Woodside Petroleum : EVP Development speech AOG

Meg O'Neill

Executive Vice President Development

Woodside Energy Ltd.

AOG Industry Supply Forum, Perth

Wednesday, 11th March 2020

[check against delivery]

I would like to begin by acknowledging the Traditional Owners of this land, the Whadjuk Noongar people, and pay my respect to their Elders past, present and emerging.

Thank you to AOG for the opportunity to speak today and thank you Premier for your comments. It is opportune for me that I am speaking after someone who clearly understands the significance of our proposed Burrup Hub projects to this State and before one of our partners whose support will be important in delivering those projects.

We know these are very uncertain times as the world deals with the coronavirus and our industry deals with significant market volatility in recent days. We are used to managing risk and uncertainty but none of us know how this will all play out.

Even in the most stable of times, the reality for our industry is no company can deliver big projects alone. We rely on engagement with governments, regulators, communities, joint venture partners and contractors and suppliers large and small. And I know that many of those attending AOG today will be interested in the opportunities that will arise as our projects progress.

When I spoke at AOG last year, I talked about our vision to create an integrated 7-train LNG production hub on the Burrup Peninsula, near Karratha.

I'll start today by updating you on our progress.

The temptation at a conference like this is to give a speech beating our own drum and talking up our projects as if we hold all the answers. I do think our proposed projects are world-class - and I'll explain why - but their significance is derived also from the context in which they are being progressed.

By that, I mean the social and economic context in this state and the broader context of an energy transition that needs to occur globally to a lower carbon future. So, I'll talk about that too.

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A quick reminder of what is involved in our proposals for the Burrup Hub [show slide]

I'll start with the Pluto-NWS Interconnector Pipeline, which is our first instalment in the overall vision for an integrated production hub. Woodside announced last November that we had taken a Final Investment Decision on the pipeline, which will link the Pluto LNG facility to the Karratha Gas Plant. Since then, significant progress has been made by DDG Operations Pty Ltd, part of the Australian Gas Infrastructure Group, or AGIG.

Detailed engineering is well advanced and the manufacture of the 30" linepipe is nearing completion, supporting the commencement of pipeline construction this year.

Importantly, over 85% of the engineering and management is being done locally in Perth, employing more than 60 people.

The Interconnector is not the biggest component of the Burrup Hub, but it's a crucial piece in the puzzle.

The two big developments are Scarborough and Browse and we are currently in the thick of approvals on both as we progress towards final investment decisions, involving tens of billions of dollars of investment.

We propose to develop the Scarborough field with a floating production unit moored above the field, and to transport gas from that facility through a 430km subsea pipeline to the Pluto LNG facility.

The scale of the development increased significantly last year, thanks to a technological breakthrough, which revealed a 52% increase in the estimated resource volume of Scarborough. That was a real game-changer and confirmed our view that this is a world-class resource.

The Joint Venture is aligned and working closely together to progress this development - we have taken some big steps forward in recent weeks.

Significantly, on 27 February, the Scarborough Joint Venture submitted applications for production licences for the Scarborough titles.

This alignment and commitment progresses Scarborough further along the path to a target final investment decision this year.

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To process this gas for customers, we propose to expand the Pluto LNG facility. We have finalised the design of a second LNG train at Pluto, and a domestic gas plant, to process Scarborough gas. Late last year, commercial arrangements took a step forward when we agreed a tolling price with BHP to process Scarborough gas. We are working with our head contractor Bechtel to engage with contractors and suppliers to discuss the opportunities this presents for local industry.

The second major development is of the Browse fields. We have completed the basis of design on a development that features two Floating Production Storage and Offloading vessels, which will be connected by 900km of subsea pipeline to the North West Shelf (NWS) Project's Karratha Gas Plant.

As I've already said, we can't do this alone - and I acknowledge the support in the State Parliament this week for legislation that extends the life of the North West Shelf Project and locks in community benefits, including the ongoing supply of domestic gas, for decades to come.

We appreciate the constructive engagement and broad support for this legislation, which lays the framework for processing other gas through the Karratha Gas Plant when the North West Shelf Project's remaining offshore reserves decline in coming years.

This is a crucial part of our Burrup Hub plans and underscores their significance to Western Australia.

The Burrup Hub is all about opening up existing Woodside-operated facilities - Pluto LNG and the Karratha Gas Plant - in a way that can unlock the value of resources WA's offshore.

Overall, we're looking to produce approximately 40 trillion cubic feet of gas resources through the Burrup Hub complex, developing that natural gas right at the time when the world will need it.

If we were in the Pilbara today, you would see that our vision for the Burrup Hub is more than just the graphic on this slide. It's evident in the confidence around the town, it's evident in the way we are working with the Karratha Chamber of Commerce and Industry to grow local business capability and it's evident in our record training intake this year of 71 new starters at our Production Training Academy.

But we know that where there are opportunities, there are also challenges. That's why we are working together with the City of Karratha and with State authorities to understand and manage our potential impacts, including around available and affordable housing.

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We are well on the way to delivering our vision for the Burrup Hub - and I will talk shortly about the benefits to Western Australia and the nation - but it is timely now to think about what happens in the absence of these developments.

The reality is that investment decisions of this scale and timeframe require alignment from a range of stakeholders and, crucially, a degree of regulatory stability. That becomes more challenging if there are unforeseen changes to fiscal and regulatory regimes.

These developments also rely on collaboration with industry partners. In the event that industry cannot agree on opening up existing facilities to third parties, it would be understandable if governments were to intervene to ensure the best use of infrastructure … and none of us want that.

If these proposed projects did not progress, it would be a missed opportunity for Western Australia in terms of jobs, energy supply and opportunities for small- to medium-sized businesses.

Some of those opportunities are already being advanced:

Bechtel has awarded an early works contract to ATCO Western Australia for its Pluto Train 2 Construction Accommodation Village in Karratha. The majority of this work has been awarded to local Karratha suppliers such as Karratha Earthmoving.

Aside from the local jobs in Karratha, should full construction proceed, ATCO will build all of the modular units at their state-of-the-art manufacturing facility in Hope Valley, 35km south of Perth.

Currently, only a small scope of work has been awarded, but when a positive final investment decision is made a variety of jobs and contracts will be available. Different skills will be required at different times and all relevant Karratha-based roles will be advertised through the Karratha Local Jobs Portal as they become available.

These are just the first steps.

The potential prize is much more significant, as has been highlighted by an economic impact analysis last year from consultants ACIL Allen. [show slide]

They found that the Burrup Hub would support thousands of jobs and billions of dollars of investment.

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The flow-on effects include boosting Australia's Gross Domestic Product by $414 billion between now and 2063.

ACIL Allen calculates that the direct employment from the Burrup Hub will include a peak construction workforce of more than 4,600 full-time jobs in 2023.

Long-term employment is also significant, with the Burrup Hub supporting the creation of an average of 1,100 operations jobs, ranging at times up to 2,000 jobs. This is in addition to the existing operations jobs in Karratha and Perth that are already associated with running the NWS Project and Pluto LNG, and the hundreds of other jobs involved in the current life extension programs.

The Premier has already mentioned the work of the LNG Jobs Taskforce and we recognise the efforts of the McGowan government to coordinate with industry to capture opportunities for this State. Some of those opportunities are reflected in the forward work plans that are being released at this conference.

At a time when the economy is in need of stimulus, one of the best things to do is to approve these projects.

We should also talk about the benefits these projects can offer to the world by supporting the transition to lower-carbon energy.

Western Australia can and should be proud of the role its LNG industry plays.

As Chief Scientist Alan Finkel has observed recently, "natural gas is already making it possible for nations to transition to a reliable, and relatively low emissions, electricity supply"1. This is also evident in the finding by the International Energy Agency that coal-to-gas switching played a role in avoiding an increase in greenhouse gas emissions globally last year2.

There will be demand for natural gas in the decades ahead. And the reality is that new gas fields will need to be developed to deliver it. Existing fields are declining and, even with new investment, they will not provide enough gas to meet the demand expected under the International Energy

1. https://www.chiefscientist.gov.au/news-and-media/national-press-club-address-orderly-transition-electric- planet
2. https://www.iea.org/articles/global-co2-emissions-in-2019

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Agency's Sustainable Development Scenario, which outlines the conditions required to limit global temperature increases to below 2 degrees Celsius.

Natural gas is part of the solution for a lower carbon world - and Western Australia is a world leader in the provision of natural gas.

The role our projects can play is confirmed by a report by global environmental consultancy Environmental Resources Management, which analysed the emissions intensity of Browse and Scarborough gas when compared to other energy sources. This report, critically reviewed by CSIRO, confirmed the significant reduction in forecast global greenhouse gas emissions that can be achieved by gas from Scarborough and Browse displacing higher emissions fuels in our target markets.

We are conscious we need to develop those resources in a way that is carbon-efficient, managing emissions through offsets, energy efficiency and lower-carbon technologies.

And we are challenging ourselves to do better.

Woodside's aspiration is to be net zero for our direct emissions by 2050, aligned with both the Western Australian Government's aspiration and the Paris Agreement.

We are working towards our target of 5% energy efficiency improvement against baseline over the five years to 2020 and have set a new 5% target for the five years beyond that.

Woodside has been offsetting emissions from our Pluto development for years, and we have in the past year set ourselves a new target to offset equity reservoir CO2 across our entire global portfolio from 2021.

Our proposed projects are timed well to support the energy transition, with nearly all of the natural gas to be developed before 2050, getting the world's energy mix shifting in the right direction.

Each company needs to figure out its own path, but there are also some actions that we can take as an industry. The Methane Guiding Principles are a good example of how industry can band together to focus on improving our collective emissions performance.

The five Guiding Principles were developed by a coalition of industry, international institutions, nongovernmental organisations (NGOs) and academics to focus on reducing methane emissions across the natural gas value chain.

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The goal of net zero by 2050 offers opportunities for Western Australia - and not just through the provision of natural gas and other low-emissions fuels. Net zero requires a dramatic reduction in emissions, but the other part of the equation is offsetting the emissions that cannot be avoided.

Western Australia, with its vast land mass, offers considerable scope for building out offsets through revegetation. Woodside is already working on this, in partnership with Greening Australia. Towards the end of last year, we acquired our first two properties in WA's south-west and will soon begin plantings.

WA is already a world leader in the supply of energy and could also become a world leader in carbon offsets.

Woodside has made the case for some time that there is an opportunity for WA to show leadership on the use of LNG as a cleaner marine fuel on the busy trade routes to Asia. We are building up our own "green fleet" of support vessels with the Normand Leader joining the Siem Thiima - both vessels that can be fueled by LNG.

The energy transition presents opportunities for WA, including further growth in renewables, the development of a hydrogen industry …and, of course, the continued dominance of this state as a global exporter of LNG.

At the Resources Technology Showcase conference at this very venue last November, the Premier did his best to lure other resources companies across the Nullarbor and bring with them jobs and investment.

Premier, let me assure you that WA's own natural gas producer is hard at work to deliver growth projects that will have significant benefits for this state.

I look forward to updating you on the next big steps we intend to have taken by the time AOG rolls around again next year. Thank you.

ENDS.

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