Hi All Drilling risk is a known known, unlike sovereign risk...

Hi All

Drilling risk is a known known, unlike sovereign risk which is a massive known unknown.

We saw this of course last week when Dr No - aka Peter Dutton - foolishly refused to support Albo's 'Future Made In Australia' initiative, forcing Labor to go cap-in-hand to the Green Fairies. Yes you can have your budget centre piece, said Chief Fairy Bandt, but not if you keep opening those nasty gas projects.

The argy bargy necessary to solve this debacle will be playing out behind closed doors in Canberra at present. One suspects Labor will find a way to assuage the Greens but leave clear a future for gas. It has to: The world and our economy simply cannot transition to renewable energy without crossing the bridge afforded to it by lower emissions natural gas. Don't forget, either, that the Rev. Scotty From Marketing was also a big proponent of gas, so we can say with some certainty the Coalition will again back gas if it returns to office. So currently we have a situation where both major parties back the fuel, yet the thin green line between them seeks to torpedo it. As I say, a way forward will surely be found.

Coincidentally, Shell’s international vice president for strategy, insights and scenarios, Laszlo Varro, has just arrived in Australia to address an Australian Energy Producers conference in Perth this week.

According to today's Age, Varro and his team at Shell, a major gas producer, see the impact of electric cars resulting in peak oil demand somewhere between 2025 and 2035, but see a significant future for natural gas – for use in heavy industry or as reserve power for renewable systems that are weather dependent - even in a net-zero environment, with carbon capture and storage or removal playing a role.

A two-thirds renewables, one-third natural gas combination produces roughly 100 kg of carbon dioxide per megawatt of power, or less than half the current European or US average, Varro said.

As our drill bit spins at Walyering, the spin in Canberra is just as energetic and to be honest will probably produce even more gas than Walyering. But once the huffing and puffing calms down, stand by for a compromise announcement that will be as welcome to Strike as a good result with the drill bit.

OOO