Australia the energy superpower?

Australia is a country rich in natural resources, because of this its economy is an export driven one, and coal, iron ore, wool, meat, gold, and wheat are some of its main exports. It was in the 1920’s that Australia’s economic potential was underpinned by the gold rush that saw its population triple in size in just ten years.

This spirit of discovery and entrepreneurship lives on in Western Australia, where a frontier atmosphere lingers. Western Australia has seen a continued boom in mining and natural gas extraction, but it is only recently that liquefied natural gas has begun to increase in demand as a cleaner alternative to coal in the production of energy.

Huge natural gas reserves in the northwest of Australia are now being tapped into, creating what the Premier of Western Australia has called the potential for Australia to become an “energy superpower” in Asia.

“We have what the world, and particularly the rapidly growing economies of Asia, want – iron ore, energy and minerals,” he said to Australian news providers.

Asia accounts for over 50% of all Australia exports, giving the country the potential to wield huge influence over the energy supplies of the region.

According to the Australian government, the projects to tap into the natural gas reserves could generate exports in the region of AU$300 billion in the next two decades.

The main players boosting the industry are Chevron, ExxonMobile and Royal Dutch Shell, who have agreed to jointly drill fields 80 miles offshore, build pipe lines and a liquification plants, as well as an entire port, for around AU$43 billion, which is around the size of the entire economy of Guatemala.

The massive venture is called the Gorgon Project.

To place the potential profitability of the project in perspective, ExxonMobile has signed a deal to supply PetroChina Co. with liquefied natural gas for the next 20 years, the deal is worth AU$50 billion, which for ExxonMobile alone is more than the cost of the entire capital outlay. Royal Dutch Shell and Chevron have reached similar deals with countries in Asia.

The mining boom has, however, created local problems for industry that the natural gas extraction will now contribute to. The region in Western Australia is developing too fast; hotels can’t be built fast enough to meet the demand for rooms for temporary workers, all urban areas are overflowing with people moving over to get a piece of the pie, and yet despite this there is a severe shortage of workers, companies compete for everyone from site managers to truck drivers.

A truck driver in Western Australia can earn as much as AU$120,000 a year.

In sweltering towns in the middle of the desert, filled only with miners, a modest bungalow might sell for as much as $900,000.

The government of Australia is now looking at ways to fill the shortage. The fast-tracking of visas for skilled labor (construction workers key among them) from the rest of Asia being the primary consideration.

There is a nasty side to all the expansion, however. On Barrow Island, one of the sites identified for natural gas extraction, the establishment of large industry will have a detrimental effect on the island’s vulnerable ecosystem.

"I don't see how you can have a safe operating environment for an industrial facility and also create the natural dark conditions that turtles need in order to not be disturbed from their natural nesting," said Gilly Llewellyn, the World Wildlife Fund's conservation manager.

The nature reserve is home to species such as the flatback turtle and the burrowing bettong, a rat-like kangaroo that no longer survives on the mainland.

Chevron has insisted that its operations will avoid conservation sites, and has also said it will inject carbon dioxide gasses, a result of the extraction, into an underground trap to prevent damage to the environment.

In addition, all equipment taken to the island is shrink-wrapped before shipping, and scrubbed down upon arrival to prevent the introduction of any pests or disease from the mainland, which could harm the ecosystem on Barrow.