

And both BP and Shell and a number of other companies are involved in a number of projects with regard to sequestration because it will be part of the portfolio, but no one knows what percentage part of the portfolio it will be.

MARK COLVIN: One of the reasons that Ron Oxburgh is there, is because his predecessors, the people who ran Shell beforehand, really catastrophically overestimated the amount of oil that Shell had sort of in the pipeline down the track.

Are we overestimating how much oil there is around?

GREG BOURNE: I don’t think one should extrapolate the issue that Shell had across the world. I think we need to look more at, you know, are some of the figures that we have from out of the Middle East, with regard to reserves, have they been inflated? That is quite a bit of an issue.

But perhaps…

MARK COLVIN: So we could for various reasons, we could run out, the world could run out of oil faster than we’re currently thinking?

GREG BOURNE: I don’t think we will have a physical issue for many, many, many years, but I think we will have a price issue much quicker than people expect.

MARK COLVIN: And what kind of price issue?

GREG BOURNE: Basically rising prices because we… we are seeing incredibly fast growth in demand from China, fast growth from India as well, and other parts of the world, and supply at the moment can keep up with it, but I do not think that’s going to last for very much longer.

And as supply and demand get closer together, we always see price spikes.

MARK COLVIN: Is that the only thing that’s actually going to bring people around to more sustainable energy consumption and reduction of dependence on oil?

GREG BOURNE: Europe are driving to get away from dependency, primarily because they see two things that are the matter. One is, the problem with emissions and global warming and they have… they have got it, they have moved forward. And the second part of that is they’re trying to drive a dynamic, innovative economy in Europe.

My sense is that with America, America will change when it believes that in a sense its self-interest of access to oil cheap and easy to get from the Middle East is beginning to dry up and beginning to become difficult.

MARK COLVIN: And where’s Australia in that picture?

GREG BOURNE: I think, for Australia, we will just take whatever the market delivers to us.

We are certainly going to be having to import oil by the end of this decade, and we will have to import it at market prices.

So in that sense, we will flip from being an exporting nation to being an importing nation with all of the issues that brings.

But my own view, without trying to project what the price would be, is that we will move into a world where prices are inevitably going to be higher.

MARK COLVIN: Is Australia facing up to that world in the way that it should?

GREG BOURNE: Very definitely not.

If we look at the latest energy policy statements and we look at some of the documents in it, you actually see a belief that we are going to be to able to grow our energy and emissions over the next 20 years with not really a problem, with some measures which reduces it a little bit.

If you actually then look at what the science is saying, and the way Europe and all of those countries that are actually signing onto the Kyoto Protocol are acting, it’s basically as if we are going to have to reduce emissions by 60 per cent by 2050.

MARK COLVIN: Greg Bourne, who retired as regional president for BP Australasia last year, and now Chairs the sustainable Energy Authority in Victoria, and is on the New South Wales Greenhouse Advisory Panel.


Tags: Consumption & Demand, Fossil Fuels, Oil