The firm's lead analyst for Australasia, Saul Kavonic, told Energy News that the ‘hub' concept promoted by Chevron Australia general manager, asset management Gerry Flaherty last month could provide an optimal development scenario from a unit cost perspective.
Flaherty cited Wood Mackenzie modelling when he told the Society of Petroleum Engineers' Asia Pacific Oil & Gas Conference in Perth last month that Western Australia's 45 million tonne per annum LNG capacity once Gorgon, Wheatstone and Prelude are fully operational would start to drop off by 2023.
However, he said Chevron saw an opportunity for industry to develop an additional 30 trillion cubic feet of gas to extend the plateau to 2038 and beyond, but would require three commercial infrastructure hubs that would require substantial collaboration seen before in the Gulf of Mexico and the North Sea but unprecedented in Australia.
Flaherty said WA needed an "interconnected basin" with three hubs centring around the North West Shelf, Gorgon-Jantz-Wheatstone-Pluto and Exmouth-Scarborough.
"You probably need two hubs that have compression, water separation, flow assurance capacity to bring all of those things together into a trunkline system that can get it to shore," Flaherty told Energy News.
"We've seen those things in the North Sea and the Gulf of Mexico, driven by economics, and we're expecting economics will drive it here too eventually."
However, Kavonic warned it would be a major challenge to develop a commercial model to achieve that, as LNG producers needed to address the core value and risk drivers such a value sharing, legal liability allocation and alignment of technical and health and safety standards that will work for all stakeholders.
"While low oil prices are focusing industry attention on the scope for cost reductions through greater infrastructure collaboration, and there are nascent signs of progress on this front, it is still early days," Kavonic said.
He believes the need for hubs will come to bear as a number of LNG plants off Australia's west coast are forecast to come off plateau production levels over the next couple of decades.
The NWS will be the earliest and largest of these, but Prelude and later Pluto are also forecast to start to come off plateau later down the line.
"Given NWS's large capacity, we see three potential long-term upstream solutions to maintaining its gas supply levels: The Browse project fields, some Greater Gorgon and surrounding area fields, or Scarborough," Kavonic said.
"If one of these fields were to be developed to backfill NWS, then I would expect with time it could be possible to also tie in other nearby fields to that upstream infrastructure, so that upstream infrastructure could potentially be developed to act as a 'hub' to aggregate a number of gas fields nearby to it over time."