In October, Extinction Rebellion South Australia disrupted the speech of Tom Koutsantonis as he addressed the Oil & Gas Industry at a government round table.
Rebels chained and glued themselves to the internal doors of the National Wine Centre and delivered a powerful speech to the Minister for Energy and Mining. Attendees were moved to another room where Koutsantonis canned his initial speech and spoke off the cuff to the industry.
In the speech he acknowledged that: “They (XR) are having an impact and we need to be cognizant of that.”
This video is a recording of this speech. This is what the Malinauskas government is communicating to the fossil fuel industry.
They (XR) are having an impact and we need to be cognizant of that.
One part they miss of course is the discussion we were having on my table. Was that this winter in Europe people are going to die because of energy poverty. I saw no sympathy from those groups about people this winter who can’t afford to heat their homes. We are… because of the lack of gas in Europe, Europe is burning more coal now than ever.
They’re actually increasing emissions, and if we are serious about decarbonising it will be this industry that leads that transition, in my opinion. And we have to start thinking about that.
The previous roundtables sent a series of challenges. And those challenges were basically the brain child of our former *inaudible* Barry Goldstein. Those of you know Barry, know who that he passed away in July after a long struggle with illness. Which has compounded of course with the isolation of Covid.
Barry was a great innovator and industry leader. And what he realised was the power of government working in collaboration with industry can do remarkable things. We can do remarkable things. For example, I’ll give you one real life example that maybe some of you realise, or you don’t realise Is the sealing the Strzelecki Track and the building of the Joy Baluch Bridge. Those initiatives were pushed by Barry for a number of reasons.
The Joy Baluch Bridge was to connect… to keep the country connected, in case of flood or disaster. So Western Australia and the eastern seaboard, if the Joy Baluch Bridge was taken out from Port Augusta was unconnected by road. So that was an important thing to make sure that in the 21st century our country is connected by dual roads of redundancy.
The second was sealing the Strzelecki Track. The sealing of the Strzelecki Track is a massive piece of infrastructure and is a direct result of the roundtable in 2012. It shows you the power of what a roundtable can do.
Now there are new challenges that are facing you here today which we are going to ask for your assistance. And unashamedly it is going to be about decarbonisation.
But it is also going to be about making sure that we get carbon capture storage right. We prove up its feasibility. What is it we can do to assist? We do need to get more gas out of the ground. There is no question of that.
There needs to be a transition. I don’t know how long that transition will last or take but I do not believe that we can stop this industry and just move on because it is unfeasible. We have to be the adults in the room. The adults in the room, in this conversation is going to get harder and harder and harder. Because of what you just saw what happen downstairs. That’s not stopping.
In a really sort of rude and personal way they talked about my daughters. Now my daughters are being taught in schools, in private schools that oil and gas exploration is bad for the country and bad for the environment. And it shocked me to my core when my daughter said: “Daddy, you’re not involved in getting oil out of the ground are you?” I said: “I certainly am. Absolutely I am.” And this year, this industry is going to provide a record level of royalties to our community, and decarbonise our community. And help with that transition. It’s a good thing. And if we want a renewable future we don’t need less mining. We need more mining. We need more critical minerals. We need more copper.
And Carbon Capture Storage is a technique and a science that this industry has been doing in South Australia for fifty years. If we can regulate it, *inaudible* a bit like Barry and these changes to petroleum *inaudible*.
Now we are bringing in new pieces of legislation. And we’ll be consulting with you on those pieces of legislation.
First of all there is the Hydrogen Energy Act. Which I want your views on. Which is about making sure that we regulate in an affordable way production of renewable energy, production of green hydrogen its use, its storage, and its export. So we’ll be opening up *inaudible* as well to make sure that we keep on improving. So I want to keep on improving this industry because ultimately it needs to be firing on all 8 cylinders. To use a really poor pun on what happened downstairs.
Another thing I want to raise that is coming at you at a million miles an hour. Those of you who know that Jeff Dimery, who is the chief executive of Alinta Energy made a public statement that power prices across Australia are going to increase by 35%. My estimate is probably a bit higher than that. And I can assure you that if a default market offer from the Australian Energy Regulator comes out in February of next year that has double digit increases that start with a 3 or maybe even a 4. The regulatory consequences of that could be dramatic on this industry.
So what I am talking about is if Australian consumers are faced with a power price increase of 35 to 40 percent in one year. governments will act, and they may act irrationally. This industry needs to be prepared for what’s coming at you. If partnering the South Australian government. As that’s coming at you, we need to be armed with information, because the easiest people to blame are the producers.
Now you’ll be surprised to know that we don’t actually have that much information about contract liquidity within the Australian energy market. We have a bit. We can talk through our royalties and what’s going on. But by and large, we don’t actually know what AGL is buying its gas for, what they’re selling their power for. We don’t actually know how much Origin Energy is paying for its coal. There are a number of things that will be coming up and this industry needs to be ready to answer those questions.
At the change of government, you saw the trigger, which was being negotiated for an interim agreement with the Commonwealth government and the industry. The solution that we came up with was a practical one. In my personal view, I think the Commonwealth, quite frankly, targeted domestic producers rather than east coast producers, rather than looking at their own backyard with production that they have offshore.
If we are going to have a national trigger, it should be a national trigger. Which means that the Commonwealth government has a role to play with its royalties and the gas it produces rather than pushing all that responsibility on domestic providers. Because quite frankly, if South Australian gas couldn’t be reserved because NSW won’t mine for gas. I won’t be part of that. This government will not participate in allowing governments like NSW to lock up their resources and demand that our community, and our state send our gas away from customers who got the exploration in. who got the investment in to meet their needs because they don’t have the courage to do what we did.
So we are… This is all coming at us. And quite frankly… to be completely frank, I don’t know what the answer is. But next year is going to be a torrid year for this industry.
We are looking to the future. There are innovative companies in SA, like Beach and Santos, that are looking at carbon capture storage and blue hydrogen. And despite some people thinking this is a way of getting more petrochemicals or hydrocarbons out of the ground. *unclear* I don’t think that’s true. I think they are serious about making sure that we develop a new industry. And if we can develop carbon capture and storage, and the CSIRO is working on it with Santos and Beach now.
If we are able to come up with something in terms of direct air capture. That could be a game changer, a complete game changer.
We are supportive of that in this state, as is the Malinauskas Labor government. We are also supportive of blue hydrogen. Blue hydrogen is another example of where activists are attempting to attack this industry. And I think unfairly and irrationally. It is inherently inefficient to produce blue hydrogen to burn some hydrocarbons you are getting out of the ground but if we can carbon capture storage at the same time we are actually producing a green product. So we should not be dominant and take advantage of that. And if you get the price right, it can work.
Now Sam Crafter who I introduced before the duck noises were being made down stairs. Is going out to tender at the end of the year for the government’s green hydrogen backing which I think is very exciting. And I say this in advance, we may fail, but we are pushing the envelope again.
I have always been supportive of this industry. But I have always been supportive of renewables because to me they make intuitive commonsense, as a good solution. And I’ve always thought the solution to renewable energy is storage. Because it’s not dispatchable, so storage is the key. Storage is an efficient way of dealing with energy.
So when we built the Hornsdale battery reserve. Quite frankly, South Australia was mocked. 100 megawatts grid scale storage that only works for a few hours or 75 minutes. Or whatever their accusation against it is. This is the point. Grid scale storage now is the template for every jurisdiction around world.
It’s not just happening here now. It happens everywhere. It’s not a tourist attraction. It is a real tool and piece of arsenal in our kit to deal with intermittent renewable energy because battery storage isn’t about just storing energy.
It’s about fast frequency responses to stabilise grids, which is very, very important. and it will be better and faster than anything a generator in the grid. So it’s important technology.
The next step will be green hydrogen. Now South Australia is a gas state, always has been, always will be. We transitioned from coal in the last half of the last century and we have a lot of infrastructure here that is based on gas. I’m talking about our generators.
Now there are 2 ways we can do this transition. We can sweat our existing infrastructure harder and make it work for us. We can have really expensive transition where we put in completely new kit to decarbonise. If we can prove up that we can blend hydrogen and gas, the existing combined cycle of open cycle turbines, that is a game changer. And if we can run a turbine on 100% hydrogen, that is a big win for the western world. Massive.
Think of the savings in the transition.
Now yesterday, I was being warned by my Department that we were going to have a constraint on the interconnector and because of the weather, we were going to over produce renewable energy. That’s something which occurred is called net-negative demand. Which meant that we were going to turn off solar panels across South Australia. starting with our solar farms and our wind farms, and our rooftop PV. Just turn it off. Power prices yesterday were, you were being paid about $98/megawatt hour to take power on the wholesale market yesterday. And the best we can come up with right now is to just turn that power off. What a wasted opportunity! What a wasted resource!
Which is why we were doing electrolyser, as a sponge, make hydrogen cheaply, store it. Then when power prices are high, when the suns not shining or the winds not blowing. For whatever reason. Firm renewable energy. Puts downward pressure on prices. We created a government business to operate that generator, that electrolyser. we contracted exclusively to renewable resources in South Australia to bid into the market to lower power prices in South Australia. If we can prove this up and make it work, I think it will be a game changer.
I recently came back from Japan and Korea with the Premier. The appetite there is dramatic. There are basically three trains of thought in Japan and Korea.
One is ammonia, green ammonia which they will use to supplement coal for coal fired generators. I am not sure it actually works. They claim it does.
The other of course is liquefied hydrogen being exported directly from Australia to Japan and Korea. I think that is probably very optimistic but the Japanese have funded trials with Kawasaki industries. They’ve build ships and infrastructure that can liquefy hydrogen at -253C and transport it. Maybe it will work. Maybe not today but maybe eventually.
Then of course there’s MCH, which is another way of transporting hydrogen.
I am not sure which method will work but what I am sure is that South Australia has to be part of that conversation. Because what we have in abundance is not just oil and gas, even though it is declining, what we do have is in the best wind and solar resources in the world. We are blessed in this state with those resources, and we would be letting our citizens down if we did not exploit them properly. And I think we are about to embark on a truly remarkable transformation. Through that transition we need you. There is no question about it.
Someone said to me earlier today that the South Australian government, Labor or Liberal has always been very pragmatic. And that is a good way of describing who we are.
I take no pleasure in global warming or climate change or whatever the terminology is you want to use. I don’t enjoy burning fossils fuels for the sake of burning fossil fuels. We do it because we need to until we don’t, and I don’t know how long we have before we don’t need to do it anymore. Because there are so many applications that we haven’t yet found replacements for.
We can be sensible about this but we have to make sense of it. So I need your help and that’s why we’ve called this roundable. And that roundtable is about making sure that we have the right regulatory tools in our kit to make sure that we can do the right thing by you and your industry. To give investment certainty, to protect your investments, to help us decarbonise, to firm our renewable resources, to decarbonise, to capture carbon and store it safely, hopefully for millions and millions and millions of years, while at the same time improving, as you have over the last fifty years, the wealth and prosperity of our state. which is what this industry has done for Australia for over a century… certainly since the 1950s.
So I’m sorry I couldn’t give you my more structured remarks I was planning to give downstairs. But this is the type of disorderly transition we’re in.
I have to go to parliament unfortunately, relatively soon, but I’m looking forward to staying to hear a few more words from Tony. As long as I can. He’s going to inspire me no doubt to make changes.
But I will just leave you with this one thought. South Australia and the South Australian government has the back of this industry. We support you but we also have the back of the renewable industry and we support them and we see them as our future. And we are going to develop it and we want to developed it here in South Australia. We want eloctrolysers made here. We want advanced manufacturing. We want to add complexity to our economy. When power prices go up next year this industry has to ensure it is not the scapegoat. So I’m going to need your assistance to know exactly how we can tackle that and tackle it quickly. Without there being silly and unforced and short-sighted government decisions across the country to deal with it.
Thank you very much for your time and I apologise for downstairs.