Chevron talks collaboration need

A SENIOR Chevron Corporation executive has told Energy News that Western Australia's LNG industry needs to create an "interconnected basin" to stay competitive beyond 2023, which will require collaboration on a scale unprecedented locally.
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Chevron Australia general manager, asset development Gerry Flaherty told the Society of Petroleum Engineers' Asia Pacific Oil & Gas Conference in Perth last week that serious collaboration will be needed in the face of increasing competition in the LNG market from Papua New Guinea, the US and east Africa.

He said that once Gorgon, Wheatstone and Prelude are up and running alongside the North West Shelf and Pluto projects WA will have 45 million tonne per annum capacity, "but that's not going to last that long".

"It will start to decline 2022-23", he said, which also happens to be when industry widely believes the LNG glut will open up.

"We're not going to supply at that rate much past that point, but we do see an opportunity to develop an additional 30 trillion cubic feet and extend that plateau to 2038-plus, where we need another Gorgon three-train equivalent at about 2031, which isn't far away in terms of LNG timelines.

"We need to have an interconnected basin. We need to have hubs, which will help us maintain our competitive advantage. We need to match up the resource concentration with where the plant capacity is.

"We do have an extensive customer base and very good reputation based on what we've provided so far, and if we can unlock this collaboration prize, it can unlock the benefits to our region for many decades - and we can compete on exploration, shipping and development costs."

While the call for more collaboration is nothing new, he later told Energy News how, given long-distance tiebacks required, the challenge will be around flow assurance, compression and water handling.

"One of the advantages of relatively low energy prices is it causes you to take a different look at your business, and see what you need to do to have a competitive advantage," Flaherty said.

"At a time when future developments are challenged, you need to see places where you can put compression and water separation where multiple people can use it; and create opportunities to tie in fields with some commercial structure that can bring things together [so] it doesn't have to just be one operator investing in it.

"So what really unlocks the Carnarvon Basin in the future - when you see how big and spread out it is - I look at is as a tentative North West Shelf centre, a Gorgon-Jantz-Wheatstone-Pluto centre than [an] Exmouth-Scarborough [centre].

"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.

"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."

Speaking of his personal view, Flaherty conceded that "in high oil prices everyone is so focused on creating as much value as fast as they can, and sometimes partnerships are challenging".

"You can always do things easier when you're 100% operator, but when you have to share, and people have different drivers, it takes longer," he said.

"When everybody's looking at the market that is going to demand gas with the outlook at $120bbl oil we didn't look to efficiency but to speed, and I think what we now need to do is look at efficiency and not speed - that's where we need to do things differently."

Once the plants are built all need turnarounds every 3-5 years due to inspections and maintenance and retooling some of the kit, but Flaherty believes the key is being able to coordinate that expertise across many trains, not only in WA but in eastern Australia, as McKinsey also recognised last year.

"A lot of advancements in subsea separation and compression are happening in the North Sea; while emerging technology even uses seismic data to reflect the rate of depletion of reservoirs in terms of 4D seismic is being pushed," he said.

Flaherty said standardisation also needs to move to front of mind for oilers to ensure Australia stays afloat in the increasingly competitive LNG market.

"Standardisation is important. Right now in terms of subsea designs, different well heads, manifolds, casing designs and workover programs, this is something we as industry need to take on to drive efficiency and costs," he said.