Industry to whip 30 shades of yellow

SENIOR Australian executives from Shell, Technip and Downer called out the country's industry for growing soft during the good times, developing an entitlement mentality and missing the chance to innovate at a frank Petroleum Club of WA panel this week.
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Discussing how the industry can return to competitiveness, an industry panel dissected the mistakes of the boom and how to ensure future success isn't taken for granted, and how to move to an innovative post-boom mindset and increase collaboration both within and across sectors.

Shell Australia vice president production David Bird gave the clearest example of the low-hanging fruit available to the industry, such as standardisation.

"Technip always keep reminding us that they have 30 shades of yellow on their books because every operator asks for a different shade of yellow for their subsea equipment," Bird said.

He said that after spending over $40 billion in the last five years Shell is bullish on Australia, but the supermajor still believes that there are challenges ahead.

Bird said there was a sense of naivety or entitlement that as the gas resource was there it would get developed.

"We are competing with other supply sources that deliver LNG to some of our customers at a lower landed cost and we need to get the mentality that the customer doesn't care.

"We feel that very acutely in Shell where we are very proud of Prelude and all the technology innovation, but the customer doesn't care," he said.

Technip Oceania managing director Christophe Malaurie believes over the past 10 years the industry has gone soft.

"It's been too easy for everyone and we haven't looked at what the world has done...they have kept on improving … look at the US," he said.

"We are going through a very difficult period, but we need to think not for tomorrow, it needs to be in 10 years' time".

Malaurie said the main challenge was to change the mindset of the industry. When he arrived in Australia six years ago, he was stunned at how people were working.

"All they wanted was to make it good and I keep telling them you have to make it [just] good enough," he said.

Technip is now implementing a fit-for-purpose program to change behaviours.

"I feel this is a journey like the safety one we had many years ago," Malaurie said.

Downer executive GM construction Adam Cook said the Australian worker could be more productive if you gave them the environment to do so.

He said the past decade had been good for service providers, but produced an environment where they stopped innovating, and their resilience wasn't tested.

"It is incumbent on the [industry's] leaders … to create the environment."

Collaboration call

Calls for increased cooperation were the dominant theme from the panel.

National Energy Resources Australia director Erica Smyth called for the industry to come together to coordinate maintenance to use the available skilled people efficiently … "or we'll have the same problem we had with construction - prices go up, skill levels go down, safety goes down".

"Let's get clever and smarter about … how we work across companies and across projects," Smyth added.

"Could we all win, rather than all losing, which is what happened in the latest construction boom?"

Smyth gave an example of cooperation from the production of radiopharmaceuticals by the nuclear industry where Australia, the Netherlands and South Africa coordinated the shutdowns of their reactors and backed each other up.

"Australia never sees a glitch in our supply," Smyth said.

Further backing up the collaboration argument, Bird also happens to be Shell's representative on Project Symphony, a group of west coast operators trying to foster more collaboration and standardisation.

The group has a pilot project looking at a single qualification for scaffolders so they can work at any site.

They are also working with the Bureau of Meteorology to develop a consistent way for the industry to interpret meteorological data.

"There is no point us saying it is safe to continue operations on the offshore platform if the port or the airport is shutting down and we can't de-man or man-up," Bird said.

In addition to the operators collaborating ‘horizontally', Downer's Cook sees opportunities in collaborating ‘vertically'.

He said that while Western Australia has workers who have gained skills over the last decade and a fantastic safety culture for major shutdowns, he also had a stark warning for industry.

"If we have the isolation between what the contractors are doing, what the engineers are doing and what the owners are doing we get some of the results that we don't want, in terms of cost pressures, in terms of schedule pressures, and dare I say it, safety," Cook said.

In addition to increased collaboration, Bird sees value in learning from international experience but has encountered resistance.

"The creativity of Australian people to say 'but it is different here' is astonishing," Bird said.

"We find every reason why it can't happen versus just saying 'you know what, let's just replicate what already works overseas'."

Bird accepted he might sound critical but said the North Sea had taken 40 years and an existential threat before they started collaborating and standardising.

Australia is only 10 years into the cycle, yet is already talking about it, he said.

As an example of collaboration, he cited the fibre optic cable from Darwin to Port Hedland installed for Inpex and Shell by NextGen.

Shell wants the industry to advocate more to the community because it believes the industry's current efforts will produce a public good.

Bird said it was not just about reducing costs so owners could make more money from existing projects. It is about paying more taxes and rent back to the community and supporting future project opportunities in a competitive environment for global capital.

EY oil and gas partner Bradley Farrell also chimed in, saying that there were no silver bullets to achieve the continual improvement that the industry needs, but urged the sector to continue dialogue with deep and honest communication.