Energy companies the world over would love to think they could be first in the queue at the next big global frontier for fossil fuel energy.
Aubrey McClendon was a key figure in creating the last big energy boom in his own backyard, using the controversial hydraulic fracturing technology to release gas from shale in the United States.
Now McClendon’s company American Energy Partners (AEP) thinks it has found that new global frontier in a vast and remote corner of Australia’s Northern Territory (NT).
AEP has made two major investments in the NT in recent weeks where drillers hope McClendon will kick-start another fracking boom. McClendon built his former company Chesapeake Energy from the ground up to become a major player in the United States shale gas fracking boom.
At one point, only ExxonMobil was producing more gas than Chesapeake.
But already McClendon’s hopes of recreating a US-style gas “fracking” boom in Australia are coming up against resistance from Aboriginal Australians — one of the oldest continuous cultural groups on the planet.
Exploration licences cover many millions of acres of land in the NT and many of those are with a view to drilling for gas using hydraulic fracturing — a process where large amounts of water, sand and chemicals are pumped at pressure to create small cracks in the rocks to release the gas.
A key to McClendon’s success in the U.S. was in acquiring rights over huge land areas of prospective shale gas, a tactic he appears to be trying to mirror in Australia. Chesapeake Energy called this a “land grab” business strategy.
McClendon is also known for his financial risk taking, a trait that caused one analyst at business magazine Forbes to dub him “America’s most reckless billionaire”.
McClendon stepped down as CEO of Chesapeake in 2013 in the wake of a series of investigations into the firm’s dealings and McClendon’s own payments and financial dealings with the company he founded alongside Tom Ward in 1989.
He is also currently mired in multiple lawsuits, including a class action lawsuit in Ohio filed by landowners and a local school district accusing him of bilking them on royalty payments and another related lawsuit in Texas.
According to Forbes, it took McClendon 22 years to lease 13 million acres of land for drilling in the U.S. But in Australia, McClendon has already secured rights on a massive 35 million acres of land.
Down Under Deals
AEP has focused on the remote McArthur Basin in the NT. Brisbane-based Armour Energy announced that AEP would bring “state of the art US management, exploration and development strategies” to its oil and gas exploration project in the Northern Territory.
Armour said in its press release that AEP would spend AU$100m within five years to unlock some 21.5 million acres of the company’s 31.4 million acres of exploration rights in the McArthur Basin.
Armour executive chairman Nick Mather said he believed the deal with AEP showed that “the McArthur Basin represents one of the world’s great opportunities for the discovery of a new frontier oil and gas province.”
The day after the Armour announcement, Sydney-based Imperial Oil and Gas, owned by US company Empire Energy, announced it had also signed a deal with AEP.
Empire Energy has shale gas exploration permits covering about 14 million acres of the McArthur Basin. In the deal, AEP would spend AUS$82 million over the first three-year period on the land.
Empire Executive Chairman and CEO Bruce McLeod said AEP was “one of the world’s most experienced unconventional oil and gas development teams” and its entry into Australia “demonstrates the potential of the McArthur Basin.”
The NT regions are sparsely populated, but the petroleum permits sit on top of land either leased or owned by aboriginal groups. The Garawa Aboriginal Land Trust is one such group, holding lands covered by Armour Energy’s petroleum exploration licences.
Gadrian Hoosan, a spokesperson for Garawa Aboriginal Land Trust, said no agreements had been signed between Armour and his group. Hoosan said his people had witnessed the well documented pollution issues and poisoning of waterways from the Glencore Xstrata Macarthur River Mine. He told DeSmog:
“Now they are pushing for oil and gas and that’s going to be another big problem. We need a clean environment to work in and to live in. We have kids. What will they see in the future?
For many years we have been looking after this country and keeping this environment clean. Then our foreign brothers and sisters came along and damaged the whole country. Now they want to do more damage and it’s just for money.”
Hoosan says that the Waanyi and Garawa peoples believe past serves as prologue when it comes to fracking in Australia.
“We have seen what has happened with drilling in Queensland and all over and in other countries – we have seen the fracking that’s been happening, we have seen all that gas coming up from underground and through the water and river beds,” commented Hoosan. “We don’t want that happening in our country and our community…to our people and to our children.”
Hoosan was critical that companies did not come and meet with aboriginal people “face to face” but instead were represented through the Northern Land Council, a government body that works with aboriginal groups. “These people do not come and face us in the community. That’s where people should come down and find the truth from us,” he said.
When asked if he could see a way that his people could come to an agreement to allow Armour Energy to drill, Mr Hoosan said: “No mate. No-one would be happy about that. Even if they did come down, we would still give them a big no. “
Australia Promotes Fracking
Many drillers are hopeful a proposed North East Gas Interconnector pipeline will open up a route to a potentially lucrative market on Australia’s more densely populated eastern seaboard.
NT chief minister Adam Giles has described the pipeline as “a critical piece of economic development infrastructure”. This month the NT government was due to receive four project proposals from preferred bidders for the pipeline.
In June, the Australian Government also released a new policy document — Our North, Our Future: White Paper on Developing Northern Australia — aimed at increasing investment in the country’s north with “resources and energy” identified as one of “five pillars” for growth.
In November, an inquiry into fracking in the territory concluded there was “no justification whatsoever for the imposition of a moratorium of hydraulic fracturing in the NT.” If a “robust regulatory regime” could be established, the report said, then environmental risks could be mitigated.
The report claimed that opposition to fracking was a “proxy” for ideological opposition to fossil fuels. The report pointed to movies such as “Gasland,” which had charted the controversy of the US shale gas boom. The report pointed to a gas industry website — Energy in Depth — for “a more complete analysis of this documentary”.
Environment groups were critical of the report’s main findings and said the NT Government had a “clear pro-oil and gas agenda”.
In October, aboriginal groups joined others in a series of four rallies across the NT against fracking (pictured). In December aboriginal groups joined together to form the Frack Free NT Alliance in a bid to get their voices heard alongside the industry.
Frack Free NT Alliance spokesperson Lauren Mellor explained that landholders with pastoral leases had very few rights to prevent companies from fracking on their land.
Mellor told DeSmog: “You lose the right of veto that is implicit in the Land Rights Act. You only have a right of veto over these types of projects if you have full freehold title. But under the Northern Territory Petroleum Act if you have a pastoral lease your only right is to be notified that a company plans to access your land. They simply have to send you a letter and you have a right to negotiate but if you don’t you end up in land court.”
Mellor also said there had been no successful attempts by pastoralists in the land court to prevent access by mining companies, also noting there was a fear that shale drillers may be entering into deals before the Northern territory government had a chance to introduce rules around activity that might mitigate prospective damage.
She said: “We have groups springing up all over the territory in response to news about drilling activity. If the gas pipeline does come online it could drive a huge amount of activity in these areas.”
With McClendon clearly eyeing another shale gas boom abroad, having also signed onto a recent shale deal in Mexico, signs are that he will either have to win over indigenous Australians or find a way to circumvent their concerns in the form of another “land grab.”
DeSmog approached both Armour Energy and American Energy Partners for comment, but received no response.
Main image: Children of the Garawa clan group. Picture: Lauren Mellor