Senate to probe BP Great Australian Bight oil plans – a $2.6bn carbon bomb?

The plans of global oil major BP to drill for the fossil fuel in the Great Australian Bight will be the subject of a new Senate inquiry, as critics question the environmental cost and high carbon risk of the proposed project.

South Australian Greens senator Robert Simms said the inquiry would give the community and experts a chance to have their say on the project while BP prepared its second application.

The first application was rejected in November 2015, when the National Offshore Petroleum Safety and Environment Management Authority (NOPSEMA) ruled BP had failed to meet all of its environmental requirements.

“We need this inquiry so that we can protect the beautiful, Australian coastal environment and the marine life in these waters,” Senator Simms said.

“This is going to… ensure that all the facts are put on the table and the implications of BP’s drilling in the Bight will be considered.”

One pretty damning fact, according to the Carbon Tracker Initiative, is that there just isn’t any room in the rapidly diminishing global carbon budget for the oil BP hopes to extract from the Bight, making it a huge possibility to become a stranded asset – and a costly one, at that.

In a statement on Monday, issued in response to the vote for a Senate Inquiry, Carbon Tracker points to $US2.6 billion of potential CAPEX identified out to 2025 to develop awarded fields in the Australian Bight, the majority of which is not needed in a 2°C (2DS) scenario – as it sits too far up the cost curve.

“Allocating capital to high cost, high risk projects in the Australian Bight appears unwarranted in a low demand, low carbon future,” said Carbon Tracker research director, James Leaton.

“Shareholders should challenge whether this is the best strategy for the companies to create value.”

Greg Muttitt, a senior advisor at Oil Change International, goes further, describing BP’s plans to bring new carbon into a saturated atmosphere as “an act of criminal irresponsibility”.

“If we are to limit climate change below 2 degrees, at least three quarters of the already-known fossil fuel reserves must stay safely in the ground,” Muttitt said.

“Yet BP wants to dig us even deeper into the problem by opening up a whole new oil province. If this project goes ahead, BP will cause devastating loss of life and economic damage.”

Indeed, it’s an interesting strategic move for BP, with oil prices still languishing at around $US32 a barrel, and with less than six years’ distance between it and the Deepwater Horizon oil spill that devastated the Gulf of Mexico and cost BP tens of billions in compensation and damages. And then there’s the new Paris climate agreement, to limit global warming to well below 2°C.

A BP spokesperson has said the company welcomes the scrutiny the Senate inquiry will bring, and will engage fully with it.

“We will look to explain why we believe the oil and gas industry can operate safely and responsibly in the Great Australian Bight,” a statement said.

“The industry as a whole makes a very important contribution to Australia and provides many social and economic benefits.

“BP is continuing to work on its environment plan for the Great Australian Bight.”

But Wilderness Society SA’s Peter Owen said it was unlikely the Senate inquiry would find nothing of concern in the project.

“What we’re talking about here is the Great Australian Bight whale nursery, is a pristine marine environment, and not at all an appropriate place to be looking to industrialise and try and turn into an oil field.

“We need to be phasing out fossil fuels, not further expanding the industry.”

The committee is due to report its findings on May 12, 2016.