Friday, May 23, 2014

Sinister Franchise: Exporting the Tea Party to Australia

Sinister Franchise: Exporting the Tea Party to Australia

So Australia has turned a dark corner. Once, this was a nice place to live, easygoing, friendly, where everybody was more concerned with the Melbourne Cup and the beach than the antics in Parliament - but no longer. In a series of insidious moves, we are being herded in the direction of the Tea Party, driven by odious people who can't keep their fingers out of the till and who apparently don't have the brains to avoid getting their photos taken with notorious criminals. 

What is their goal? That hasn't been revealed in ICAC yet, but it isn't what we thought we were voting for (don't worry, I vote Green). I believe the Liberal Party wants to dismantle the welfare state, impoverishing workers while setting up a state where a very small group of haves totally dominate a very large group of have nots, for the purpose of enriching themselves and their serpentine mates.


    Over the next 30 years or so, we will spend a hair-raising $24 billion on 75 F-35s, even though no Australian-badged fighter aircraft has fired a shot in anger since the Korean War."


    F’d: How the U.S. and Its Allies Got Stuck with the World’s Worst New Warplane
    The F-35 Joint Strike Fighter was meant to improve the U.S. air arsenal but has made it more vulnerable instead

    ..................Fatal flaw

    Where the Harrier has its rotating engine nozzles for downward thrust, the F-35 has a new kind of vertical-lift system combining a hinged main engine nozzle at the back of the plane that points directly backward until the pilot shifts into hover mode, at which point the nozzle swivels 90 degrees to point down.

    Simultaneously, a complicated system of shafts, gears and doors activates to reveal the horizontal lift fan installed in the center of the aircraft just behind the cockpit. Together the fan and nozzle produce more than 40,000 pounds of thrust, enough to lift the nearly 20-ton aircraft straight up off the ground like a gargantuan dragonfly.

    The lift fan, devised by Lockheed and DARPA in the early 1980s, was the only workable solution that anyone had come up with to give a plane vertical capability plus supersonic speed and radar-evading stealth, the last of which demands an airplane with a smooth outline and nothing hanging or protruding from it.

    But this mix of characteristics came at a price to all three F-35 models, even the two that don’t need to take off vertically. “The STOVL requirements have dictated most if not all of the cardinal design elements for all three aircraft,” said Peter Goon, an analyst with the Air Power Australia think tank.

    The addition of a lift fan to the baseline F-35 design started a cascade of problems that made it heavier, slower, more complex, more expensive and more vulnerable to enemy attack — problems that were evident in the 2008 war game set over Taiwan.


    To keep down costs all three JSF variants — the Air Force’s basic F-35A, the Marines’ vertical-takeoff F-35B and the Navy F-35C with a bigger wing for at-sea carrier landings — share essentially the same fuselage. And to fit both the F-35B’s lift fan and the bomb bays present in all three models, the “cross-sectional area” of the fuselage has to be “quite a bit bigger than the airplanes we’re replacing,” conceded Lockheed exec Tom Burbage, who retired this year as head of the company’s F-35 efforts.

    The extra width violates an important aerospace design principle called the “area rule,” which encourages narrow, cylindrical fuselages for best aerodynamic results. The absence of area rule on the F-35 — again, a knock-on effect of the Marines’ demand for a lift fan — increases drag and consequently decreases acceleration, fuel efficiency and flying range. Thus critics’ assertion that supersonic speed can’t be combined with STOVL and stealth, the latter of which are already incompatible with each other.

    “We’re dealing with the laws of physics,” Burbage said in his company’s defense when word got out about the JSF’s performance downgrades.

  2. .................Fatal flaw

    But the hits kept coming, chipping away at the F-35's ability to fight. The addition of the lift fan forces the new plane to have just one rearward engine instead of two carried by many other fighters. (Two engines is safer.) The bulky lift fan, fitted into the fuselage just behind the pilot, blocks the rear view from the cockpit — a shortcoming that one F-35 test pilot said would get the new plane “gunned every time.” That is, shot down in any aerial dogfight by enemy fighters you can’t see behind you.


    Problems multiplied. Originally meant to cost around $200 billion to develop and buy nearly 2,900 planes expected to make their combat debut as early as 2010, the F-35's price steadily rose and its entry into service repeatedly slipped to the right. Today the cost to develop and manufacture 2,500 of the new planes — a 400-jet reduction — has ballooned to nearly $400 billion, plus another trillion dollars to maintain over five decades of use.


    To add insult to strategic injury, one of the most modern Chinese prototype warplanes might actually be an illicit near-copy of the F-35 — albeit a more intelligent copy that wisely omits the most compromising aspects of the U.S. plane. It’s possible that in some future war, America’s JSFs could be shot down by faster, deadlier, Chinese-made JSF clones.


    The F-35 that could have been

    At least twice since 2007 Chinese hackers have stolen data on the F-35 from the developers’ poorly-guarded computer servers, potentially including detailed design specifications. Some of the Internet thieves “appear to be tied to the Chinese government and military,” Defense Secretary Chuck Hagel claimed.

    The September 2012 debut of China’s latest jet fighter prototype, the J-31, seemed to confirm Hagel’s accusation. The new Chinese plane, built by the Shenyang Aircraft Corporation, bears an uncanny external resemblance to the F-35: same twin tail fins, same chiseled nose, same wing shape. “It certainly looks like the Chinese got their hands on some [F-35] airframe data,” said Richard Aboulafia, a vice president at the Teal Group, an arms industry consultancy in Virginia.

    But the J-31 lacks many of the features that were included in the F-35 “mainly or entirely because of STOVL,” according to Aviation Week writer and fighter expert Bill Sweetman.

    Namely, the J-31 does not have a lift fan or even a space for a lift fan. The omission apparently allowed Chinese engineers to optimize the new plane for speed, acceleration, maneuverability and flying range — and to add good pilot visibility and a second rearward engine — instead of having to build the plane around a pretty much useless vertical-takeoff capability that slows it down, limits it to one motor and blocks the pilot’s view.

    It could be that China doesn’t know how to build a working lift fan and that’s why they left it off, Aboulafia said. But for a country that has unveiled two different radar-evading stealth warplane prototypes in just the last two years, that seems unlikely. It’s more plausible that China could build a lift fan-equipped plane and has chosen not to.

    The F-35 was compromised by, well, compromise. A warplane can be maneuverable like the F-16, tough like the A-10, stealthy like the F-117 or a STOVL model like the Harrier. A plane might even combine some of these qualities, as in the case of Lockheed’s nimble, radar-evading F-22. But it’s unrealistic to expect a single jet design to do everything with equal aplomb. Most of all, it’s foolish to believe a jet can launch and land vertically — a seriously taxing aerodynamic feat — and also do anything else well.

  3. The F-35 that could have been

    By contrast, the Chinese J-31 does not appear compromised at all. Surrounded by rivals with powerful air forces — namely India, Russia, Japan and U.S. Pacific Command — and with no grudge-holding Marine Corps to hijack fighter design, it would make sense that China prioritized the air-combat prowess of its new jet over any historical score-settling.

    That apparently apolitical approach to (admittedly illicit) warplane design appears to have paid dividends for the Shenyang-made jet. “With no lift fan bay to worry about, the designers have been able to install long weapon bays on the centerline,” Sweetman wrote. The centerline bay helps keep the J-31 skinny and therefore likely fast and maneuverable — in any event, faster and more maneuverable than the F-35, which in a decade’s time could be pretty much the only new U.S. jet the Chinese air force might face in battle.

    If Stillion and Perdue’s simulation ever comes true and the U.S. goes to war with China in the air, F-35s dragged down by their lift fans could be knocked out of the sky by Chinese-made F-35 clones that are faster and more maneuverable, because they never had lift fans.

    Sprey, the fighter engineer, said he expects the Pentagon to eventually come to terms with the unpleasant truth, that its new universal jet fighter with the foolhardy vertical-takeoff capability could spell the end of an epochal half-century in which America truly dominated the world’s skies. “My prediction is the F-35 will be such an embarrassment it will be cancelled before 500 are built,” he said.

    Straus Military Reform Project Director Wheeler advocated replacing the F-35 with upgraded A-10s and F-16s pulled from desert storage plus new Navy F-18s fresh off the Boeing production line. These moves would “reverse the continuing decay in our air forces,” Wheeler claimed.

    Ward said any future warplane should have clear and narrow requirements, as opposed to the F-35's broad, incompatible guidelines. Development timelines should be fast, budgets should be inexpensive, the overall concept should be simple and hardware should be as tiny as possible, Ward recommended. “What you don’t do is hold up complexity as a desirable attribute,” he said.

    But that investment of time, talent and cost would be better than continuing with an over-budget, past-due warplane that can’t turn, can’t climb and can’t run because it’s hauling around a lift fan that makes Marines feel better about World War II but isn’t actually practical in the present day.

    Replacing America’s useless, universal fighter would be a headache, according to Wheeler, but keeping it would be far worse. The F-35, he wrote, “will needlessly spill the blood of far too many of our pilots.”

  4. Tony Abbott aims for aircraft carriers

    The Australian
    May 23, 2014

    TONY Abbott wants the navy’s new amphibious assault ships ­fitted out to carry Joint Strike Fighters — effectively turning the giant vessels into aircraft carriers.

    The proposal, which would require comprehensive structural changes to the ships costing millions, comes at a time when the government is under pressure over budget cuts.

    It would also require Australia to buy an alternative version of the fighter bombers already on order.

    The Prime Minister’s proposal would bring Australia into line with the US, Britain and a number of other nations that plan to operate JSFs from their assault ships.

    It is understood Mr ­Abbott has instructed planners working on his defence white paper to examine the possibility of putting a squadron of 12 of the short take-off and vertical landing version of the JSFs — the F-35B — on to the ships.

    Mr Abbott has just announced the purchase of 58 JSFs for the RAAF at a cost of $12.4 billion, bringing the number on order to 72. They are all standard take-off and landing F-35As and not suitable for the navy.

    The 27,000-tonne assault ships, officially designated Landing Helicopter Docks or LHDs, were intended to carry helicopters rather than fixed-wing aircraft.

    Operating JSFs from them would require extensive modifications to accommodate the aircraft and their fuel, munitions and parts.

    The Royal Australian Navy has not had an aircraft carrier since HMAS Melbourne was decommissioned in 1982. Having landing ships carrying fixed-wing aircraft would bring a new strategic dimension to the region.

    The ADF has said repeatedly that putting JSFs on to the landing ships was not being considered, but a government spokesman said the idea had not been ruled out.

    When Mr Abbott’s spokeswoman was asked to comment on the JSF plan, she responded with a statement saying: “As part of the defence white paper process, Defence is conducting a comprehensive Force Structure Review.

    “This will examine a range of capabilities and will provide the government with options to ensure Australia maintains a sustainable, versatile and highly capable defence force in coming decades.”

    It is not clear whether the Joint Strike Fighters under the navy plan would come from the 72 that have been ordered so far. Successive governments have indicated they would ultimately buy 100 JSFs.

    Past public discussion about the landing ships has focused on their value in the region in dealing with the aftermaths of natural disasters such as tsunamis and earthquakes. Turning the LHDs into aircraft carriers would require a more detailed explanation to Australia’s neighbours.

    The F-35B version of the JSF is being built for the US Marines and British forces to replace their effective but ageing British-built Harrier jump jets.

    The Canberra-class assault ships will be able to land a force of more than 2000 personnel by helicopter and water craft, with all their weapons, ammunition, vehicles and stores.

    It appears likely that the government will soon announce that it will order two new supply ships for the navy to be built in Australia.

    The shipbuilding industry and unions have been warning for the past two years that more work is needed to bridge the so-called “Valley of Death’’ as current major projects end.

    Defence Minister David Johnston told The Australian the government was “looking at plans and what ships can be built” but he would not say what class of vessel was likely to be selected.

    The Australian has been told the most likely choice is the two navy support ships that Labor promised as its solution in the lead-up to the election.


    1. "The F-35B version of the JSF is being built for the US Marines and British forces to replace their effective but ageing British-built Harrier jump jets."


      Among the pathologies inherent in the F-35's design, by far the most damaging is the result of a peculiar institutional obsession by one of the new plane’s three main customers. Early on, the Marine Corps contrived to equip the JSF as a “jump jet,” able to take off and land vertically like a helicopter — a gimmick that the Marines have long insisted would make its fighters more flexible, but which has rarely worked in combat.

      . the late ‘60s a British company invented a new jet with complex, rotating engine nozzles that could point downward to provide vertical lift, allowing it to launch from short airstrips or small ships. The Marines fell blindly in love with this temperamental new plane, nicknamed Harrier after a low-flying hawk, and schemed to acquire it for their own air wings.


      But the Harrier, so appealing in theory, has been a disaster in practice. Fundamentally, the problem is one of lift. A plane taking off vertically gets no lift from the wings. All the flight forces must come from the downward engine blast. Forcing the motor to do all the work results in three design drawbacks: a big, hot engine with almost no safety margin; an unsafe airframe that must be thinly built with tiny wings in order to keep the plane’s weight less than the down-thrust of the engine; and minimal fuel and weapons load, also to save weight.

      As a result, in vertical mode the Harrier carries far fewer bombs than conventional fighters and also lacks their flying range. And the concentrated downward blast of the Harrier’s vertical engine nozzles melts asphalt and kicks up engine-destroying dirt, making it impossible to operate from roads or even manicured lawns.

      In the 1991 Gulf War, the front-line concrete lily pads never showed up, so the jump jet had to fly from distant full-size bases or assault ships. With their very limited fuel, they were lucky to be able to put in five or 10 minutes supporting Marines on the ground — and they proved tremendously vulnerable to machine guns and shoulder-fired missiles.

      Even when it isn’t launching and landing vertically or being shot at, the Harrier is delicate and hard to fly owing to the complex vertical-flight controls and the minimal lift and maneuverability of the tiny wings. By the early 2000s a full third of all Harriers had been destroyed in crashes, killing 45 Marines.

      *****“The Harrier was based on a complete lie,” said Pierre Sprey, an experienced fighter engineer whose design credits include the nimble F-16 and the tank-killing A-10. “The Marines simply concocted it because they wanted their own unique airplane and wanted to convert amphibious ships into their own private carriers.”*****



    Air Platforms
    USMC drafts key F-35B operational concept
    Marina Malenic, Washington, DC - IHS Jane's Defence Weekly

    Key Points

    DSOs are to leverage a force posture independent of fixed infrastructure
    A shifting network of expeditionary airfields would complicate enemy targeting capability, according to the strategy

    Aviation planners at the US Marine Corps (USMC) have drafted a new operating concept for their next-generation combat aircraft that is meant to help counter anti-access/area-denial (A2/AD) challenges.


    As the USMC emerges from a 13-year period of sustained land combat, it is rebalancing its forces to the Pacific while integrating new platforms such as the Lockheed Martin F-35B short take-off and vertical landing (STOVL) combat aircraft into its capabilities portfolio. The marines are developing a crucial concept of operations (CONOPS) for the F-35B and will test the idea in a major wargame later this year, according to USMC officers involved in the process.

    To read the full article, Client Login
    (131 of 453 words)

  6. Pilbara ghost town fears

    Shane Wright Economics Editor The West Australian May 23, 2014, 2:42 am

    The Pilbara could become Australia's California or a tumbleweed ghost town, depending on choices made now, a report into the region has found.

    Compiled by Curtin University's Sustainability Policy Institute, the report into the Pilbara's future argues that without diversification, the region will live and die with the iron ore and LNG sectors.

    Report authors Jemma Green, Peter Newman and Johanna Mitchell note the success of the Barnett Government's Royalties for Regions program and its Pilbara Cities vision. But tying the area's future to two big and potentially volatile commodities brought huge risks.

    The authors say if the Pilbara gets its big economic decisions right, it can assure its future like California, which built on its initial finds of gold and gas by moving into agriculture and then the movie industry.

    But get them wrong, and the region could end up like Geiju in China where the end of the tin industry has consigned an eighth of the population to government welfare.

    "The choice is to become like California or like Geiju, where a region became fixated on a limited resource, which came and eventually went," the report said.

    "The choice is between living in the present only or planning for the future, and planning for a more permanent prosperity."

    The report notes there are more than 87 ghost towns across WA, almost all of them former mining centres that have vanished along with their resources base.

    Across the rest of the nation, there are just another 75 ghost towns.

    The report said that while new infrastructure would play a role in safeguarding the Pilbara's future, better links between existing infrastructure could be more important.

    Governments may have to invest in projects that are "not necessarily the most politically attractive" but ones which deliver long-term benefits. Among their proposals, the report argued that introducing a fully integrated electricity grid that would enable the "de-dieseling" of the region would safeguard the Pilbara's long-term power needs.

    They also back efforts to make housing, commercial space and the cost of living much more affordable, as well as building up a strategic military presence, diversifying the region's agricultural base and developing its tourism sites.

  7. Mark McGowan says the government has not spent the promised 25 percent of mining royalties on regional WA.
    Mark McGowan

    Mark McGowan

    The opposition leader says only about three quarters the promised Royalties for Regions money has in fact been spent on the regions.

    “Over the next four years, the percentage of mining royalties being spent in regional WA will drop further to only 12.5 per cent,” Mr McGowan said.

    You can read his statement here:

    Thursday, 22 May 2014

    Redman admits government has misled regional Western Australians

    Fast Facts:

    • Regional Development Minister Terry Redman admits government publications have been misleading

    • Mr Redman also admitted that over the past six years Liberal-National Government has spent an average of only 18 per cent of mining royalties on regional WA

    • The Royalties For Regions program was supposed to spend 25 per cent of mining royalties on regional WA

    • The Liberal-National Government will not remove the Country Local Government Fund from the Royalties for Regions Act, even though it has been abolished

    Regional Development Minister Terry Redman has admitted the Liberal-National Government’s publications have contained misleading information about the Royalties for Regions program.

    The admission came during Budget Estimates this week when Mr Redman was questioned over misleading government publications that claimed 25 per cent of mining royalties were being spent on projects and services in regional WA.

    For example, last year’s Royalties for Regions Progress Report 2012-13, said that ‘Through Royalties for Regions, 25 per cent of the State’s mining and onshore petroleum royalties are being returned to regional areas’.

    Mr Redman admitted that the Liberal-National Government has never spent 25 per cent of mining royalties on regional WA, it had only spent an average of 18 per cent over the past six years.

    Over the next four years, the percentage of mining royalties being spent in regional WA will drop further to only 12.5 per cent.

    Mr Redman also admitted that his government’s publications had been misleading but did not say if they would be changed to accurately report the percentage of mining royalties being spent in regional WA.

    It was also revealed that the Liberal-National Government would not remove the Country Local Government Fund from the Royalties for Regions Act even though the fund would no longer function after 2016-17.

    Comments from WA Labor Leader Mark McGowan:

    “The Liberal-National Government should stop misleading regional Western Australians and be honest about the percentage of royalties actually being spent under Royalties for Regions.

    “The National Party leader has confirmed the program has never delivered what it promised and government publications should reflect this.

    “The Country Local Government Fund is now a ghost fund – it exists by name but does not contain any funding for regional WA.

    “The Liberal-National Government is ripping $3 billion from Royalties for Regions over the next four years. No amount of spin or misleading information will make up for this massive broken promise to regional WA.”

    - See more at:

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  9. Greens cheer as Deutsche Bank dumps Abbot Point

    The Australian
    May 24, 2014

    ENVIRONMENTALISTS have claimed a victory after Deutsche Bank vowed not to participate in the $1.8bn development of Abbot Point coal terminal near Townsville because of concerns about its ­impact on the Great Barrier Reef.

    In Frankfurt on Thursday Deutsche Bank co-chairman Juergen Fitschen said the bank would not entertain “financial applications’’ for the port development because there was no consensus between the Australian government and UNESCO over the environmental impact of the port development and associated dredging.

    The UNESCO World Heritage Committee is due to be updated by the federal government on efforts to address concerns that led to warnings last year the reef could be placed on the endangered list.

    Environmental groups took their concerns about Abbot Point to the international banks that fin­ance big coal projects, highlighting the growing sophistication of campaigns against resource development in Australia.

    Fronted by Whitsunday tour boat operator Tony Brown, the environmentalists campaigned against Deutsche and other international banks participating in the port development.

    Two Indian companies, Adani and GVK — which is in a joint venture with iron ore billionaire Gina Rinehart’s Hancock Prospecting — want to expand the port between Townsville and Mackay to ship out tens of millions of tonnes of thermal coal from a planned new complex of mines in the Galilee Basin.

    Deutsche was targeted for its role, with the Commonwealth Bank and Westpac, in refinancing a $1.25bn loan to Adani to buy a 99-year lease on the Abbot Point terminal from the Queensland government in 2011.

    “We have put strict guidelines in place to make it clear that we would not consider any request to finance an expansion unless we had the assurance of both the government and UNESCO that it would not adversely affect the World Heritage Site,’’ the bank said.

    “We observe that there is no consensus between UNESCO and the Australian government regarding the expansion of Abbot Point. Since our guidance requires such a consensus as a minimum, we would not consider a financing request.”

    Greenpeace campaigns director Ben Pearson said Deutsche’s policy sent a warning to local banks that supporting such developments carried reputational risk.

    “How is it that a German bank recognises the unacceptable impacts of coal expansion in a World Heritage Area before our own Australian banks do?’’ Mr Pearson said. Australian banks declined to comment on the ban.

    Both the Queensland Mining Council and GVK Hancock played down the significance of the decision.

    “This doesn’t impact our proposed projects in any way,” a spokesman for GVK Hancock told The Weekend Australian.



    Gazprom CEO says China gas deal will affect European market

    May 23, 2014,

    T PETERSBURG Russia (Reuters) - Russia's landmark deal to supply natural gas to China will affect prices in Europe and have an impact on international liquefied natural gas projects, the chief executive of state-run Gazprom said on Friday.

    Russia and China signed a 30-year gas supply contract on Wednesday worth a total of more than $400 billion (237.5 billion pounds), during a visit by President Vladimir Putin to Shanghai.

    "Literally a day ago a really historical event took place, an epoch-making event. We, Russia and Gazprom, have discovered the Asian gas market for ourselves," Gazprom Chief Executive Alexei Miller said at the St Petersburg International Economic Forum.

    "It can be assumed that the signing of the contract will affect gas prices on the European market," he said without giving any details.

    Miller added that the deal will also have an impact on LNG projects in eastern Africa, Australia and western Canada.

    Fitch Ratings said on Thursday that the deal "sets a new benchmark for what China is willing to pay for natural gas over longer-term contracts".

    The deal opens up a huge new market for Gazprom, which generates around 80 percent of its revenue from Europe, where demand is stagnating and profits are falling.

    "This is the contract, which will influence the whole gas market," Miller said.

    Neither side disclosed the price in the Russia-China contract, but industry sources said it was between $350 and $380 per 1,000 cubic metres, similar to what most European utilities pay under discounted long-term contracts signed in the last two years.

    Gazprom has yet to build a pipeline to carry 38 billion cubic metres of gas annually to China from 2018. Russia and China have agreed on a $25 billion prepayment under a supply deal, Alexander Medvedev, chief executive of Gazprom Export, said on Friday.

    1. "....between $350 and $380 per 1,000 cubic metres, "

      = ABOUT $10 PER 1000 CU FEET


    2. "Miller added that the deal will also have an impact on LNG projects in eastern Africa, AUSTRALIA and western Canada."


      Yes indeed - AND BARNETT's mad plan to force them to build a supply base / common user hub at JPP !

      Did someone yell torpedo ?

    3. Gazprom, Eni to Revise Terms of Gas Supply Contracts

      Posted on May 23rd, 2014

      Gazprom CEO Alexey Miller and Eni CEO Claudio Descalzi have today signed an agreement to revise the terms of gas supply contracts.

      The agreement involves a reduction in supply prices and an important change in the price indexation to fully align it with the market. In addition, in 2014 Eni’s ability to recover gas pre-paid under “take or pay” clauses will be significantly enhanced.

      The terms apply retroactively from the start of 2014.

      The agreement reached today with Gazprom is a key part of Eni’s effort to renegotiate all third-party long-term gas supply contracts, with the target of achieving a fully competitive portfolio.

      Press Release, May 23, 2014; Image: Gazprom



    Woodside’s big (dull) day out

    Monday, 19 May 2014

    THERE will be no rabbits out of hats when Peter Coleman meets bankers and brokers on Thursday at Woodside Petroleum’s first Investor Day in two years, however, Slugcatcher reckons a few telling blows will be landed by the company’s chief executive and his audience.

    Brokers, miffed at what they perceive as Woodside’s lack of firm growth options, will let Coleman know that their consensus view of the company is that it is over-priced and heading for a fall.

    Coleman will remind the bankers that most of his investors are happy with the spectacularly generous dividend policy, which means anyone buying Woodside shares today can expect a yield of 5% which is 50% better than the 3.3% available on a 12-month term deposit at Westpac, and close to 100% more than the Australian Government’s two-year bond yield of 2.67%.

    So what, the bankers will say, if we want to put our clients into safe fixed interest investment we will recommend specialist products run by fixed interest specialists. Woodside is an oil and gas company that is supposed to deliver capital growth as well as dividends.

    Both sides in this “brokers v Woodside” argument have their strong points to make, and both have their weak points.

    The company undoubtedly can point to the popularity with yield-hunters of its policy of returning 80% of annual profit to shareholders.

    The brokers can be equally firm in saying that the yield game is based on existing projects that are performing at nameplate capacity and that the next production move from Woodside’s oil and gas facilities will probably be down.

    It is the prospect of a future decline in production that is causing some brokers to tell their clients to sell Woodside.

    As for what Coleman might be able to say at the Sydney meeting on Thursday, that was not said at the annual meeting in Perth 19 days ago, the answer is “not a lot”, simply because management must stick to the rules of communicating with Woodside’s shareholders before spilling any company secrets to a room of share traders.

    What will almost certainly happen is that Woodside management will lead bankers and brokers through the annual meeting presentation slide show with little new being said.

    Worse than not saying anything new, it will quickly dawn on those in the room that Woodside is an oil and gas company passing through a remarkably quiet period, content to eke out 1% “debottlenecking” efficiency gains, and modest LNG price increases rather than do anything risky.

    Given the mistakes made in the past when risk overrode financial safety a period on the sidelines is not a bad idea, especially when most of the growth options available today seem to be littered with value-destroying hazards.

    Far better, goes current thinking, to enjoy the cash flow of the Pluto and North West Shelf LNG projects, and the Vincent oil project, rather than jeopardise future earnings by rushing into the Leviathan gas project in high-risk Israel, or move too quickly on a floating LNG development atop the Browse gasfields off WA.

  12. Woodside’s big (dull) day out

    It is that sort of MINIMAL RISK APPROACH that should ensure WOODSIDE’s net earnings tick over at around $2.4 billion in the current financial year, and next year.

    Further out, from 2016 onwards, something more exciting (and risky) is essential if Woodside is to lift itself off the sell list of an alarming number of big brokers who have lost interest in a company with a no-growth policy.

    Macquarie Bank summed up the financial world’s frustration with a comment in last Thursday’s assessment of Woodside as “a fully-priced stock running out of ideas” – backed with an underperform tip (broker speak for sell) and a 12-month share price target of $39, which is 6.6% below Friday’s closing price of $41.75.

    Credit Suisse has a similar view of the stock. It described its status as a form of hiatus (or pause), a lacklustre condition that prompted its analysts to predict a future share price of $38, down 9% on Woodside’s latest price.

    Of the seven broking firms surveyed by The Slug for views of Woodside only two see it as a stock worth buying – Citi and JP Morgan. Of the other five, three say sell (Macquarie, Credit Suisse and Merrill Lynch) and two say hold (Deutsche and UBS).

    Perhaps Coleman will wow the crowd with a stellar performance on Thursday, clearing the air on Leviathan with a decision either way (in or out), or explain the increasingly international exploration push, and the new-found hunt for oil production.

    Or perhaps the Woodside boss will deliver a steady as she goes, dividends first presentation, with excitement postponed for another day.

    If The Slug was a betting man he would load up on a horse called Dullsville in the first at Sydney on Thursday.

  13. Woodside Backs Out of Leviathan Project

    Posted on May 21st, 2014

    LNG player Woodside said that it has advised the participants in the Leviathan Joint Venture that it has elected to terminate the memorandum of understanding agreed by the parties in February 2014.

    Negotiations between the parties failed to reach a commercially acceptable outcome that would have allowed fully-termed agreements to be executed, the company said in a statement.

    Woodside had been in discussions with Noble Energy Mediterranean Ltd, Delek Drilling LP, Avner Oil Exploration LP and Ratio Oil Exploration (1992) LP to acquire a 25% participating interest in each of the 349/Rachel and 350/Amit petroleum licences located offshore in Israeli waters.

    Woodside CEO Peter Coleman said that this was a difficult decision and one that was not taken lightly.

    “All parties have worked very hard to secure an outcome which would be commercially acceptable, but after many months of negotiations it is time to acknowledge we will not get there under the current proposal,” Coleman said.

    “While Woodside’s commitment to growth is strong, even stronger is our commitment to making disciplined investment decisions.”

    “I would like to acknowledge and thank the Leviathan Joint Venture participants and the Israeli Government for working with us.”

    Press release, May 21, 2014


    Woodside pulls out of Leviathan project

    ...................While some investors are not expected to be too disappointed about Woodside's decision to terminate the investment, abandoning the deal will raise questions again in the market about the Perth-based company's growth prospects.

    Last year Woodside also abandoned plans to build a large onshore LNG project at James Price Point on the Kimberley coast for its Browse gas, which it is now reworking as a floating LNG venture, which would only come into production around 2020 or later. Its Sunrise LNG venture in the Timor Sea remains stalled, while it has so far failed to find enough gas to expand its $15 billion Pluto LNG venture at Karratha, leaving it short on new projects to drive production growth.

    The failure of Woodside's Israeli ambitions will therefore heighten speculation it may look elsewhere for expansion, potentially in Papua New Guinea.

    Last year Woodside returned funds to shareholders and lifted its dividend payout ratio to 80 per cent.

    Read more:

  14. Woodside plays down impact of China-Russia gas deal

    ..................."Given the enormous gas resource base of East Siberia this could be the first of many deals on gas between Russia and China as Gazprom shifts its focus away from Europe to the east," Bernstein analyst Neil Bernstein said.

    Bernstein said the likely beneficiaries of the deal are Russian state-owned Gazprom, Chinese gas distributors and oilfield services companies, while those that would suffer were higher-cost LNG projects.

    Woodside's long-term LNG contracts both for the North West Shelf venture and its $15 billion Pluto LNG plant in Karratha are primarily with Japanese utilities. The North West Shelf venture has one, low-priced LNG sales contract to supply the Guangdong LNG import terminal in China.

    It is currently marketing LNG volumes from the proposed Browse floating LNG venture, in which PetroChina is a major partner. But it has been focusing those marketing efforts on Japan, in combination with another Browse project partner, the MIMI venture between Mitsubishi and Mitsui.

    Mr Coleman said he didn't expect any negative impacts on the Browse LNG marketing efforts from the Russia-China gas deal.

    "China doesn't drive buyer sentiment because they answer to themselves," he said. "Our view is that the Chinese market is very strong and is probably stronger than the experts would say it is at this point in time."

    Mr Coleman suggested the completion of the Russian supply agreement may be more related to China's view on its progress in developing its own gas resources, including unconventional gas.

    "It may be more reflective of China's view of their ability to develop domestic gas," he told the Australian Financial Review.

    Mr Coleman said that the price of the contract would be significant in determining the "entry price" of other gas coming into China, and that pricing would become visible over time.

    Neither the Chinese nor the Russians would comment on pricing terms, but Bernstein estimates that based on the $US400 billion total figure, the price at the Russian-China border may be about $US10 per thousand cubic feet.

    That compares with prices for LNG in Japan over the last three years of $US15-18 per thousand cubic feet.

    Read more:

  15. China's Gas Deal with Russia Could Benefit Rest of Asia
    Vast Siberia Fields Expected to Produce Enough Cheap Fuel for Other Countries, Put Pressure on Other Development Projects

    Russia's $400 billion gas deal with China may pave the way for cheaper energy for the rest of Asia and put in question the viability of future gas developments around the world.

    By committing to the 30-year accord, Beijing will help finance the development of two vast gas fields in Eastern Siberia. While much of that output will go to China, there will still be plenty of relatively cheap gas left over that Russia plans to pipe to the Pacific coast near Vladivostok and ship as liquefied natural gas to elsewhere in Asia.

    That will put downward pressure on energy prices in the region and avoid Russia becoming too reliant on China. Russia made a similar maneuver several years back when it built a crude-oil pipeline to the Pacific with a spur pipeline into China.

    While good news for buyers, lower prices are a potential threat for developers of other multibillion-dollar gas projects being planned that also target Asian markets, which need to decide soon if this new supply could lose them customers and impact their profits.

    The significance so far of the deal is mostly political given the boost it provides to Russian President Vladimir Putin as his relations with the West sour. It remains to be seen what the deal will do to prices, but that will be crucial in determining the impact on other suppliers, many of whom are already experiencing cost overruns.


    *****The agreement "will have profound impacts on multiple fronts including political relationships among China, Russia, Europe and the U.S., domestic gas market in China, and [the] LNG market in Asia," said analysts at Bernstein Research in Hong Kong. Higher-cost LNG projects "will be less likely to be developed."*****


    Developing sites capable of producing gas can costs tens of billions of dollars and take years to bring online, leaving their backers vulnerable to sudden changes in the market, like the recent China-Russia deal or the unlocking of shale gas reserves in North America.

    Some in Australia have already been hit by big cost overruns, including projects backed by Chevron Corp., ConocoPhillips, Total SA and BG Group PLC. Others like those planned offshore Mozambique by Anadarko Petroleum Corp. and Italy's Eni SpA are awaiting a final go-ahead.


  16. Woodside welcomes Western Australia's increased stake in Browse LNG project

    Sydney (Platts)--22May2014/554 am EDT/954 GMT

    Woodside Petroleum CEO Peter Coleman has sounded a positive note on news that the Western Australian state government will be entitled to more of the gas resource underpinning its key Browse LNG project.

    A new geological survey has identified three previously unrecorded rocky outcrops off the coast, which means more of the Torosa gas field falls within the jurisdiction of the Western Australian state government, rather than the Commonwealth. The redrawing is expected to boost Western Australia's share of the field from about 30% to more than 50%.

    The Western Australian state government requires 15% of all gas developed for export LNG markets to be reserved for use in the domestic market, and Coleman acknowledged there would need to be discussions around the issue.


    Coleman told an investor briefing in Sydney on Thursday that Woodside had not yet been informed of the details of the boundary change, but that it would have no impact on the timetable for the development of the Browse floating LNG project.

    "We don't know what that means yet, we haven't had access to the data to see how much of Torosa we think is in those blocks," he said. "The development plan has Brecknock and Calliance being developed first so we've got time to work through any of these issues with the state."

    Coleman added that the JV was now likely to be more aligned, since the state would "have more skin in the game." The state government of Western Australia has previously criticized the JV's decision to switch the Browse project to an offshore development, after it determined that an onshore plant would cost as much as $80 billion.

    "The state was potentially a small player previously, but this says they're potentially a larger player," he added. "There will now be a natural alignment with the state around development."

    Hong Kong-based analysts with Bernstein Research said they were confident Browse would go ahead, but said the project was unlikely to start up before 2020.

    "Browse FLNG remains the most compelling option for near-term growth [for Woodside] although costs remain an uncertainty," they said in a note. "We expect a cost of around $3,000/mt, which would make it 30% cheaper than a greenfield onshore LNG project in Australia and closer to emerging new LNG hubs in East Africa and Canada."




    Write-down of two-thirds of US shale oil explodes fracking myth
    Industry's over-inflated reserve estimates are unravelling, and with it the 'American dream' of oil independence

    Next month, the US Energy Information Administration (EIA) will publish a new estimate of US shale deposits set to deal a death-blow to industry hype about a new golden era of US energy independence by fracking unconventional oil and gas.

    EIA officials told the Los Angeles Times that previous estimates of recoverable oil in the Monterey shale reserves in California of about 15.4 billion barrels were vastly overstated. The revised estimate, they said, will slash this amount by 96% to a puny 600 million barrels of oil.

    The Monterey formation, previously believed to contain more than double the amount of oil estimated at the Bakken shale in North Dakota, and five times larger than the Eagle Ford shale in South Texas, was slated to add up to 2.8 million jobs by 2020 and boost government tax revenues by $24.6 billion a year.

    Industry lobbyists have for long highlighted the Monterey shale reserves as the big game-changer for US oil and gas production. Nick Grealy, who runs the consultancy No Hot Air which is funded by "gas and associated companies", and includes the UK's most high-profile shale gas fracker Cuadrilla among its clients, predicted last year that:

    "... the star of the North American show is barely on most people's radar screens. California shale will... reinvigorate the Golden State's economy over the next two to three years."

    This sort of hype triggered "a speculation boom among oil companies" according to the LA Times. The EIA's original survey for the US Department of Energy published in 2011 had been contracted out to Intek Inc. That report found that the Monterey shale constituted "64 percent of the total shale oil resources" in the US.

    The EIA's revised estimate was based partly on analysis of actual output from wells where new fracking techniques had been applied. According to EIA petroleum analyst John Staub:

    "From the information we've been able to gather, we've not seen evidence that oil extraction in this area is very productive using techniques like fracking... Our oil production estimates combined with a dearth of knowledge about geological differences among the oil fields led to erroneous predictions and estimates."

    The Intek Inc study for the EIA had relied largely on oil industry claims, rather than proper data. Hitesh Mohan, who authored the Intek study for the EIA, reportedly conceded that "his figures were derived from technical reports and presentations from oil companies, including Occidental Petroleum, which owns the lion's share of oil leases in the Monterey Shale, at 1.6 million acres." Mohan had even lifted his original estimate for the EIA to 17 billion barrels.

    Geoscientist David Hughes, who worked for the Geological Survey of Canada for 32 years, said:

    "The oil had always been a statistical fantasy. Left out of all the hoopla was the fact that the EIA's estimate was little more than a back-of-the-envelope calculation."

  18. Write-down of two-thirds of US shale oil explodes fracking myth

    Last year, the Post Carbon Institute (PCI) published Hughes' study, Drilling California: A Reality Check on the Monterey Shale, which conducted an empirical analysis of oil production data using a widely used industry database also relied on by the EIA. The report concluded that the original EIA estimate was "highly overstated," and unlikely to lead to a "statewide economic boom.... California should consider its economic and energy future in the absence of an oil production boom."

    A spokesman for the Institute, Tod Brilliant, told me:

    "Given the incredible difference between initial projections of 15 billion barrels and revisions to 600 million, does this not call into account all such global projections for tight oil?"

    As I'd reported earlier in June last year, a wider PCI study by Hughes had come to similar conclusions about bullish estimates of US shale oil and gas potential, concluding that "light tight oil production in the USA will peak between 2015 and 2017, followed by a steep decline", while shale gas production would likely peak next year. In that post, I'd pointed out previous well-documented, and alarmingly common, cases of industry over-estimates of reserve sizes which later had been questioned.

    Analysts like Jeremy Leggett have said, citing exaggerated oil industry estimates, that if reserve and production reality are indeed significantly lower than industry forecasts, we could be at risk of an oil shock as early as within the next five years.

    The latest revelations follow a spate of bad news for industry reassurances about the fracking boom. New research published this month has found that measured methane leaks from fracking operations were three times larger than forecasted. The US Environment Protection Agency therefore "significantly underestimates" methane emissions from fracking, by as much as a 100 to a 1,000 times according to a new Proceedings of the National Academy of Sciences study published in April.

    The Associated Press also reported, citing a Government Accountability Office investigation, that the US Interior Department's Bureau of Land Management had failed to adequately inspect thousands of oil and gas wells that are potentially high risk for water and environmental damage.

    Despite the mounting evidence that the shale gas boom is heading for a bust, both economically and environmentally, both governments and industry are together pouring their eggs into a rather flimsy basket.

    According to a secret trade memo obtained by the Huffington Post, the Obama administration and the European Union are pushing ahead with efforts to "expand US fracking, offshore oil drilling and natural gas exploration", as well as exports to the EU, under the prospective Transatlantic Trade and Investment Partnership (TTIP) agreement.

    Dr. Nafeez Ahmed is an international security journalist and academic. He is the author of A User's Guide to the Crisis of Civilization: And How to Save It, and the forthcoming science fiction thriller, Zero Point. Follow him on Facebook and Twitter @nafeezahmed.


      The last one just a kilometer away was a duster.

      Dare they try say 500 meters away ?


      Might be time for an "Australian offset" and drill say 100 kilometers away - or their share price will look like shit if another dry one results.

      Haha what a crazy game.

    2. "Given the incredible difference between initial projections of 15 billion barrels and revisions to 600 million, does this not call into account all such global projections for tight oil?"

      Oooops !


    This Rocks: California Oil Shale No Bonanza
    May 22, 2014

    Oil companies have been salivating at the possibility of turning central California into a sewer of toxic air, poisoned water, dried up wells, squalid boomtowns, overcrowded man camps, bursting jails and sex slavery. It’s their vision of the future for most of America.

    Looks like maybe not. At least, not yet.


    Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California’s vast Monterey Shale deposits, deflating its potential as a national “black gold mine” of petroleum.

    Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.

    The new estimate, expected to be released publicly next month, is a blow to the nation’s oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.

    Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California’s vast Monterey Shale deposits, deflating its potential as a national “black gold mine” of petroleum.

    Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.

    The new estimate, expected to be released publicly next month, is a blow to the nation’s oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.

    Post Carbon Institute:

    The downgrade has major implications for California’s energy and economic future, as well as the debate over hydraulic fracturing (“fracking”) and other forms of well stimulation-enabled oil development.