Woodside exec backs Chevron LNG concept

WOODSIDE Petroleum chief operations officer Mike Utsler has backed Chevron Corporation's calls for an interconnected Carnarvon Basin using three supply hubs to optimise Western Australia's LNG production amid rising competition from Asia, Africa and North America.
Woodside exec backs Chevron LNG concept Woodside exec backs Chevron LNG concept Woodside exec backs Chevron LNG concept Woodside exec backs Chevron LNG concept Woodside exec backs Chevron LNG concept

Chevron Australia general manager, asset development Gerry Flaherty addressed the competition issue at the Society of Petroleum Engineers’ Asia Pacific Oil & Gas Conference in Perth last month when he said WA’s 45 million tonne per annum capacity output would start to decline by 2023 as existing gas fields matured.

Flaherty said that to ensure WA’s place in the LNG market remained strong, developments equivalent to the resources underpinning Gorgon’s initial three trains will be needed by

2031 – a short period in LNG timescales – and industry would need the type of large-scale collaboration occurring in the Gulf of Mexico and the North Sea.

He “tentatively” suggested to Energy News a North West Shelf centre, a Gorgon-Jantz-Wheatstone-Pluto centre than an Exmouth-Scarborough centre could be developed.

“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,” he said.

Speaking at an American Chamber of Commerce in Australia luncheon, Utsler told Energy News that he believed the industry’s big guns could collaborate.

“I think we can make this work, I think it’s up to us as an industry, and as an opportunity-set, in order to actually create this hub-and-spoke approach that lets us optimise to the benefit of everyone involved, the full development of our resource potential,” he said.

Earlier in his presentation he warned of increasing competition from North America, Asia and west as well as east Africa, where significant volumes of gas have been discovered.

While Canadia’s LNG ambitions have been tempered over the past few years, Utlser said there would be plenty of developments about five years from now, as the 700 trillion cubic feet of discovered gas has to find its way to market somehow, in a country of 25 million people.

The key consideration for LNG investors when they return is what gets developed and when.

“The reality is people want security and diversity of supply, so as investors come into our industry in the next five years they’re going to be looking for what gets developed in each of those four hubs versus Australia, and brownfield [and] greenfield development,” he told the luncheon.

“Our opportunity in the next 3-5 years is to demonstrate that we are not a low-productivity [country], high-cost relevant to global competitive benchmarks, and that we are world-class in our efficiency and effectiveness in being able to not only deliver to customer but to operate on a sustainable and reliable basis.

“Because customers will come back to places that they trust, so how do we prepare Australia ‘phase 2’ in the next 3-5 years to compete for brownfield-greenfield developments for the future LNG opportunities when there’s more gas already discovered offshore Australia than there has been produced to date since the 1970s and/or is currently under development?”

While his CEO, Peter Coleman, has lambasted the wider LNG sector for cost blow-outs that saw the country’s recent LNG boom cost $200 billion instead of $100 billion, Utlser suggested this could be a blessing in disguise to optimise future opportunities.

“We talk about wanting to be a global centre for excellence, particularly for gas/LNG offshore/onshore … this is our opportunity,” Utsler said.

“We’ve got this amazing laboratory of infrastructure that’s been gifted to us by the decisions made on multiple facilities being built.

“Now let’s operate them in a manner that is world class, that drives their cost efficiency and effectiveness and demonstrates the technological innovation that allows us to build brownfield and greenfield at a fraction of the cost in the future, to develop those resources in a way that we compete with anywhere in the world.

“The buyers will go to British Columbia, east and west Africa and Asia, [so the question is] how do we bring them back Australia.”

Flaherty said WA’s LNG sector was already competitive on exploration, shipping and development costs.

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