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Davies outlines wishlist

SENEX Energy CEO Ian Davies has laid out a wishlist for juniors, particularly those targeting the east coast gas market, so they can survive the transitioning energy sector. 

Davies outlines wishlist

Speaking on the ‘Oil and gas industry in transition' panel during APPEA 2017 in Perth last week, Davies spelled out a three point plan to save explorers and with them, possibly, the industry itself.
 
Eerlier during APPEA 2017 Woodside Petroleum CEO Peter Coleman told conference delegates that explorers and seismic companies would have to be questioning whether it was worth investing in Australia given the discombobulated policies, which threatened the very future of the industry's future project pipeline.
 
Explorers not rich enough to search offshore without a partner with deep pockets needed to survive onshore, and with costs already high amid still-relatively low oil prices their challenges were tough enough, even without regulatory certainty.
 
With exploration at 30-year lows, Australia's LNG industry transitioning to operations phase, and low oil prices making some resources uneconomic, both he and ExxonMobil Australia chairman Richard Owen called for a national approach to energy policy.
 

Technology agnostic

 
In this regard, BP Developments Australia managing director Claire Fitzpatrick backed the Turnbull government's "technology neutral" approach.
 
"From a policy perspective, I don't think government should be picking winners or losers," she said. 
 
"From an energy perspective you just want reliable and affordable, so having signed up to Paris we need to look at the carbon footprint, and as consumers you want an energy mechanism that's transparent and efficient."
 
While Coleman specifically targeted reducing the rule locking up seismic data for 15 years to two - a move Davies appeared to agree with - the Senex CEO went further.
 
Echoing Coleman's comments, Davies said more could be done to support small to medium explorers and producers, explorers are key to new exploration plays and "the industry transition we find ourselves in".
 
"Among many current difficulties, I see three key challenges, albeit among others: a national energy policy, regulatory stability and more industry collaboration," he said.
 
"We have enough natural resources to meet our needs at an appropriate price point, but we do need a national energy policy to stimulate more supply.
 
"Supporting these explorers may involve flow-through tax share schemes, capital gains tax concessions on certain asset transactions, more land releases for exploration and templates for access to third-party infrastructure on a competitive and transparent basis."
 
While a national energy policy was a nice idea, Davies warned that it's clearly acknowledged that the challenge of achieving a single policy would not be easily overcome.
 
He attributed this difficulty to the fact that "we're operating in a political environment where only two of Australia's east coast state governments - Queensland and South Australia - support gas exploration and development".
 
"Regulatory stability encourages a successful transition. It is the role of government to provide clear and consistent rules to achieve desired policy outcomes. Businesses simply invest in line with these rules," he said.
 
The introduction of short-term interventions targeting artificial and temporary price outcomes like the recently announced Australian Domestic Gas Security Mechanism only heightened those concerns, Davies said.
 
"So do reactionary policies and moratoriums that cast doubt on the integrity of a mature and sophisticated industry operating to some of the highest standards in the world, often introduced in response to populist pressures from a small but noisy minority," he said.
 
"Clear, stable regulation based on good science, careful planning and solid bipartisan foundations will provide industry and business with the signals it needs to deliver on Australia's broader energy goals."
 

Oilers' obligation

 
Yet Davies also said the oil and gas industry must work together to become more efficient and innovative than ever before to maintain its place in the energy mix. 
 
"This is key to our new operating environment of higher costs and marginal fields," he said.
 
"I see this collaboration taking shape in respecting our social license to operate, including landholders and the manufacturing industry among others.
 
"Sharing of infrastructure with transparency and of knowledge and information like seismic data will go a long way for achieving outcomes for industry and other related stakeholders."
 
Owen backed Davies' comments, saying Australia needs "stable and sensible policies over a long period of time" to enable investment. 
 
"Reflecting back on the history of Bass Strait and Kipper-Tuna-Turrum, it's an investment late in life in a basin that's been going for 50 years," he said.
 
"The only way we've been able to make that type of investment is because it's been underpinned by a fairly stable system.
 
"The whole question of supply of reliable and affordable energy and meeting our climate goals is a technical one, requiring scientific input rather than simply policy positions."
 
 

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