Owning the future – protecting our offshore assets. Is the Commonwealth moving fast enough? 1 Senator Alan Eggleston Chair, Senate Foreign Affairs, Defence and Trade References Committee

Overview The north in focus Defence in the north: previous discussions and the current situation Increasing the defence presence Conclusion 2

1. The north in focus 3

Royalties State royalties in 2009/2010 $3.6B State royalties in 2010/2011 $4.9B State royalties for 2011/2012 $5.9B (projected) Commonwealth Petroleum Rent Resource Tax Collected in 2010/11 $1.73B TOTAL: $16.13B Information courtesy Chamber of Minerals and Energy of Western Australia 4

1. The north in focus Information courtesy Chamber of Minerals and Energy of Western Australia 5

1. The north in focus Major LNG offshore projects in Northern Australia include: Pilbara the North West Shelf LNG project ($27 billion) in the Carnarvon Basin and the Pilbara, which has been producing LNG since 1989; the Gorgon LNG project ($43 billion) in the Carnarvon Basin and the Pilbara, which is expected to begin production in 2014; the Wheatstone LNG project ($29 billion) in the Carnarvon Basin and the Pilbara, which is expected to begin production in 2016; Kimberley the Greater Sunrise LNG project ($14 billion) in the Timor Sea Joint Petroleum Development Area subject to negotiations with East Timor. the INPEX LNG project ($25 billion) in the Browse Basin and Darwin, which is expected to begin production in 2017; and the Browse (James Price Point) LNG project ($30 billion) in the Browse Basin and the Kimberley, which is expected to begin production in Major new offshore projects – committed (not exhaustive) Chevron/Shell/ ExxonMobil Gorgon Joint Venture LNG Project, Barrow Island - $43B Chevron Australia Wheatstone LNG Development - $23B Rio Tinto Cape Lambert Phase 1 - Brockman 4 Phase 2 and Western Turner Syncline Mines Expansion – Power, Port and Rail $6.1B Woodside Energy Pluto LNG Project Carnarvon Basin - $14.9B Woodside/North West Shelf North Rankin LNG Redevelopment - $5B 6

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2. Defence in the north: previous discussions and the current situation 9

Australian Defence Force Posture Review announced in June 2011 Terms of reference (e): consider the implications for ADF force posture of the need for energy security, including security issues associated with expanding offshore resource exploitation in our North West and Northern approaches 10

2. Defence in the north: previous discussions and the current situation Force Posture Review: Energy security in the Asia-Pacific Energy security is a significant concern for major Asian economies. The International Energy Agency estimates that global energy demand will increase by approximately per cent by Growing demand for critical resources such as energy, water and rare earth elements has heightened international concerns about resource security. Tensions over resources may exacerbate existing security problems such as territorial disputes. 11

Sunda strait 12

2. Defence in the north: previous discussions and the current situation Force Posture Review: Resource Development in Northern and North West Australia Australia is a leading energy and mineral resource supplier for major Asian economies and the value of our mining exports has more than tripled over the last decade, from $55.6 billion in to over $185 billion. These mining exports now account for 12.5 per cent of Australia’s annual GDP. The scale of northern resource development is often underappreciated: the Pilbara region alone accounts for 29 per cent of Australia’s total merchandise exports, with Pilbara iron ore accounting for 60 per cent of Australia’s exports to China. 13

2. Defence in the north: previous discussions and the current situation Interim report: ‘No need for a permanent naval presence’ “(5) While permanent Navy bases in the North West are not operationally necessary, there is a case for Defence to pursue improved access arrangements at commercial ports such as Exmouth, Dampier, Port Hedland and Broome.” Defence Ministers Beazley and Hill held different views 14

3. Defence in the north: current situation 15

3. Defence in the north: current situation Operation Resolute: 2520 AP-3C hours were flown with 320 flights; Patrol Boats were force assigned to RESOLUTE for a cumulative total of 2707 days including 2063 days at sea and 644 days ashore; Patrol Boats visited Darwin, Dampier, Port Hedland, Exmouth, Broome, Cocos Islands, Christmas Island, Gove, Weipa, Cairns, Mackay and Brisbane (and Indonesian ports in Jakarta, Bali, Cilicap, Kupang and Ambon); 16

3. Defence in the north: current situation Operation Resolute: a total of 208 patrol days were conducted by Army Regional Force Surveillance Units (RFSUs); in support of these Regional Force Surveillance Unit patrols, Naval landing craft commitment was upward of 170 days, and the RAAF supported with C-130 sorties; and Transit Security Elements were embarked on Australian Custom Vessels for a total of 244 days with a further 272 embarked days for specialists. 17

3. Defence in the north: current situation Operation Resolute: a total of 208 patrol days were conducted by Army Regional Force Surveillance Units (RFSUs); in support of these Regional Force Surveillance Unit patrols, Naval landing craft commitment was upward of 170 days, and the RAAF supported with C-130 sorties; and Transit Security Elements were embarked on Australian Custom Vessels for a total of 244 days with a further 272 embarked days for specialists. 18

3. Defence in the north: current situation Defence Force Posture Review still found a perception of inadequate ADF presence Question: why aren’t any exercises such as the "kangaroo" exercises of the 1980s being conducted? 19

Defence in the north: current situation Army Two army forces in the north. NOR FORCE – Kimberley to Northern Territory based in Darwin. Pilbara regiment – HQ Karratha. 20

4. Increasing the defence presence 21

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4. Increasing the defence presence 23

4. Increasing the defence presence Preliminary conclusions from the ADF Posture Review Preparing and Training for Operations in the North West (2) Defence to enhance its preparedness for operations in the north west Joint maritime security exercises Simulated exercises and war games Improve situational awareness and north west familiarity 24

4. Increasing the defence presence Preliminary conclusions from the ADF Posture Review Regional Force Surveillance Units (RFSU) capability (3) Defence to improve the sustainability of the Pilbara Regiment and other RFSUs ‘Mentor’ training relationship Flexible recruitment concepts Reserve brigade reconnaissance 25

4. Increasing the defence presence Preliminary conclusions from the ADF Posture Review Infrastructure and logistics capacity: (4) RAAF Learmonth (5) Improved access arrangements at commercial ports (6) Assessment of civil infrastructure and its logistics capacity 26

4. Increasing the defence presence Preliminary conclusions from the ADF Posture Review Strategic communications and civil engagement: (7) Communicate ADF activities (8) NORCOM (9) Consultative forum (10) Fleet Base West 27

Conclusion 28 In view of the huge investment in offshore assets off the north west coast, it’s hard not to conclude that a larger, locally-based defence presence is needed