The annual release of offshore petroleum acreage by the federal government announced yesterday isn’t just another opportunity for fossil fuel companies to tap into carbon emissions during a climate crisis — it represents the latest part of a very long-term gift from the government to fossil fuel companies.
Every year, the government releases new offshore areas that fossil fuel companies can bid to explore. They can also nominate to the government what areas they’d like to see made available.
How do they know where to look, and what might be lurking in the ocean bed around Australia’s truly vast maritime economic zone? The good folk of Geoscience Australia have a Petroleum Data Repository where fossil fuel companies can search the results of seismic and other surveys going back decades that have determined underwater terrain and the composition of the sea bed, which can inform them of where to most efficiently explore for oil and gas. Fossil fuel companies pay a token fee to access the data.
Who created all this data? The government, courtesy of decades of expensive mapping under programs like the Continental Margins Program, approved in 1983 by the Hawke government. This was a very expensive program using highly specialised equipment and highly skilled engineers. And who paid for it?
As Clinton Fernandes outlined in his book Island Off the Coast of Asia: Instruments of Statecraft in Australian Foreign Policy, there was considerable dispute about that. The Bureau of Mineral Resources — Geoscience Australia — wanted to give the information away virtually for free despite the significant cost to the government, with industry paying just 5% of the cost.
But Treasury demanded to know why fossil fuel companies shouldn’t be undertaking this sort of mapping themselves given they were the ones who stood to benefit from the information — or paying for the information via “a much more substantial level of cost recovery”. The Department of Finance agreed, saying a “level of cost recovery well in excess of 5% of program costs” was needed.
But DFAT, never ones to miss a chance to miss the national interest, argued for making the information free. Fernandes shows how the Hawke cabinet decided that the interests of fossil fuel companies were paramount — the government needed to reduce the risk to those companies, and those companies were unwilling to invest in basic research to identify areas to be efficiently explored. Too expensive and too risky for them, they claimed.
The result? Taxpayers bore all the risk, and paid for the mapping, and fossil fuel companies then simply took the benefits for free. It’s a rip-off that continues to this very day.
When you factor in how companies like Woodside, Santos, Origin, Shell and Chevron pay minimal tax and no PRRT [petroleum resource rent tax] while they enjoy billions in profits from gas exports, it really is the case that, as Gough Whitlam once described it, Australia is “paying to be exploited”.
Still perplexed though. What’s in it for the ALP ?
The theory (which you can agree with or disagree with, up to you) is that the government does not have the resources to develop its own minerals, oil and gas. It pays for some surveys to encourage foreign companies to come in and do exploration and maybe development. Actually the vast majority of the geoscience data is generated by the companies, who are required to provide it all to the government libraries. “what’s in it’ for the government is royalties and taxes when the minerals get developed. Nice theory. Unfortunately it’s been undermined somewhat by the ability for large companies to dodge paying their royalties (‘rent tax’) by setting up fictitious loans from company subsidiaries in tax havens. That rort needs to be stopped, and of course many people say that new oil & gas should not be developed. But the data regime applies to onshore mining as well – each state government operates a similar system.
My personal opinion is that Australia should have created a national oil company, and required all developments to have the national company as at least a 51% partner. This approach has made Saudi Arabia and Norway – for examples – very rich
After the first oil was found at Moonie-Moonie (apols. to Greek readers) this country was well over 75% self sufficient until the end of the 90s.
One of Frazer’s first acts was to demand that we pay the world parity price for oil rather than the cost of extgraction + a profit dividend “to ensure finance for further exploration“.
IOW, the Seven Sisters celebrated, bigly, unable to believe their luck at his his credulity.
The various resource giants are currently salivating over the ocean floor survey results of the extensive search in the southern Indian ocean off the WA coast following the fruitless search for MH370.
All that lovely data for free!
And all the wonderful, exotic sea life at the bottom of the ocean that are about to be decimated, out of sight and out of mind? I guess they’re just collateral damage.
I think that’s the wrong sort of data.
Hardly.
For starters, it shows where not to look for goodies which, in & of itself, is of benefit.
On this subject, we got a lot of data mapping the Indian ocean looking for that Indonesion plane that went down. I believe Australia, Indonesia and China were partners. The Chinese barely paid any of the costs but still got a complete set of the data. These sorts of deals seem to be a feature of Australia governments. Pity they cant operate this way with citizen welfare recipients instead of being stingy as hell and supporting a vast policing operation to monitor every penny every one of them earns to make sure no one gets a cent more than they are entitled to. Billionaires get billions thrown at them whether they ask or not, no questions asked. Australian politicians, amazing.
Government geoscientists collect data to map the entire face and depth of Australia, even as far as the bottom of the crust. Every ragged line across a seismic section represents an ancient environment yet to be explored. Almost incidental to the process, they identify prospective zones, and while they continue to identify prospective zones, they continue to get funding from an industry-driven government. Industry then pours much more money into searching for minerals or hydrocarbons in the identified prospective zones. The “data” that the government geoscientists use is largely previously collected by industry. This is particularly true of seismic data. Government-funded seismic typically searches deeper, elucidating the deep structure of the crust.
Just to clarify Roger’s point, the government collected data represents less than 1% of the seismic data oil companies use in their exploration – the vast bulk comes from previous commercial surveys by other oil companies. When a company acquires seismic they are required to provide a copy to the Geoscience Australia which anybody can access for the cost of copying the data. So the government ends up with a vast store of data provided by the oil companies. I suggest Bernard has a chat with a petroleum geologist, either from the government or an oil company so that he has a better understanding of the situation.
True. And not just seismic…. results of any drilling, including tests done on rock samples, and the residual rock samples themselves, and even the geologists’ interpretations of the data, are all provided to the government (federal for offshore, state for onshore). After an embargo period all that data and the rock samples are available, almost for free, to anyone who wants to look at it. The data embargo is the incentive that the governments provide to oil & gas companies to do exploration – the people that paid millions or tens of millions to get the data have first dibs at deciding whether to apply to drill, or to develop. If they don’t apply, the acreage reverts to the government and then anyone can apply to develop it. Actually quite a good system I’d say, providing a balance of costs and benefits for a company doing exploration. When I worked in the oil industry, blow-in managers from the USA couldn’t believe that the company had to ‘hand over its data’ to the government who then put it in the public library.
Time for the revolution folks.
(Might have to book a trip to Scotland to try to find Great Grandad’s sword).