LNG (LIQUIFIED NATURAL GAS)

LNG industry must mix old with new: Voelte

COMBINING both innovative and traditional approaches will be critical to unlocking liquefied natural gas opportunities in an increasingly risky and uncertain global industry, Woodside managing director Don Voelte says.

LNG industry must mix old with new: Voelte

Speaking at the CERAWeek conference in Texas yesterday, Voelte said LNG markets are seeing unprecedented growth.

Global LNG trade is expected to grow from about 145 million tonnes (MMt) in 2005 to 370MMt in 2015 – nearly trebling in only 10 years.

Voelte said demand is growing from existing customers in traditional LNG markets as well as new customers in North America, Europe and Asia.

But he said the industry also faces unprecedented tightness in supply and demand, as well as new sources of volatility in them.

“Many industry observers believe global LNG demand could outstrip supply by up to 20 million tonnes a year between 2008 and 2015,” Voelte said.

“And as suppliers seek to meet this increasing LNG demand, the scarcity of human and material resources has contributed to rising costs and challenges in delivering new projects on time.

“We are also confronted with continuing geopolitical uncertainties.”

Voelte said the key to developing an effective corporate strategy in an increasingly “high stakes, high risk” world will be to mix innovative processes and systems with better delivery of traditional industry solutions.

“These two strategies – moving ‘back to tradition’ while seeking to ‘secure the new’ – are not mutually exclusive,” he said.

“Indeed, mixing and combining them will be essential.”

Voelte said such a method has been integral to the success of the company’s Pluto field, about 180km off north Western Australia, discovered in April 2005.

He said the project’s customer’s preference for LNG from a traditional partner – “stable and secure Australia” – worked in the company’s favour, but the willingness of all parties to be commercially innovative “sealed” the success.

“While our plant will be state-of-the-art, our engineering approach has been traditional with plant design based on the fifth train of our currently expanding and nearby North West Shelf project,” he said.

“On the other hand, and in view of resource constraints, we continue to be innovative in construction, moving towards modular methods as opposed to the traditional ‘stick build’.

“Now, as we contemplate our energy future in this new, high-stakes world, Woodside believes combining both these traditional and innovative approaches can be key to unlocking our other LNG opportunities,” he said.

The company expects to have first production from Pluto by late 2010.

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