Why we need to say ‘no’ to Equinor’s planned oil project
Norwegian company Equinor has just released a draft environmental plan for deep water oil drilling in the Great Australian Bight. A misstep in this project would have disastrous environmental, social and economic impacts for all Australians, which is why we think it should be rejected.
You’d be forgiven for thinking that all fund managers have a right-wing view of the world. It is true that I believe capitalism is the best current model available for balancing the need to efficiently allocate resources for the creation of wealth and to share that wealth equitably. But without effective government (and I see lots of issues with our model of democratically elected leadership) the second objective might be forgotten by those who lean much further to the right.
As I wrote in a blog post in December, “Very few, if anyone, I know subscribes to the ‘greed is good’ mantra offered by Michael Douglas’ character Gordon Gekko in the movie Wall Street. The cost borne by society from promoting such self-interest would simply be too high to be anything other than morally repugnant. But even when capitalism’s extremes aren’t widely embraced, and even though capitalism has pulled many billions out of poverty, it fails on many levels.”
One of those levels is the environment. Privatising the profits from damaging the environment while socializing the costs and consequences is one of the serious issues that will eventually need to be addressed. The solution however seems way beyond the pay grade of our current crop of political leaders.
But simply force any seriously successful entrepreneur, whose business produces an adverse environmental consequence, to live beside that consequence rather than inside the commercial benefits they enjoy, and you’ll quickly expose one of the serious imbalances capitalism has produced.
When that imbalance potentially threatens the priceless beauty of Australia’s coastline, it’s worth sitting up and paying attention. Norwegian company Equinor have formally released their draft environmental plan for deep water oil drilling later this year in the Great Australian Bight.
A misstep in this project has consequences for all Australians.
The proposed Stromlo well is 327km offshore in the Southern Ocean, exposed to the Roaring Forties and one of the roughest seas known to seafarers. The proposed well is in 2500m of water, and Equinor would then need to drill through another 3000m (three kilometres) of seabed.
As part of their environment plan, Equinor were forced to supply oil spill modelling, which showed oil on beaches between Margaret River in the west and Port Macquarie in the east. According to the ABC, “In November, the ABC revealed an internal draft emergency plan prepared by Equinor, which showed oil could reach as far as Port Macquarie under a “worst credible case” scenario.
A “leaked document obtained by Greenpeace contained maps of Australia’s coastline which outlined the extent of a potential spill. “However, the group said those projections were missing from the company’s official draft environment plan…”
While Equinor claim the drilling “can be done safely,” BP – who Equinor acquired their Australian Bight leases from – made the same claim about the Deepwater Horizon well in the Gulf of Mexico which exploded in 2010 causing the largest marine oil spill in history.
It’s estimated that BP’s cost for the clean-up, environmental and economic damages and penalties has reached $54 billion. So, perhaps little wonder that BP have stepped away from the Great Australian Bight.
According to ABC reports, “Equinor’s 426-page report discusses a range of measures the company would take to reduce the impact of a disaster, including a piece of machinery called a “capping stack” to plug a major leak.
“However, the company conceded the capping stack would not be kept on site and would take 15 days to be transported from Singapore.”
“To be clear, that means oil flowing freely into the ocean for 15 days,” according to senior campaigner Nathaniel Pelle.
Keep in mind however, it took BP 149 days to permanently kill the Deepwater Horizon well in the Gulf of Mexico.
Source: ABC
According to Greenpeace, the above map of southern Australia with blue plumes around the Great Australian Bight extending into Bass Strait was left out of the company’s environment plan.
Equinor’s environmental plan is before industry regulator NOPSEMA (National Offshore Petroleum Safety and Environmental Management Authority) and is open to public comment, closing on March 20.
This will be the last public consultation before NOPSEMA makes their decision, and you are invited to have your say via this link.
If you believe that our system of capitalism has flaws and that we shouldn’t expose the Great Australian Bight to them, it might just be worth mentioning that to NOPSEMA.
If you’re unsure about how to word your submission here’s some tips.
*Image source: Sean Gardner, Reuters
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
steven lock
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If this is deemed to risky, which I think it is, what is your view on other offshore oil rigs, don’t they all pose the same environmental risk. If the rest of the world adopt a view of not in our backyard, the following would close;
https://www.weforum.org/agenda/2015/10/where-are-the-worlds-oil-rigs/
Meaning a big drop in supply presumably and a higher price, would we be prepared to pay $5 a litre, for example, and a higher price for most things, as the rely on transport, knowing oceans around the world are safe from an oil spill.
Roger Montgomery
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An estimated 85% of the known species in The Great Australian Bight are found nowhere else. Wild fisheries and aquaculture industries worth around $440 million per annum back in 2012–13. Much more now. Regional tourism industry worth more than $1.5 billion per annum. Record number of Blue Whales in the bight this year: https://www.abc.net.au/news/2019-02-14/blue-whales-in-record-numbers-in-great-australian-bight/10786692
Lester Green
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Thanks for the quick response Roger.
It’s your blog and you determine content……..I’m fully on board with that. I’m simply giving you some personal feedback, which I know you are open to, that I don’t think this is the right forum for this debate. Once you have digested the response to your blog you will surely make your own deductions whether the article served its purpose. You’ve achieved your aim and so have I. The autonomous society is working. Enjoy a red wine when you get home tonight.
Roger Montgomery
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I took your advice Lester! It was a WA red called The Pirate.
Lester
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Roger. – I’m a huge fan of yours but I have to say, on this occasion, I am really disappointed at your naivety in walking into this one.
I read and enjoy the blog to stimulate my investment knowledge, and I thoroughly enjoy the Montgomery blog for this reason. I don’t read the blog to be educated on divisive subjects such as climate control, etc. I’m struggling to understand what purpose will be served by inviting a discussion on this subject. Talk about walking into a brick wall.
Roger Montgomery
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If “naivety” is because I haven’t pleased everyone all the time, that’s ok. Inevitably we will have views that diverge – as we do with everyone who sells us a stock that we buy! There are just as many who have appreciated the note for the expression of concern for others. Interestingly, through investing, I have experienced much divisiveness (just look at the comments when I forecast a property market downturn!). The only time I experience more is when I post my Christmas messages. In the autonomous society we live in, and presumably you value Lester, each person determines their own moral prerogative. Presumably you’re willing to afford me my autonomy rather than dictate to me what I must believe as well. Therefore delighted to meet with ‘brick walls’ as they appear – or are they put there by others?
tania-tan-96
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I have made a public comment and hopefully my friends will too. A well written factual perspective from you Roger. Thank you.
andrew ronan
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Well if your getting your information from Greenpeace and the ABC, expect nothing less than the leftist/activists garbage they both peddle daily. A leaked document from Greenpeace, really Roger? you find that credible? Yet your unsure on Martin North’s credentials?
From what I can gather about this story so far is 1/ All the experts, judges, jurors and commentators have had Zero experience in offshore drilling.
2 all their info comes from well known opposing/activists.
3 there has been no Logical discussion at all in defence of the project.
And this kind of emotional hysteria is exactly why even conventional drilling for gas has been banned in gas rich areas of Australia, simply to please the dumbed down public who have no clue because they are brainwashed by activist media groups who want to look like the good guys and who cares about the facts.
A good example is nuclear power, we are the most stable continent on earth, yet we cant build nuclear power because of public perceptions about it that are largely false.
So because of what happens in Japan, Chernobyl etc we cant build nuclear, yet the geological conditions are totally different,
Same with the emotional rubbish going on in the sustainable timber industry at the moment, all to please the dumbed down I’ll inform city voters. A little dose of feel good I saved a tree, yet I live in a house full of timber.
In the 80s close to where I live, the then labor environment minister shut down our sustainable logging industry, after retiring and thirty years later admitted in a book he did it to please voters in the capital cities and the decision had little to do with the environment.
Nothing has changed. Emotion rules logic is irrelevant.
Roger Montgomery
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That’s just as emotional as anything else written here Andrew.
andrew ronan
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Yep maybe so Roger, but it’s all true, and you know it.
Anyone who cares about this country’s future and prosperity tends to get a bit upset at the constant fake news leftist media garbage peddled by the so called progressives. Other than that your reply is quite unsatisfactory with regards to my presented argument.
Roger Montgomery
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Question for you Andrew, can it be true that there are any environmental consequences from human activity?
andrew ronan
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Of course, but we are always throwing the baby out with the bath water, on an epic scale. This project maybe very bad or good, I don’t know, but neither do you Roger, we’ve got to stop the leftist activist media etc from deciding things for us.
Roger Montgomery
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More than happy for you to balance the scales with any data or evidence that refutes the above.
andrew ronan
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Well that’s easy Roger, you point to one disaster, but fail to take into consideration thousands of other offshore productive drilling projects that did not create disaster, and they are why you can still drive your car. By your logic, no sane man or woman should ever fly on a commercial jet because one crashed and 300 people died. It’s the same with nuclear and conventional gas drilling, all banned because of similar irrational logic you are using.
This is clearly an irrational decision making process.
What are your thoughts on the banning of conventional drilling for gas Roger?
Roger Montgomery
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The post suggests a much too dangerous aircraft is be about to take off.
andrew ronan
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Yes according to the our favourite socialist network the ABC and Greenpeace and yourself of course, you stay in the echo chamber ,I’ll go talk to the mechanic, because he knows more than me you and the ABC about aircraft safety.
Don’t get me wrong Roger, I’m a huge fan of yours too, as with all my friends etc, we have never agreed on everything all of the time.
But robust discussion is usually around the things we disagree on, and I have changed my point of view on many things because of new developments etc.
On that note I look forward to your new hairdo, as reported by Greenpeace your growing dreadlocks I hear.
Roger Montgomery
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So ‘Hipster’ that we drink our lattes from an avocado.
xiao fang xu
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Natural Seeps of Petroleum
Natural seeps occur when crude oil seeps from geologic strata beneath the seafloor into the water. Seeps are often used to identify potential economic reserves of petroleum. They contribute the highest amount of petroleum to the marine environment, accounting for 45 percent of the total annual load to the world’s oceans and 60 percent of the estimated total load to North American waters.
While the devastating impact of spills has been well publicized with images of oil-covered shores and wildlife, releases from the transport of petroleum now amount to less than 4 percent of the total in North American waters and less than 13 per- cent worldwide.
If humans didn’t drill for oil it would leak out and pollute the environment anyway.
But since oil rigs are ugly and oil companies are rich evil, there are good potential cash cow resources that should be milked by government in the name of protecting environment.
xiao fang xu
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Greed is universal. Capitalism is not.
Why Socialism Causes Pollution
Corporations are often accused of despoiling the environment in their quest for profit. Free enterprise is supposedly incompatible with environmental preservation, so that government regulation is required
But if the profit motive is the primary cause of pollution, one would not expect to find much pollution in socialist countries, such as the former Soviet Union, China, and in the former Communist countries of Eastern and Central Europe. That is, in theory. In reality exactly the opposite is true: The socialist world suffers from the worst pollution on earth.
https://fee.org/articles/why-socialism-causes-pollution/
Pollution Control and Biblical Justice
Gary North – May 03, 2018
Contrary to many of the twentieth-century critiques of both capitalism and pollution, socialist commonwealths have not produced reasonable, cost-effective, workable solutions to the pollution problem. More than this: such solutions cannot be implemented in socialist societies, for it is the private ownership of the means of production which is the basis for a successful program of pollution control. In fact, it is common ownership—bureaucratic ownership—which creates most of the economic incentives to pollute and exploit the environment.
https://www.garynorth.com/public/18031.cfm
andrew ronan
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Agree %100 with that, it’s our fiat currency and monetary system that is the enabler of vast waste and inefficientcies therefore pollution, cheap money is the biggest polluter of all time. Very few people at all get this.
Tracey Oberg
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Thanks for standing and speaking for the Environment Roger.
Steve Greenwood
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Thank you Roger for this article and bringing it to our attention. I’ve submitted a comment.