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Scott Morrison’s veto of a gas-drilling plan off Sydney was strange – but it should not be overturned

Federal parliament has been rocked by extraordinary revelations that Scott Morrison secretly assumed control of numerous ministries, including the resources portfolio, in the last term of government. The then prime minister went further and used his new powers to knock back a gas-drilling proposal off the New South Wales coast.

The proposal is known as “Petroleum Exploration Permit 11” or PEP 11. The company behind the application, Asset Energy, had sought to renew its licence and start exploratory drilling.

Asset Energy is challenging Morrison’s decision in the Federal Court, and pushing the NSW and federal governments to reconsider the plan.

The company this week said the project was safe and “should be part of the solution to the east coast energy crisis”. But as I explain below, these claims are highly questionable.

What is PEP 11?

PEP 11 covers 4,500 square kilometres of ocean from Newcastle in the north to the Sydney suburb of Manly in the south. Asset Energy holds a majority stake in the project.

Map showing the ocean area covered by PEP 11. NOPSEMA

Exploratory drilling already occurs elsewhere off Australia’s coast. For example, 23 offshore platforms and installations exist in Bass Strait. But PEP 11 is controversial because the drilling would occur alongside an iconic and densely populated section of the Australian coast and may affect fragile marine ecosystems.

The proposal was unpopular with adjacent communities – many of them in Liberal seats where sitting MPs faced an electoral threats from teal independents and Labor.

In April 2020, the National Offshore Petroleum Titles Administrator recommended the application be approved. But Morrison reportedly overruled then resources minister Keith Pitt to knock back the proposal.

The Greens say the decision was motivated by Morrison’s desire to retain government, rather than genuine concern over the plan. Even as he rejected the proposal, Morrison insisted gas was “an important part of Australia’s current and future energy mix”.

Even before this week’s revelations, Asset Energy was challenging Morrison’s decision in the Federal Court, asking for a judicial review.

Asset Energy’s executive director David Breeze this week said the project could supply 20 years’ worth of gas to NSW, adding:

In light of significantly changed circumstances in the international energy market following the war in Ukraine, and the prospect of sustained higher energy prices and gas shortages in Australia, we are urging Federal and NSW governments to reconsider their position and allow limited, safe, and sustainable exploration activity.

But many of the company’s claims about the project simply do not stack up.

Not an energy solution

Extending PEP 11 will not resolve the domestic gas supply concerns on the east coast, for several reasons.

First, it usually takes many years for gas to be produced commercially from oil and gas fields. This is particularly true in the offshore zone. By the time the field is in production, renewable energy is likely to have progressed extensively and our dependence on gas is likely to have diminished.

Second, the supply crisis on the east coast is not caused by too few gas projects, but by the lack of robust export regulation.

Large gas producers contract to sell almost 90% of extracted gas to countries such as Japan, China and South Korea. Asset Energy says it would direct all gas from the project to the domestic market, but there is no legislative mandate requiring this.

What’s more, Russia’s invasion of Ukraine has triggered a spike in global gas prices. This creates yet another incentive for producers to sell gas on the international market.

Read more: Historic new deal puts emissions reduction at the heart of Australia's energy sector

gas burner on stove
Russia’s invasion of Ukraine caused a spike in global gas prices. Joel Carrett/AAP

An environmental risk

Advent Energy, which owns Asset Energy, says an environmental plan for the proposal was lodged with authorities and must be approved before commencement of any surveys.

But this did not appease community groups that feared the project would destroy the marine environment. Among their concerns was that the project may disrupt one of the world’s largest whale migration routes and endanger marine wildlife such as the Manly colony of little penguins.

Research shows offshore drilling for oil and gas in other parts of the world has brought substantial environmental risks.

Oil spills or gas leaks can permanently damage fragile marine and coastal ecosystems. We need only look to BP’s Deepwater Horizon oil spill in the Gulf of Mexico in 2010, which devastated marine and coastal wildlife.

During the exploration phase, sound, traffic and physical disturbance – from anchor chains, drill cuttings and drilling fluids – can be extensive.

Oil and gas rigs are large industrial facilities that operate continually. They can disturb species and ecosystems, impacting biodiversity that supports life on our planet.

During the production phase, physical impacts include disruption from installing infrastructure and possible contamination from the discharge of drilling mud and produced water that can damage surrounding ecosystems.

Further, gas and oil extraction undermines global efforts to tackle climate change. As the International Energy Agency has warned, no new fossil fuel projects can be approved if the world is to reach net-zero emissions.

Read more: Noise from offshore oil and gas surveys can affect whales up to 3km away

The Deepwater Horizon disaster devastated the ocean. US COAST GUARD

No social license

The application to extend PEP 11 attracted vehement community opposition. This included a petition organised by community group Save Our Coast bearing 60,000 signatures, which was presented to federal parliament by Warringah MP Zali Steggall.

Should the PEP 11 extension be approved and production proceeds, residents fear oil rigs and infrastructure will be visible from shore. This would fundamentally alter the visual amenity of the New South Wales coastline, damaging tourism and real estate values.

Read more: Equinor has abandoned oil-drilling plans in the Great Australian Bight - so what's next?

Warringah independent MP Zali Steggall speaks out against PEP 11.

An unacceptable plan

The revelations about Scott Morrison’s secret powers does not suddenly mean PEP 11 has become socially acceptable or environmentally responsible.

Nor should global disruptions caused by sanctions on Russia be used to justify the approval of an offshore gas project that will worsten the climate emergency without resolving the current energy crisis.

Australia’s fossil fuel reserves belong to all of us. Mandates to explore and extract them should be granted only when it’s in the public interest – and this proposal fails that test.

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