WHERE TO FROM HERE – OIL AND GAS IN WA

Francis Norman 2015 WA Division President

Overview

•  Recent history of projects in WA •  Workforce changes and challenges •  Future opportunities and challenges •  EA FLNG report •  Questions…

Disclaimers

•  Much of the following is drawn from my own views and beliefs, much of what I will discuss derives from individual discussions, media commentary and publically available research material.

•  As with many things, it is best to form your own opinion…

WA PROJECT HISTORY

Recent history

•  By late 2017 if everything goes to plan we will have increased the WA LNG export capacity from 20mtpa to 50mtpa through the construction of Pluto, Wheatstone, Gorgon and Prelude.

•  At the same time, additional capacity has been added in NT and Qld

•  We should be the largest LNG export nation in the world

•  How well did we do?

Breakeven costs keep escalating

Project costs

Project timeline

Committed LNG expenditure

Cost increases reducing competiveness

Growth in costs

So, what is our reputation

•  Are we seen as a high skill, experienced, reliable, stable workforce who delivers on time and has realistic demands

Or •  Are we seen as a moderate skill, demanding,

unpredictably mobile workforce who’s projects are always late and over budget?

WORKFORCE CHANGES AND CHALLENGES

Demographic challenges

FUTURE OPPORTUNITIES

Changing profile of opportunities

•  WA has, for the majority of the past decade and for the majority of engineers been the province of greenfield developments, characterised by massive local and international spend.

•  Much of this is now over, and may not repeat for several years as the current new assets come on stream and are optimised.

•  Our next few years are likely to be characterised by small brownfield developments and expansions.

•  Are we ready?

Potential upcoming projects

Major new projects •  Hess Equus - Semi •  Browse – 3? x FLNG •  Scarborough - FLNG

Expansion projects •  Backfill to DLNG •  Ichthys Phase II •  Gorgon Phase II

The Australian Oil & Gas Market – Key projects and prospects

Ichthys  

 Wheatstone  

Gorgon  

 Prelude  Legend  

Pre  execu5on  

In  Execu5on  Phase  

 Equus   Laverda  

Crown   Crux  

Poseidon  

   Gorgon  Expansion   Palta  

Wheatstone  Expansion  

   Zola  &  Olympus  

 Scarborough  

 Pluto  expansion  

Sunrise   Heron   Evans  Shoal  

Caldita  Barossa  Browse  

Cooper  Basin  

Region  

Bass  Strait  

Canning  Basin  Surat  &  Bowen  

Basins  

Bonaparte  Cash  Maple  

Canning Basin

Energy prices

Then there’s this

Global LNG demand projection

Potential future trends

•  Subsea processing •  Operations and maintenance •  Subsea – Design and fabrication •  Remote operations •  Big data

FLNG FUTURE REPORT

Our FLNG future

•  Report prepared over 2014, released in mid December

•  Incorporated input from

•  Operators •  Engineering houses •  Industry bodies •  Universities & tertiary

education •  Research groups

•  Report was initiated to get a better understanding of ‘life after FLNG’ and the opportunities and challenges associated with its arrival.

Key findings

•  The engineering workforce in Western Australia has a large number of skills directly relevant to support the installation, commissioning, operations, maintenance, ongoing development and eventual decommissioning of FLNG facilities. These skills are spread across industry and academia.

•  There is a strong desire among all parties for the local engineering workforce to be as heavily engaged in FLNG as possible.

Key findings

•  There is a real appetite for close and meaningful collaboration among all parties: for operators to work together across project boundaries to rationalise and optimise the sharing of information; for engineering companies to collaborate in supporting the operations of the facilities; and for academia to collaborate on impactful research.

•  With Western Australia being the first location for the deployment at scale of FLNG, the state has the opportunity to establish itself as a centre of knowledge and excellence in the operations and maintenance of the technology. If properly managed, these skills could then be marketed to organisations deploying FLNG into other regions of the world.

Recommendations

•  That all operators of FLNG in Australian waters, regardless of the state or territory in which they may be based (WA and NT), collaborate as openly as possible in the sharing of knowledge, facilities and experience.

•  That the industry as a whole works to identify deficiencies and opportunities in the current skills pool and to find ways to fill those gaps through development of local personnel, through focused education and where necessary through targeted importation of skills.

Recommendations

•  That a regular (annual) researcher and industry conference be held to allow academia to showcase research to industry and industry to advise researchers of their current needs. That the conference be mindful of competition such as from Singapore, Norway and Scotland but be open to organisations wishing to attend.

•  That Industry, in the form of both operators and engineering companies contribute both financially and in kind (for example through the provision of time for personnel) to support the coordination efforts of Engineers Australia.

Recommendations

•  That the Federal and WA State governments provide grants, tax incentives and marketing support to stimulate the involvement and growth of the Western Australian engineering sector in FLNG.

•  That methods are found to include all Western Australian universities in the research work being undertaken around FLNG. This could be by specific activities that leverage the skills of each university or by groups such as WA:ERA (or the new Floating Systems Centre) expanding to potentially include CDU, Murdoch and ECU.

Sources

•  Macquarie private wealth – Australian LNG, strangling the golden goose, Dec 2012, http://www.macquarie.com.au/dafiles/Internet/mgl/au/apps/retail-newsletter/docs/2012_12/AustralianLNGOutlook071212e.pdf

•  Ernst & Young, Global LNG trends, May 2013, http://www.ey.com/Publication/vwLUAssets/Baku-event-LNG/$FILE/Baku-event-LNG.pdf

•  Hays Recruitment, Oil & Gas Global Salary Survey 2015

QUESTIONS