Oilers to fess up at LNG18

THE CEOs of Woodside Petroleum and Chevron Corporation could be pressed to spill the beans on their delayed LNG mega-projects in Western Australia at LNG18 in Perth next month in the wake of Shell's senior management issuing warnings about industry needing to be more pro-active rather than "crossing its fingers" and hoping that demand for oil and gas will begin rising rapidly.
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Energy News has learned that organisers of the April 12-15 LNG18 conference in Perth are working to get Woodside and Chevron CEOs Peter Coleman and John Watson to open up to local media after they present at the opening plenary on The transformation of gas.

WA's government says the state's LNG production capacity will more than double in coming years, rising from 20.6 million tonnes in 2015 to nearly 50Mmt in 2018.

Woodside announced last week that it, with joint venturers Royal Dutch Shell, BP, Japan Australia LNG and PetroChina, had decided to shelve Browse LNG, though analysts believe it's still one of the better projects that could be resurrected in time for when the current LNG glut opens up next decade.

For that to happen, long-term customers will need to support new projects sanctioned in 2017-18 to be ready for the opportunities that will arise in the 2020s, Citigroup's Dale Koenders told Energy News.

Chevron, meanwhile, announced earlier this year that its $29 billion Wheatstone project would be delayed by six months and pushed its start date into the second half of next year, a move Macquarie Group warned could blow out the price tag by 14% to $33 billion.

While Chevron announced its days of building mega-projects was over with low oil prices set to persist well into next year - a view reinforced when Woodside and its JV partners shelved the $40 billion Browse development - one Shell executive who will address LNG18 would not go that far.

Shell Global Solutions' Malaysia-based vice president integrated gas projects, Hilary Mercer, said the landscape of LNG mega project development and delivery was no doubt changing, with delivery of such projects being inherently complex.

"As we look into the future, it will remain challenging," Mercer said ahead of LNG18 where she will pose several uncomfortable questions for industry.

"The stakeholders involved are more varied with different needs and aspirations, the partnerships created to deliver the opportunity are more disparate, new geographic locations are being explored, the impact of non-technical risks on project delivery continues to rise and more technology advances are available to deploy.

"But has the recipe for developing LNG mega projects become too complex, are they still affordable? What is the right amount of technological development to deploy? Is the industry creating the best environment to develop the next generation of LNG project delivery professionals?

"What sorts of contractor relationships are needed to ensure safe, high quality, reliable and affordable project delivery? What can be learnt from the past that will help or hinder development in the future?"

Amid all this, Shell Eastern Petroleum's general manager, global IG, portfolio and strategy Stefan Vos de Wael said that while the answer to whether there was enough demand to meet rapidly rising supply was still an "emphatic yes", he warned that " …it won't happen by accident".

"The industry needs to determine this course, rather than cross its fingers and hope," Singapore-based Vos de Wael said.

"LNG is finding its way to more and more customers because new geographic markets are opening up, and there is also now a broad range of uses for LNG, including to power transport.

"This presents opportunities, and challenges, for countries with newly discovered gas resources."

Ineco Group said earlier this year that Australia and the US would account for 90% or more new LNG exports through 2020, while the global LNG market will increase by 50% between 2015 and 2020.

Meanwhile, India's Economic Times reported yesterday that consumers were buying more and more gas, helping consumption rise 19% in February having seen little movement for the rest of the fiscal year.

Spot LNG rates are down to $US4.50 per unit and long-term contracts from Qatar have been renegotiated favourably, fuelling the rising consumption.

The oil ministry's Petroleum Planning and Analysis Cell in India, where Woodside is looking for LNG growth, said the country consumed 3175 million cubic metres of natural gas in February, up from 2666MMcm a year prior.

Vos de Wael, who will address LNG18 on April 12 about The evolving LNG market - the supply and demand dynamics, said some countries were struggling to cope with big new resource discoveries, from an economic, fiscal and regulatory perspective.

"The raft of decisions - from how to monetise the resource, what type of projects to develop and who to bring on board to help you do that - can make or break the opportunity," he said.

"There is also the weight of expectation that both politicians and populations have on what it means for them, and how they could benefit, both in terms of using gas to support their own power systems, or in exporting it [via pipelines or as LNG] to generate revenue."

His boss, Shell CEO Ben van Beurden, will also address LNG18, where LNG industry professionals from more than 70 countries will gather.

Shell will provide insight at LNG18 into how LNG mega projects are being developed using thematic approach, how technical and non-technical risks are managed, what is being done to work with contractors to continually improve construction capability and how the next generation of project delivery professionals are being developed.

The WA government has supported a number of community engagement events coinciding with the LNG18 conference, including an LNG-themed school holiday program in Forrest Place in the CBD, a careers forum for high school students and an ‘Unearthed' innovation event to solve real-world industry problems.

The government said 68% of conference delegates will be from overseas, while LNG18 itself would inject $45 million to the state's economy.