Q: What are your predictions for the industry for the coming 12 months?
The fog is clearing. After several years of global oversupply of gas and pressure on prices, our industry is emerging into a time when there is opportunity on the horizon.
We can expect volatility on LNG prices in the year ahead, but overall we see upside. During the northern winter, China’s switch from coal to gas for heating led to a surge in demand for LNG spot cargoes, providing a glimpse of the pressure on prices when the market begins to tighten. The China growth story is immense, but should not obscure the fact that we are also seeing rising demand for LNG from other Asian nations like we haven’t seen before.
After about this time next year, there will be no new supply coming into the LNG market globally because as an industry we haven’t been investing.
The looming shift from oversupply to shortfall creates opportunity for cost-effective, faster-to-market brownfield developments that can scale up and deliver. The market shift will unfold over the next five years, but policy changes of the sort we have seen in China could accelerate it.
Here in Australia, there’s a federal election due in the next 12 months and energy prices and supply will continue be in the spotlight. To avoid market intervention, the growing global demand for LNG will need to be balanced against our responsibility to ensure adequate domestic supplies.
After more than a decade of false starts on climate and energy policies in Australia, it is to be hoped there is sensible progress and clarity on that front this year. How this pans out will be significant for our industry. Gas will need to play a big role in the energy mix if we want to meet the goal of providing affordable, reliable and sustainable energy.
Q: What are the key factors/challenges/opportunities that business’ currently need to consider to survive and thrive in the current market?
We need to be vigilant about maintaining our social licence to operate and ensuring we meet the growing expectations of government and the broader community. If we don’t take this responsibility seriously, we risk a public backlash and punitive regulation.
For all industries – and especially ours – the transition to cleaner energy presents both opportunities and challenges. As explorers for and producers of gas, we have a big role to play. Our product will be crucial to solving the concurrent challenges of reducing global emissions, improving air quality and extending access to sustainable energy. We can also improve our own energy efficiency and consider how to integrate renewables to complement our operations.
Advances in data analytics and artificial intelligence will transform the way we work. These frontier technologies are all about augmenting human intelligence, giving our people easy access to the knowledge they need to perform at the highest level. The potential benefits are huge but we need to ensure, as a society, that our people are prepared for this change.
Q: What do you, as a leader in the industry, gain from attending APPEA 2018?
The APPEA conference is an unmissable event for anyone who wants to understand the opportunities and challenges facing our industry right from exploration through to production and supply. This year’s theme, Resilient Business – Success in the New Energy Market, is apt – as an industry, we’ve had the big construction boom, we’ve cut our costs through some challenging years and now we’re ready to meet emerging demand. That’s going to require effort from across the supply chain and I look forward to taking part in the important conversations that will happen in Adelaide.
Peter Coleman will deliver a keynote address ‘The next wave of LNG growth’ on Tuesday 15 May, in Plenary Session ‘Energy Transformation – the future is now’. Mr Coleman will be joined in the session by:
Ms Amy Myers Jaffe, Leading US expert on global energy policy, energy, sustainability and geopolitical risk
Mr Nigel Hearne, Managing Director, Chevron Australia
Dr Larry Marshall, Chief Executive, CSIRO
Ms Wendy King, President Australia East, ConocoPhilips Australia will facilitate this session.