McGowan won’t rule out favouring Woodside for carbon farming land

Woodside Petroleum needs massive amounts of land for carbon offsets and the WA Government appears to be laying out an exclusive red carpet for the LNG giant.

McGowan won’t rule out favouring Woodside for carbon farming land
North West Shelf LNG plant near Karratha. Source: Woodside.


WA Premier Mark McGowan declined to say his Government would not give Woodside Petroleum an inside run to access vast areas of State land for carbon farming after the gas giant asked for government help to reduce its climate impact.

Woodside wrote to McGowan in May requesting support for three "decarbonisation initiatives": carbon farming, renewable energy, and hydrogen.

"However, for these benefits to be realised, support from government is essential to enable timely and effective investment," the letter said.
"To this end, Woodside is seeking to partner with the Western Australian Government."

The author of the letter obtained by a Boiling Cold freedom of information request was redacted but is almost certainly chief executive Meg O'Neill or chairman Richard Goyder.

Woodside's renewable energy and hydrogen proposals likely require access to industrial land that the Government can deliver within well-established procedures.

However, opening up land to create carbon offsets is not a common practice of WA governments, as evidenced by the level of bureaucratic involvement even before Woodside wrote to McGowan.

Woodside first pitched its carbon offset proposal on April 21 and met with the Department of Jobs, Tourism, Science and Innovation and the Department of Primary Industries and Regional Development in early May, two weeks before the letter to McGowan.

Three days later, on May 7, the director generals of six Government agencies met to discuss the offset proposal: JTSI, DPIRD and the departments responsible for mines and petroleum, environmental regulation, lands, and conservation, according to a Woodside email to a Government official.

Not only is Woodside's ask unique, but it could also be huge.

When Woodside's proposed purchase of BHP's petroleum assets was announced in August, O'Neill presented a plan to cut the emissions of the combined group by 30 per cent by 2030.

Source: Woodside presentation 17 August 2021. 

To succeed, Woodside must offset almost two million tonnes of CO2 a year by 2030.

Although there is no need for those offsets to occur in WA the State offers an attractive combination of large tracts with few people and low sovereign risk.

To fulfil a requirement to offset CO2 from the Pluto reservoir since 2008, Woodside has paid for 26 million mallee trees to be planted across 17,000 hectares, cancelling out 850,000 tonnes of CO2 emissions.

Woodside's unique and potentially huge request for assistance with carbon farming appears well suited to the Market-led Proposals policy announced by McGowan in 2019.

The policy aimed to create "a clear, consistent and transparent process to manage unsolicited proposals from the private sector that fall outside of the normal competitive processes."

Boiling Cold asked the Premier if Woodside's offset proposal had been referred to the MLP process, and if not, why?

"The WA Government recognises that local offsets are in demand from WA industry, and we are looking at options to support the creation of more local offsets," the Premier's spokesperson responded, without answering the question.

"No individual arrangements have been entered into with any companies."

Boiling Cold then asked if the Government would put in place a process open to all applicants so Woodside would have to participate in on equal footing with other interested parties?

The Premier's spokesperson failed to answer the second question by supplying the same response that did not answer Boiling Cold's first question: "The WA Government recognises that local offsets are in demand from WA industry, and we are looking at options to support the creation of more local offsets."

Serena Lillywhite, chief executive of anti-corruption group Transparency International Australia, recently described the MLP process as having the feel of "deals being done that potentially just benefit special interest groups and their commercial interests."

Woodside's possible land grab appears to be subject to even less process and transparency than the MLP process that concerned Lillywhite.

The McGowan Government's Ministers have been accused of giving oil and gas producers priority access.

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Scrutiny of the closeness of the Government and Woodside in particular heightened after former Treasurer Ben Wyatt joined the Woodside board in June, less than three months after leaving Parliament.

A 2018 report by energy and emission consultant Reputex calculated the availability and cost of carbon abatement opportunities in WA. It showed the cost rose significantly with demand as early movers utilised the cheaper options.

Early access to large land areas for carbon farming could be a massive saving for Woodside at the expense of other companies that want to offset their emissions later, or are excluded from or unaware of the current process.

Chart of marginal cost of carbon abatement in WA versus assumed offset demand
Cost of carbon offsets in WA increases with demand as cheaper options are exhausted. Source: Reputex report 2018.

The rush to offset emissions is just starting. In 2018 Reputex predicted the European carbon price would rise to more than $60 a tonne by 2025, but last week it hit €60 ($97).

Woodside also wants the WA Government to help it pursue renewable energy and hydrogen.

In the letter to McGowan, Woodside requested help to set up a hydrogen "new energy technology hub", but all the details of that proposal were redacted.

The company also wants to deliver solar power "in the near term" to the Burrup Peninsula, where its Pluto and North West Shelf LNG plants are located.

According to the letter, the so-called Woodside Power Project is planned to eventually combine a gas power plant, solar farm, large battery, and a transmission line to the Burrup.

Woodside has worked on the concept for some years, with the plant to be located at the Government's Maitland strategic industrial area near Karratha.

The initial plan was to replace the old and heavily polluting power plant at the North West Shelf LNG plant when it was refurbished to process gas from Browse, but the idea did not appear in Browse-related environmental approvals lodged by Woodside in 2019.

Woodside now proposes to start with just one component of the earlier proposal, with 210,000 solar panels over 200 hectares to deliver 50 megawatts of power to its Pluto LNG plant. Another 50MW could be built to supply the urea plant proposed by Perdaman on the Burrup Peninsular.

Woodside said in its letter to McGowan that it was "prepared to move the opportunity forward in the near-term," but "there are a range of matters that will be critical to our ability to progress, for example, with respect to appropriate apportionment of the cost and risk."

McGowan's spokesperson said access to land in a Strategic Industrial Area, such as for the hydrogen hub or the power plant, would be allocated by Development WA and JTSI according to long-established processes.

Woodside did not respond to questions from Boiling Cold.

The two documents obtained by Freedom of Information can be viewed here.

Main image: North West Shelf LNG plant near Karratha. Source: Woodside.