BOB SORBY. Of Pipes and Pipedreams

Nov 7, 2017

Life is an equation in hydrocarbons was a favourite aphorism of the late RFX Connor, Minister for Minerals and Energy in the Whitlam Labor governments of 1972-1975. The phrase belied a deep understanding by Connor of the Australian petroleum and natural gas industry at the time together with a suggestion of big ideas waiting to be explained. One big idea that Connor had was the need to develop Australia’s natural gas deposits to maximise their economic return in the international market and secure sufficient gas reserves to satisfy Australia’s domestic requirements, both domestic and industrial, for the foreseeable future.

In recent months as it has become apparent that there are not sufficient reserves of natural gas to satisfy demand on Australia’s eastern seaboard two solutions have emerged. The first was for the Federal Government to persuade the large gas producers in Australia to set aside more gas for the domestic markets notwithstanding their international contractual obligations. Following considerable dithering by the Prime Minister, prodded by Barnaby Joyce throwing export controls into the debate, Turnbull received an assurance from the gas producers that Australian needs would be met for the next two years.That is all that Turnbull could get from Australia’s natural gas industry when Australia is now the largest exporter of natural gas in the world, together with Qatar.

The second idea that has been floated as a solution to the eastern states gas shortage, though not a short-term solution, is a national pipeline gris from the North west shelf gas fields to the east, with spur lines (as now exist in NSW and Victoria) to regional centres. It was recently reported in the Fairfax press that ACIL Allen in partnership with the engineering firm GHD has been contracted by the Federal Government to carry out a feasibility study on an east-west gas pipeline to link with the eastern states markets.

In 1968 Connor first floated the idea of such a pipeline at a Labor Party meeting, at a time when the potential of the Northwest shelf gas fields was just opening up and the emergence of large scale gas extraction from coal seams was yet to be imagined, let alone realised and developed.

In the 1971 ALP National platform there was a policy inserted that a Labor government would establish a pipeline for the “transmission of natural gas by interstate ring main to ensure certainty of supply and uniformity of price.” This visionary policy was before the Arab oil shocks of 1973 and 1974. Though not in the Shadow Ministry before the 1972 election, Connor managed to secure enough Caucus votes to make the ministry after the election win in 1972 and Whitlam gave him the new portfolio of Minerals and Energy, incorporating the old Department of National Development in existence under the Liberals.

Connor immediately set about implementing the party platform in energy and the Pipeline Authority Act  was introduced into Parliament and passed early in 1973, one of the few pieces of legislation not to be blocked by the Senate. The purpose of the Authority was, among other things, as set out in the preamble of the Act to “secure, control and retain reserves of petroleum adequate to meet the long term needs of the Australian people”.

Once the Act was passed into law, Connor immediately started negotiations to transfer the ownership and construction of the AGL natural gas pipeline from the Moomba gas fields in South Australia to Sydney to the Authority. Connor’s plan was that the Moomba-Sydney-Adelaide pipeline with spur lines to regional centres would connect with Kalgoorlie, Perth and then Dampier where a petrochemical plant would be built. Together with the Petroleum and Minerals Authority, another Connor initiative to develop and secure Australian resources (knocked back by the Senate and High Court in 1975), Connor’s pipeline grid and spur lines were to be part of a national energy strategy combining natural gas, petroleum, brown coal, solar power and uranium, the latter a highly divisive policy in the Labor Party at the time.

With the dramatic Arab oil shocks and their impact on the world economy, Connor’s policies received an unintentional boost. The world oil crisis also produced a glut of what became known as “petrodollars” in the world capital markets. Connor’s attempt to tap into this source of funds through unconventional methods to pay for his project became his undoing and the excuse for Fraser to block supply. One consequence of the end of the Labor government in December 1975 was the end of Connor’s and Labor’s plans for the energy and minerals sector of the Australian economy. Fraser sold the Moomba pipeline back to private enterprise and the rest of Connor’s policies were ignored. Labor disavowed Connor’s policies. In government Labor failed to recoup the huge tax losses to the Exchequer identified by Tom Fitzgerald in his report initiated by Connor. When the Rudd-Gillard-Swan government tried to introduce a resource rent tax, it went to water following a campaign by the mining industry.

There is only one state in Australia – Western Australia – that has a natural gas reservation policy with reserves of natural gas set aside for the local market. Queensland does not have such a policy nor is there a Federal policy.

Federal Labor has no specific energy policy in its platform. Renewables, emission trading schemes and the end of coal power are its priorities. The policies do not resonate in the community in a way that Connor’s and Labor’s policies and visions did in the early Whitlam years.

It is ironical that part of Connor’s vision for an energy rich Australia to benefit all Australians, the national natural gas pipeline grid, is now being discussed as a part solution to Australia’s energy requirements, if 40 years too late.

Bob Sorby was Press Secretary to R.F.X. Connor between January 1973 and October 15, 1975.

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