Woodside Energy : CEO Speech at AmCham Business Luncheon

Meg O'Neill

CEO and Managing Director

American Chamber of Commerce in Australia

(AmCham) Business Luncheon

Thursday 25 May 2023

[Check against delivery]

Good afternoon everyone. And thank you for that warm welcome Gary.

I would like to begin by acknowledging the Traditional Custodians of the land on which we meet today, the Nyoongar Wadjuk people and pay my respects to their Elders, past, present and emerging.

I extend that respect to all other First Nations people, in the locations around the world where Woodside works and where all of our employees and community members live.

I'd also like to take this opportunity to say Woodside is strongly supporting an Indigenous Voice to Parliament here in Australia.

As most people in the room know, there'll be a referendum on this subject later this year. Woodside is backing the Yes campaign because we believe having a formal pathway for First Nations people to share their views on policies that matter to them, can only result in better outcomes.

In my view, this is really an opportunity to bring Australians together.

I acknowledge distinguished guests here today including the US Consul General, Siriana Nair, based in Perth, Siriana, welcome, nice to see you again.

American Chamber of Commerce in Australia Board Director, Bill Townsend, fellow Amcham Governors.

I'd also extend my thanks to Amcham's Chief Executive Officer, April Palmerlee, for inviting me to speak and to Natalie for the hospitality of the Western Australia team today.

And thanks to everyone who's come to join and hopefully participate in the conversation today.

As Gary noted, I grew up in Boulder, Colorado.

My dad was an engineer and my mother was a communications professional.

And at this time of year, back in Colorado, the weather would be warming up, my brothers and I would be riding our bikes around, looking forward to the long Memorial Day weekend.

We had a very safe and happy childhood.

And ahead of Memorial Day, I'd like to remember the fallen service men and women.

The United States is the home of the free because of the brave.

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Australia has a rich service history as well.

And with Anzac Day just passed I'd also like to pay my respects to the courageous Australians who've served this country.

We will, and do, remember them.

The sacrifices of our armed forces have safeguarded the United States' and Australia's prosperity and protected our way of life.

I believe being lucky enough to have been born in either the United States or Australia is something we should be grateful for.

One of the reasons for this is reliable and affordable energy that both countries enjoy, and that has underpinned our economic and social development.

Over the past 28 years my career has taken me to places where people aren't as fortunate.

Places where the poorest people live without electricity and where the air isn't clean.

Watching the horrible images coming out of Ukraine is another reminder of how unfair our world can be.

It's also an example of how quickly the tectonic plates of global security and trade can shift.

As everyone here knows, Russia is a major supplier of oil and gas.

And when Russia invaded Ukraine, countries around the world enforced sanctions banning the importation of Russian oil and gas.

That drove prices up and sent nations around the world scrambling for stable and reliable sources of energy.

As two of the three biggest exporters of LNG globally, Australia and the United States were well placed to support energy security for those nations that were caught short.

President Joe Biden promised to increase exports of LNG to Europe, and to further grow LNG export capacity to make up for the gap in the market when Russian pipeline gas came out of the system.

Australia has a similar opportunity if it's willing to seize it.

Now Russia's invasion of Ukraine has clearly spotlighted the critical role that energy plays in global strategic partnerships and as Gary noted it's highlighted the link between national security and energy security.

And nowhere is this more evident than the Australia-US alliance.

As highlighted by the AUKUS security deal, the iron-clad ties between our two countries continue to strengthen.

Australia and America conduct 77 billion US dollars in two-way trade.

We have an investment relationship valued at 1.6 trillion dollars.

This means the US is Australia's largest economic partner.

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The growing prominence of Australia's partnership with India, Japan and the United States, known as The Quad, also reinforces our two countries' desire for a free, open and prosperous Indo-Pacific region.

Over the past 18 months we have seen energy emerge as a prominent agenda item within these bilateral and regional structures.

This reflects the importance that secure energy supply, and a stable energy transition, has, to international security.

The most recent example was the clean energy compact signed between President Biden and Prime Minister Albanese on the weekend.

President Biden said he wanted to establish climate and clean energy as the third pillar of the Australia-US alliance.

The specific details of the compact have to be worked up of course and endorsed by the US Congress.

But it could very well have significant potential for Australian companies involved in US clean energy supply chains, by potentially treating them as domestic producers under the US Inflation Reduction Act.

Also over the weekend, the Quad Leaders issued a Statement of Principles on Clean Energy Supply Chains in the Indo-Pacific.

To paraphrase, this statement described clean energy supply chains as:

"…urgent and critical to enhancing our collective security, creating new economic opportunities and supporting the acceleration of the global energy transition…".

Another very development in recent days, that may have passed under the radar, was the introduction of a bill into the US Senate, called the 'Indo-Pacific Strategic Energy Initiative Act'.

This Act would and I quote "…promote the financing and development of new energy infrastructure projects in the Indo-Pacific region - with a focus on natural gas."

It aims to reduce dependence on Russian supplies and transition away from higher-carbon emitting energy sources.

Australia is among a very select group of countries identified in the Act as being a focus for US energy-related cooperation.

I believe Woodside is strongly placed to contribute to this evolving US-Australia relationship.

That's because since our merger last year with BHP's petroleum business, we have a significant presence in both countries.

We are proudly headquartered here in Western Australia, but we now have more than 800 employees based in the US and a significant office in Houston.

This office oversees assets in the Gulf of Mexico and the Caribbean which contribute about 15 percent of Woodside's total production.

Our portfolio today includes traditional sources of energy like oil and gas.

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But we are working hard to expand it to include new, lower carbon products like hydrogen.

This includes several potential hydrogen opportunities here in Australia.

But our most advanced hydrogen project actually, is in Oklahoma, we call it H2OK, OK being short for Oklahoma.

This project would see Woodside create liquid hydrogen, through electrolysis, to fuel the US heavy transport sector.

Now if you picture a map of the United States, Oklahoma is right in the middle, it's located on the cross section of a number of national trucking routes, so H2OK could play a significant role as the nation seeks to decarbonise ground transportation.

Road trains as they're called here, or 18-wheelers as we say in the states, would be powered by hydrogen, not diesel.

We intend for H2OK to be a net-zero project.

Power for the electrolysis would be sourced from Oklahoma's existing network.

Now a large portion of that is wind-powered and we'd use renewable energy certificates to abate any remaining emissions.

We're hoping to make a final investment decision on this project this year.

Woodside only secured the land for H2OK 18 months ago.

But we've been able to come so far, so quickly, because of the supportive investment climate in the US.

The US Inflation Reduction Act will see $370 billion US dollars invested in improving energy security and accelerating the transition to a clean energy future.

Combined with other measures, it's expected to help America achieve its goal of reducing carbon emissions by roughly 40% from 2005 levels, by 2030.

Put simply, the IRA has catapulted the US to the front of the global energy transition.

Why, you might ask?

It uses carrots, not sticks, to encourage decarbonisation.

It delivers tax credits once a project is up and running rather than up front subsidies - which is good for taxpayers.

And it focuses on reducing carbon, rather than picking winners, or discounting any particular energy source.

In short, it doesn't let the perfect be the enemy of good progress.

The Inflation Reduction Act also offers strong support for Carbon Capture, Utilisation and Storage or CCUS.

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CCUS involves capturing carbon dioxide from industrial facilities, or directly from the air and either permanently storing it very deep underground or using it to make something else.

It's a technology that's backed by the International Energy Agency and the Intergovernmental Panel on Climate Change.

Now it was very pleasing to see recent comments from Prime Minister Anthony Albanese acknowledging CCUS is available and effective.

And we look forward to working with the government to maximise Australia's sequestration potential.

This technology has been working in the US and in Norway, for decades.

If Australia is to take advantage of all the tools in the lower carbon toolbox, we need the Australian Government to support us as we try to deliver this technology.

And what I think everyone needs to focus on, as we think about energy transition, is how do we get the biggest emissions reduction for the buck.

At Woodside, we believe this involves an ongoing role for LNG and pipeline gas, which supports our customers' energy needs, while they reduce their emissions.

Gas already makes up a bigger part of America's electricity generation pie than Australia's.

In fact, it might surprise you in 2021, natural gas accounted for 38 per cent of US electricity generation.

It was the biggest slice of the pie.

Coal came in second, at about 22 per cent.

Now contrast that to Australia, where coal was still the largest source of electricity generation in 2020-2021 at 53 per cent of the mix.

The second biggest source in Australia was renewables, at 27 per cent and natural gas came in third, at about 19 per cent.

Now of course it's important to note that the share of renewables in that mix is climbing rapidly, as it should.

As that happens, experts predict that coal and gas will compete to fill the gap.

But when used to generate electricity, natural gas emits around half the life cycle emissions of coal.

I'd say that's a pretty strong argument for using more gas.

Now shifting gears a little bit, to the technology front, I want to talk with you about one of the exciting US-Australia partnerships within Woodside.

Several years ago we entered an agreement with NASA to collaborate on robotic technology and as part of that NASA loaned us a Robonaut.

A Robonaut is a human-looking robot.

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