Environment

AWE is committed to conserving the diversity and sensitivity of the natural environments in which we operate.

We understand that our operations – the extraction and production of oil and gas – have the potential to seriously impact on the environments in which we operate. We continually strive to reduce our environmental impact and conserve biodiversity by implementing environmental management systems and technological improvements and innovation. We are committed to minimising our impacts through the life of our operations and via rehabilitation of the land once the operations have ceased.

AWE‘s Code of Conduct shows our clear commitment to complying with all applicable rules and regulations within and outside Australia with regard to the impact of our operations on the environment. When operating outside Australia, we continue to hold ourselves accountable
to environmental leading practice. We will maintain an open and transparent disclosure with the investment community and regulatory authorities. We also seek to raise environmental awareness to all employees and contractors. We aim to be open with our stakeholders in the event of non-compliance with environmental laws and regulations.

Addressing climate change

Climate change is one of the most important business and environmental issues facing the world today. AWE acknowledges that climate change is a critical issue, accepting the need for a coordinated, global response. As a company operating in the oil and gas industry, AWE recognises its own environmental responsibility to participate in this effort and to address issues associated with our greenhouse gas emissions. This year the focus of our environmental reporting was developing our understanding of our greenhouse gas emissions profile across our operated and non-operated sites, and aggregating this at a corporate level.

n 2009, AWE reported under the CDP for the first time, addressing the regulatory and physical risks and opportunities associated with climate change, as well as disclosing our greenhouse gas emissions. Together with our joint venture partners, AWE is also required to report our greenhouse gas emissions from Australian operations under the National Greenhouse and Energy Reporting System. This reporting act requires robust, auditable data, which has assisted us to further our development of a more accurate data and measurement and reporting framework. It has facilitated our understanding of the emissions profile of our operations and joint venture partners in order to prepare us for the forthcoming Australian Carbon Pollution Reduction Scheme and New Zealand Emissions Trading Scheme. In recognising the need to cut global greenhouse gas emissions, we are supporting such regulatory frameworks.

As a producer of natural gas, we will help play a pivotal role in assisting Australia’s transition to a low carbon economy. Climate change therefore presents an opportunity for AWE to explore new markets and develop its gas production. According to APPEA, natural gas uses between 17 and 50 percent less water than coal in the generation of electricity in Australia, and gas used for domestic power generation is estimated to emit as little as 30-50 percent of the carbon dioxide emitted by coal.

Greenhouse gas emissions and intensity

The summary table on page 23 shows the total annual emissions for our operations. We have reported our greenhouse gas emissions associated with our operated and non-operated assets on an equity share basis. We have also worked hard with the respective operators of our non-operated assets to ensure the accuracy of the data.

In 2008-09, our greenhouse gas emissions across operated sites totalled 316,565 tonnes of Carbon Dioxide equivalent (tCO2-e). During the reporting period, the CO2-e intensity of our sites remained flat 0.03 tCO2-e/BOE. Emissions data from non-operated joint venture sites are indicative as they rely on data from joint venture partners. Flaring of methane at Tui in New Zealand (an operated site) reduced sharply through the year reflecting the lower output rates and increased recycling of gas. We will continue to look for ways to reduce flaring from our New Zealand operations and expect to see this reduced further in future years.

We undertook a number of initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation, such as our joint venture with Air Liquide at BassGas and Cool Energy‘s CyroCell® Technology in the Perth Basin.

Looking forward, AWE has a goal to continue this trend to reduce the greenhouse gas intensity across our operations. We believe this can be achieved through investing in initiatives that reduce our greenhouse gas emissions, improving our operations and measuring and disclosing greenhouse gas emissions to stakeholders. AWE is already planning to use more fuel efficient generators in some of the existing gas plants, which will have the combined benefit of decreasing fuel usage and increasing gas sales into the network.

Incidents and spills

We are pleased to report that during 2009, no oil spill incidents occurred at AWE operated sites. We continue to implement a range of measures so as to prevent any incidents.

Looking forward

In 2010, we aim to define and commence data collection for a number of indicators, including, energy usage, water consumption, waste management and biodiversity.

We will also develop performance targets, and report our performance against targets in the next financial year in the Annual Report and as part our CDP submission. We also plan to improve our energy efficiency and implement initiatives to reduce greenhouse gas intensity (tCO2-e/BOE), with particular focus on reducing our flaring of gas at the Tui oil field.

Our Vision

To achieve our vision to be a successful oil and gas exploration and production company, AWE will need to continue to achieve superior exploration, development and operations performance. In achieving this,
AWE is committed to continually improving its framework for managing and reporting sustainability. As we look to grow our business exploration activities into Australia, New Zealand, Indonesia and Yemen and continue to create value for our shareholders, sustainability will be one of the key driving factors underpinning our business.

Over the next year, AWE’s ongoing effort to build a successful and sustainable business will be guided by the commitments and targets laid out in this report. Our focus will be on better understanding our reputation, to improving our understanding of how AWE is viewed by our most valued stakeholders, and responding to the economic, social and environmental issues most material to them.

We will continue to understand our performance through the measurements and reporting framework, enabling us to reduce the impact of our operations and joint ventures on the environment and the communities in which we operate. To keep our stakeholders informed, we will continue to provide an overview of all sustainability issues and our performance related to our core business within our Annual Reports.

Our progress

The following table identifies our progress against actions and objectives we set in our Annual Report 2008, as well as actions and objectives for 2010.

AWE’s priorities for 2010 will be to improve areas of the company’s performance and to expand our reporting commitments and meet our objectives.

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