New $7 billion offshore LNG project looms for WA after Hess-North West Shelf deal

Extremely gratifying in the light of current low prices for crude oil and gas

Western Australia looks set for a new $US6 billion ($7.3 billion) offshore petroleum development thanks to a long-awaited deal struck between US player Hess Corporation and the North West Shelf venture, which also opens a new era for the Woodside-managed venture in the processing of third-party gas.

The North West Shelf venture will process gas supplied by Hess from its fields in the Carnarvon Basin through its LNG plant at Karratha for a fee, providing an extra revenue stream and helping extend the life of the project.

The deal will allow Hess to go ahead with the development of the gas it has discovered in the Carnarvon Basin off WA, in a project expected to cost $US6 billion to develop. It will also secure LNG that it can then market to customers in the Asia-Pacific region.

Although no increase in LNG plant capacity is required, Hess' new offshore project, called Equus, will be one of the few large-scale resources projects set to go ahead in the next few years after the fading of the mining investment boom and after a splurge of investment in new LNG infrastructure that triggered an escalation in costs and made further new LNG projects unlikely. A final investment decision in Equus is not expected until 2017 or later, Hess said.

"Everybody has been saying and probably rightly that because of costs in Australia it's very challenging to build a new greenfield LNG plant but this does show that once you've got a lot of established LNG infrastructure there are these brown-field opportunities," said Graeme Bethune, principal of consultancy EnergyQuest.

"People have been saying, 'Why don't these companies get together and co-operate?', and this is an example of that."

Woodside's senior vice-president, North West Shelf, Niall Myles said the letter of intent with Hess shows the Karratha gas plant is "open for business", providing "an attractive option for third-party gas owners to commercialise their resources in proximity to existing LNG infrastructure".

Negotiations between New York-based Hess and owners of LNG plants in WA have been going on for several years, after the US company decided against building its own LNG infrastructure to process its several gas discoveries in the WA-390-P and WA-474-P permits off the coast. Potential partners for the processing arrangement also included Woodside's Pluto LNG venture and Chevron's Wheatstone venture, while Hess was also at one stage considering developing a floating project.

The initial accord struck with the North West  Shelf venture has a downside for Woodside, however, in that Hess gas would now be ruled out as an option to feed a potential expansion of its $15 billion Pluto LNG plant, also at Karratha. Woodside has so far failed to find enough new discoveries of its own to add a second LNG train at the plant, and has been in talks for years with other holders of gas resources on potential supply arrangements.

Hess would not disclose the volume of gas involved in its discoveries, nor how much LNG it would get from the North West Shelf venture for sale to its own customers.

A spokeswoman said the terms of the letter of intent were confidential, as were information on gas volumes. Estimating the capital cost of the upstream Equus project is "premature", she said.

The news of the deal came as new research from global consultancy Douglas-Westwood confirmed Australia would will see a plunge in investment in the LNG sector over the next five years.

Although total investment globally in LNG is set to surge 88 per cent to $US259 billion over the 2015-19 period from the previous five years, Australasia is one of only two regions along with the Middle East that will see a drop, as the focus of spending shifts to new North American export ventures, new projects in Africa, and new import terminals across Asia.

"Australasia and Asia have dominated global LNG capex in recent years, however, over the forecast period all the regions are expected to experience positive growth in capex, except for Australasia and the Middle East," said Amanda Tay, author of the Douglas-Westwood report.

Australia last saw a final investment decision for a new LNG project in January 2012, for Inpex Corporation's $US34 billion Ichthys venture in Darwin. Since then, Woodside has ditched a plan to build a new onshore LNG plant at James Price Point on the Kimberley coast for its Browse gas venture, while Shell and PetroChina have held off committing to building an LNG plant in Queensland for their Arrow coal seam gas venture.

Santos and GDF Suez have also called off a floating LNG plant at their Bonaparte venture off the northern coast, while ExxonMobil and BHP Billiton are holding off committing to a proposed floating project for their Scarborough gas resource well off the WA coast.

The delays have caused players to urge more co-operative development of gas resources to avoid wasteful and costly spending on new infrastructure, of which the Hess-North West Shelf deal is a significant example.

"This arrangement would bring together Hess' strong deepwater drilling and development capabilities with NWS' proven track record in natural gas processing and liquefaction," Hess president and chief operating officer Greg Hill said in a statement.

"The combination provides an attractive option for Hess to commercialise commercialise its important Equus natural gas resource in a manner that delivers secure, reliable energy supplies into Asia Pacific LNG markets and creates value for our shareholders."

Hess said it would sort out the detail of how Equus gas would be transported to the North West Shelf processing facilities as part of joint engineering studies the partners would now carry out.

"It is envisaged that Hess will deliver its gas to an offshore North West Shelf platform by means of a Hess-constructed main pipe/trunkline from our Equus platform to the North West Shelf platform," the spokeswoman said.

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Penalty rates: Loadings for working weekends and holidays could be reduced

Long overdue in some cases

This could be the last Christmas millions of Australian workers will claim penalty rates for working on weekends and public holidays, unions have warned.

The Fair Work Commission on Monday released a schedule of hearings to run throughout next year as part of a four-year review of all modern awards. It has confirmed it will examine proposals by employer groups to change penalty rates as part of the wider review.

Australian Council of Trade Unions president, Ged Kearney, said employer groups have indicated they will target a range of industries including retail, hospitality, pharmacy, fast food, dry cleaning, laundry, hair and beauty, amusements and events. She said workers in those industries were at risk of losing their current penalty rates.

"If employer groups have their way, this could be the last year millions of Australian workers will be paid existing penalty rates for working weekends, late nights and public holidays – including Christmas," said Ms Kearney.

Ms Kearney said the case to cut penalty rates had begun just before the busy Christmas period when many Australians have no choice but to work on public holidays.

"While many of us are winding down to enjoy the holidays, millions of Australian workers will give up this special time with family and friends to work. They work weekends, nights and other unsociable hours and should be paid for that," she said.

The Fair Work Commission released a schedule of hearings from August next year. Employer groups have until February 13 to lodge submissions for any proposed changes to the award.

The commission will finalise its timetable and a list of witnesses after a conference in late February.

On Friday, the federal government announced the terms of reference for a Productivity Commission review of workplace laws under the Fair Work Act.

Ms Kearney said this meant that wages, conditions and penalty rates would be under attack on two fronts.

"The employers are going after them in the Fair Work Commission while the Abbott Government is using the Productivity Commission to do the same," she said.

Australian Chamber of Commerce and Industry chief executive officer Kate Carnell said Sunday penalty rates should be similar to Saturday rates in a modern Australia.

"We think there should be penalty rates but Sundays should be in line with Saturdays. Sunday is no longer the day of rest. It's a day we go shopping just as we do on Saturdays," she said.

Ms Carnell also welcomed the announcement of the Productivity Commission review of the Fair Work Act, saying Australia needed a more modern and flexible workplace suited to its 24/7 economy.

"We need to make sure penalty rates are realistic and don't make businesses unviable," she said.

"Reform does not mean dismantling penalty rates altogether, but it does mean ensuring businesses and employees don't suffer. We otherwise risk condemning large numbers of people to unemployment and underemployment."

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Outback restaurant in trouble for anti-Islamic sign



A Longreach restaurant that placed a sign reading "Sorry No Muslims" outside its front doors has caused consternation on social media.

Local Helen Day posted pictures of the chalkboard outside the Eagle's Nest Bar and Grill on its Facebook review page last Friday.

"Just a bit surprised to see the sign up [reading] 'Sorry No Muslims' ... what's that about?" Ms Day wrote.  "I certainly won't be going into a place where my Muslim friends are not welcome!"

The full handwritten message on the sign read "2000 years ago Jesus Christ made headlines turning water into wine...the tradition continues...We turn money into beer [Sorry No Muslims]."

Ms Day's pictures were reposted by Facebook group Boycott Halal in Australia? No Way, and a moderator for that group told Brisbane Times the image had since been shared widely.  "Our page has only been going three weeks and we had a 'Total Reach' of up to 7,000 people," the moderator said.  "We put the story up a day and a half ago and are now reaching almost 80,000 people and rising, because of that one post."

Anti-Islamic sentiment has risen in Australia since last week's Sydney cafe siege, with movements like #illridewithyou acting as a counter argument.

Comments on the Eagle's Nest Bar and Grill's Facebook page have ranged from outraged to unapologetic.

The moderator of the page, who wished to remain anonymous, said some Facebook groups were trying to shut it own, or making comments such as Islam forbids alcohol consumption anyway so it shouldn't matter if Muslims can't enter a bar.

"We've been deleting disgusting and hateful posts from members of the Australian Defence League, Australian Brotherhood, Boycott Halal in Australia and lots of other anti-Muslim pages since we put up the post," the moderator said.

A Longreach Regional Council spokesman confirmed a verbal complaint had been received.  He said they were seeking more information about the sign and would consider an investigation, or referring the matter to the appropriate body.

The spokesman said the operator of the Eagle's Nest had a history of writing quirky, tongue-in-cheek slogans on his chalkboard that changed daily.

A spokeswoman for the Anti-Discrimination Commission of Queensland said it had not yet received any formal complaints about the sign.  "I understand the Australian Human Rights Commission has received some enquiries about it and they have referred the enquirers to us," she said.  "So it may just be a matter of time."

However, the spokeswoman said under the legal definition of religious discrimination, the complaint would have to come from someone directly affected.

"Therefore if there was a Muslim person in Longreach who wanted to obtain the goods and services from Eagle's Nest Bar and Grill but couldn't because they didn't serve Muslims, then that person could make a complaint to the ADCQ," she said.

The Eagle's Nest restaurant is closed on Mondays and Tuesdays, and calls to the owners' home went unanswered.

The moderator of the Boycott Halal in Australia? No Way Facebook group said they should own up to writing the message.  "If they would only apologise and say they made a mistake, we'd be the first to publicise that. I wish they'd just clear it up so we can all move on," they said.

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Must not mention that women still do most of the household budgeting

Senior Liberals were privately aghast when the Prime Minister nominated repealing the carbon tax as his "biggest achievement" for women because they are "particularly focused on the household budget".

Foreign Minister Julie Bishop was forced to defend Tony Abbott's latest gender-related gaffe as Labor lashed the Prime Minister as "stuck in the past".

Mr Abbott was asked to name his biggest achievement as the Minister for Women during an appearance on the Nine Network's Today program. "Well, you know, it is very important to do the right thing by families and households. As many of us know, women are particularly focused on the household budget and the repeal of the carbon tax means a $550-a-year benefit for the average family," he said.

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