There is increasing focus on securing south-east Australia’s gas supply. What are the keys to doing this?
Achieving supply security sounds simple enough: just make sure that south-east Australia gas users have access to the gas they need. But, of course energy security is not just about access to gas; industry and other consumers require that access at a sustainable price. As the ACCC and others have observed, the cheapest source of gas for south-east Australia is from the discovery and development of local resources.
Gas exploration and development in the south-east has been at a very low level for a considerable time. In response to market signals exploration activity is now picking up. Cooper Energy expects the Sole gas project will be completed in the September quarter and onshore and offshore drilling activity is now increasing. The question is what are the keys to maintaining (or increasing) this activity and for it to be effective in getting gas supply to market at the right price?
The development time-frame for new gas fields and new sources of gas supply can vary from some 6 months (e.g. onshore nearby existing infrastructure) to more than 5 years (e.g. new supply basin and/or offshore). Exploration can add 1-5 years to this timeframe.
To help ensure the most cost competitive and economic gas supply is developed requires:
- stable federal and state energy policy;
- access to existing gas pipelines and gas processing plants or certainty that pipeline and gas plant processing capacity will be available;
- a minimum economic resource volume – which will vary depending on location, access to infrastructure and the prevailing gas and liquids prices; and
- adequate certainty of acceptable commercial sales terms and conditions.
If any one of the above ingredients are not in place the upstream gas supply investors (or the financial backers) are unlikely to invest the risk capital required to underpin the investment essential to support new gas supply.
Opponents of oil and gas development are switching their focus from onshore to offshore, even in well-established areas such as Bass Strait. How should industry respond?
In terms of how we work and the standards we set for ourselves as an industry I don’t distinguish between onshore and offshore projects. Wherever we operate as an oil and gas explorer, developer or producer it is imperative that we conduct our business in a manner:
- which identifies all the issues and risks and mitigate them to a safe overall level. The industry and our regulators have globally accepted standards and procedures to determine this; and
- if a risk cannot be managed in this manner then question if the operation should proceed; and
- work closely with the local communities to help ensure a balanced understanding of all the issues involved.
Oil and gas companies, regardless of where they operate, need to work with their host communities. However, very often it is people from outside the local community that make the noise or speak against an oil or gas development. These views need to be listened to and addressed – but it is most important that balanced decisions are then made taking account of the facts, the processes in place and regulations to be adhered to.
There are now a range of initiatives underway to help ensure there is a balanced understanding of our activities and how we manage our business. These include the current Bright-r campaign on the many uses for natural gas [https://bright-r.com.au/], the APPEA oil and gas myth-busting communications [https://www.appea.com.au/oil-gas-explained/mythbusting/] and increased public consultation requirements for new oil and gas projects.
How important is the APPEA conference as a time and place for discussions with other industry players and key stakeholders?
The APPEA Conference is the main oil and gas annual industry show case event. I think there is no doubt of the Conference’s irreplaceable value and role for our industry.
Every year it is the one time when all participants in our industry (including governments, regulators and service providers) make the time to come together. By rotating the annual APPEA Conference between the different states it provides opportunity for all states to be involved. For an industry participant it can provide an invaluable opportunity to communicate with many others and learn of the latest industry developments – technical, commercial and regulatory. In my experience the conversations with industry colleagues at the APPEA Conference have proven immensely valuable – and there is no other similar forum in Australia for such broad ranging communications and opportunities.
But, I also think the potential of the Conference for engagement with stakeholders from outside our industry is under-utilised and under-appreciated. We need to further develop the annual APPEA Conference as a showcase for our valuable industry and as a forum for engagement. For example, greater involvement of customers and local communities could help enhance the understanding of the Australian oil and gas industry and the strict standards and procedures we operate within to ensure the safe and reliable exploration, production and transport of our products.
David Maxwell, with a team from Cooper Energy will join 2000 industry representatives at APPEA 2019 in Brisbane, May 27-30.