In the iconic Kimberley region of West Australia one of Australia’s biggest recent environmental battlegrounds has emerged in the red cliffs and turquoise waters of James Price Point, about 20 km north of Broome. This is a battle that might ultimately be won in the investor board rooms rather than on the front lines of blockades.

Sweet Jesus, don't look at me! Look at his PANTS! Pic: Richard Polden

The Browse Basin gas hub development has stoked up so much opposition on so many fronts that many investors are now asking if the project is still economically viable, or if in fact Woodside’s ‘social licence’ to proceed has disappeared in the red dust that graces the Kimberley coastline.

Australian business is all too familiar with the impact strident community opposition can have on controversial major projects, yet some large corporations and investors continue to discount the importance of maintaining their social licence and protecting the environment.

Such a scenario is playing out right now in the Kimberley where, despite a National Heritage listing in August that declared an area almost the size of Victoria to be worthy of protection, Woodside continues to push its $30+ billion gas project at James Price Point in the face of escalating barriers and community opposition.

Time and time again corporate Australia thinks it can push against the tide of public concern to drive projects through. Yet time and time again these same proponents come up against insurmountable discontent that ultimately blocks projects and can result in massive losses to shareholder value.

Back in 2000 mining giant Rio Tinto made a momentous decision to suspend the development of the Jabiluka uranium deposit, which lies within Kakadu National Park. Decades of opposition to mining at Jabiluka culminated in five years of large scale campaigning led by the local traditional owners, the Mirarr people, and supported by a well organised environment movement.

The social licence to mine at Jabiluka was irretrievably lost. Rio took too long to realise this, costing it millions in the eventual rehabilitation of the site, which included refilling many kilometres of mine shafts. There are many such examples in Australian corporate history, most recently the story of the Gunns Ltd pulp mill being another cautionary tale of shareholder value destruction.

Those watching the development of the Browse Basin gas hub by Woodside and partners Shell, BP, Chevron and BHP Billiton may see a pattern emerging remarkably similar to big controversial projects of the past. Concern about this $30+ billion LNG development has expanded in recent months from a local issue to one that has national attention.

Since July, a protest camp has been set up at James Price Point, often preventing access to the site for Woodside’s contractors. A number of protesters have been arrested. In the town of Broome, nearly half the population of 15,000 turned out to protest against the gas development, fearing it would turn the laid-back holiday town into just another expensive Pilbara mining town. 

As well as the domestic environmental concerns about this development, it would appear too that investors here and overseas are increasingly sceptical of Woodside’s ability to deliver on the project.

Woodside’s production downgrade in December, on the back of slippages in timelines for delivery of its other major project, Pluto, have left many with serious reservations about the company’s ability to deliver the Browse project on time and on budget.

Recent analyst reports have indicated that investors feel the company is under-quoting the budget by as much as 20 per cent.  Alternative sites are now being modelled as economically competitive and, by some estimates, as cheaper options than James Price Point.

An announcement just before Christmas that Woodside would be requesting an extension to make Final Investment Decision by more than six months to the first half of 2013 confirmed what many looking at this project had long suspected – that James Price Point was looking increasingly unviable. But most significant of all was the announcement last Friday that Woodside will sell down its majority stake in Browse perhaps marking the final nail in the coffin for a gas hub at James Price Point, as Woodside has always been the strongest advocate for this big, expensive and risky development.

Other options suddenly looked far more appropriate for a gas hub. Earlier this month Japanese oil company Inpex got the go-ahead for its Ichthys liquefied natural gas project – setting up Darwin as a potential alternative for a hub to process Browse Basin gas. 

As it stands, there is little chance Woodside will be able to make the economics of James Price Point stack up, let alone defy strong community opposition to the industrialisation of the Kimberley.  Investors understand this. It’s time Woodside and its partners took stock of the situation and gracefully conceded that Browse gas will not be developed at James Price Point.

With every new slippage in the timeline, and every budget blow out, the alternatives become ever more attractive. It is on these grounds that investors should be applying pressure on the company now to stop wasting money in developing a project proposal that clearly isn’t going to see the light of day.

It would be wise for Woodside’s new CEO to take a history lesson on the importance of maintaining a social licence. 

Woodside should re-examine the other options for developing the Browse Basin gas away from the pristine and unique Kimberley region.

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9 comments

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    • jimmy of Melbourne says:

      08:15am | 31/01/12

      Right on Simon! Its time for Woodside to realise that, just as the image used for this article suggests, to proceed and destroy the pristine Kimberley wilderness is a dog of an idea!

    • Blind Freddy says:

      08:50am | 31/01/12

      In 2006 when Gunns placed a SLAPP suit on the “Gunns20” to deter opposition to their to be proposed pulp mill their share price was approximately $4.50 six years later - no pulp mill and a share price of 11 cents! LOL

      P.S. and not one of the Gunns20 were successfully prosecuted. LOL x 2

    • Samscout says:

      12:07pm | 31/01/12

      If we going to save James Price Point shouldn’t we also save Sydney Harbour.  Widely regarded as the most beautiful harbour in the world isn’t it about time the 4 million people that live around it be moved somewhere less pristine.

      Until such time as Sydney siders move away from the harbour and let it regain its natural beauty they have no right to prevent other states or regions from getting on with progress.

      This argument is so typical of city people - they can trash the environment when it suits them but then they turn around and tell country people what they can or can’t do.

      Hypocrisy at its finest.

    • Jeremy says:

      03:27pm | 31/01/12

      Please note that those being most active in this situation live in the affected area, not in cities, as you suggest? If local popular opinion wants our help we should feel free to give, or not, as is the case with myself.

    • Polly says:

      12:38pm | 31/01/12

      It’s a pity articles like this only present one side of the argument.

      In Woodside’s case, there are deep divisions within the local Aboriginal community.  So local opposition is certainly not unanimous.  Who would you get a “social licence” from, the group you negotiate with or the group that opposes everything?

      The parallels with Gunns are in some ways accurate.  Wrong site (should have stuck with another site south of Burnie); local opposition (vocal minority); strong support by the Govt of the day over such opposition.  The parellels are misleading nonetheless.  Gunns “social licence” was weakened by the extremely close relationship it had with the Govt, not just over the pulp mill but its entire operation.  For the pulp mill itself, the independent approvals process was fatally undermined by all parties (Greens included) to such an extent that Gunns withdrew and the approvals were subsequently rammed through Parliament.

    • Occam's Blunt Razor says:

      01:44pm | 31/01/12

      Dear Simon,

      Why is the township of Broome allowed to exist?  Shouldn’t that be torn down if James Price Point is so important???
      Where is your evidence that it is the James Price Point location that is the reason for a delay in the FID?  Could there not be any other reasons to delay a FID, like global economic uncertainty perhaps?

      I doubt that you will make any attempt to answer the questions I have asked of you.

    • John T says:

      02:56am | 01/02/12

      I would love to see an environmental impact study on the aboriginal slums in the same area. Burnt out cars,sewage overflows ,rubbish piled up, mangy dogs killing the wild life, uncontrolled fires…
      But of course we never will.

    • Jaxon barnes says:

      08:54am | 01/02/12

      We are talking about the biggest Gas hub in the southern hemisphere…
      The proposal includes many significant construction processes including the clearing of 2400 hectares (24 square kilometres) of Pindan Woodlands and extremely rare Monsoon Vine Thicket plant communities and the dredging of the proposed port area. Both of these processes are very ecologically damaging. It is worth noting that dredging would be a permanent process.
      Environmental impacts associated with this proposed development include:
      •  Sediment: Dredging releases sediment into the marine environment which causes impacts on light-dependant organisms such as corals and sea grass by smothering the organisms and cutting off the light required for photosynthesis. Suspended sediments impact on filter feeding organisms such as oysters and sponges by clogging their feeding mechanisms, essentially starving the animals. Other organisms such as fish are impacted by the clogging of their gills. There is a 50km2 ‘dead zone’ caused by this marine pollution.
      •  Humpback Whales: The largest Humpback whale nursery on Earth lies between Broome and Camden Sound on the Kimberley coast. The Kimberley coast is crucial habitat for the Humpback whale, a protected species in Australia. The Kimberley population of whales is internationally significant.
      •  Fish: James Price Point has been identified as a fish aggregation area, though scientific information is limited. It is likely that future studies will identify fish breeding sites and the dredging and blasting of coral reefs will destroy habitat.
      •  Turtles: Five marine turtle species, including Australia’s own Flatback turtle, are found in the Kimberley. Studies have identified the James Price point region as an important feeding area for turtles and nesting has been recorded in the area, though survey effort has been insufficient to date to have a clear idea of the significance of the area as a nesting beach. It is known from elsewhere that light pollution and other impacts from this sort of development can impact on turtle hatchling survival.
      •  Coral: A coral reef province of global significance extends along the Kimberley coast. The James Price Point area is no exception and the area under threat from development is home to many beautiful and diverse coral species.
      •  Snubfin dolphins: are Australia’s unique dolphin species. This species has been recently discovered by science and the Kimberley is crucial habitat. The latest research has identified that Snubfin families appear to spend much of their lives in very small territories close to shore. This means Snubfin populations can be heavily impacted by habitat destruction and unsustainable development.
      •  Reef blasting: the diverse coral and other communities are threatened by the extensive blasting that would be required for port and channel construction.
      •  Breakwater: the breakwater proposed for the area could be as large as 7km long. Such a large structure would interrupt and change the local current flows, and damage the local ecosystem during construction with unpredictable impacts.
      •  Seismic pollution (e.g. blasting and ship noise) – studies have implicated seismic pollution in changing migratory and other behaviour and whale stranding events.
      •  Air pollution: Toxic air pollution from the gas hub would release gasses from flare towers and other operations including poisonous nitrogen and sulfur compounds known to have negative impacts of human and wildlife health.
      •  Sea pollution: Continuous pollution and degradation of the marine environment from drilling, dredging, shipping, and pipelines being laid along the ocean floor.
      •  Water: A huge amount of fresh water would be required for this project. This will come from groundwater or desalination. The use of groundwater will have negative impacts on the waterholes and vegetation of the region. Desalination is an energy (greenhouse) intensive process that also releases highly saline water and chemicals into the marine environment.
      •  Impacts on Scott Reef: Woodside plan to put the rig that will pump oil and gas to James Price Point on top of the environmentally important and beautiful Scott Reef.
      But your right Stuff the environment or sustainable industries… lets just mine it all!

    • Russell says:

      01:13pm | 10/02/12

      Try checking the veracity of facts posted on environmental websites before accepting them…for example…the statement
      Coral: A coral reef province of global significance extends along the Kimberley coast. The James Price Point area is no exception and the area under threat from development is home to many beautiful and diverse coral species.
      is easily demonstrated to be incorrect.
      There are no significant areas of coral offshore from James Price Point, and I know because I have dived the area….but don’t take my word for it…try reading the survey report compiled by CSIRO and AIMS. Their key finding was…

      The offshore flat sandy areas from Quondong Point to Coulomb Point were found to have almost exclusively bioturbation habitat. Where areas were dominated by sand dunes and waves, such as further inshore, there was little biohabitat seen, except for some seagrass and turf or mat green algae coverage on the flat sandy patches between these dunes and waves.
      Along the patches of low relief reef, there were sparse to medium densities of sponges, gorgonians and whips. Sparse to medium density gardens of soft corals were also relatively common on this
      substratum type. At the northern end off Coulomb Point, there was a large patch of Sargassum algae, corresponding to a low and high relief reef and rocky substratum habitat. Other brown algae were major contributors to the percentage biohabitat coverage along the shallow coastal area off Coulomb Point, also where low relief reef structure was present.

      Thus, the only survey data clearly does not match the statement you have posted from the wilderness website.
      Now who would have an agenda that promotes distortion of the facts….an organisation with a stated aim of halting the development….or our premier marine science organisations which were asked to survey a number of sites…???
      The actions of those who compiled the ‘facts’ you refer to are either lazy…the recent survey data is readily available, or mischievous.

 

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