D&d aug oct 2014 web by digging drilling

AUSTRALIA • CHINA • INDIA • JAPAN • NEW ZEALAND • ASIA PACIFIC

AUG 2014 - OCT 2014 • Issue 9

AUSTRALASIA AustralaSIA’s QUARTERlY Oil , Gas & Mining Magazine

OLYMPIC DAM EXPANSION APPROVED SANTOS SOUTHERN AMADEUS JV TO PROCEED Santos has elected to proceed to Stage 2 of an amended Southern Amadeus Joint Venture

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Editor’s Letter We are proud to announce that in July, 2014, on the 2nd Birthday of D&D Australasia we launched WARR Magazine. Our new sister publication, WARR Magazine is Australia’s first and only publication to combine the excitement of car, bike, boat & truck racing and restoration. Australia’s fastest Harley Davidson, Australia’s fastest Drag Boat and the World’s Fastest Jet Truck are featured in the inaugural edition of WARR Magazine. To celebrate the launch of WARR Magazine, we are giving away an adult size, Quad Bike to a lucky subscriber (see opposite page for full details). The lucky Quad Bike winner will be announced in the next quarterly edition of WARR Magazine which comes out in October, 2014. Congratulations to the Australian Parliament for finally delivering the Federal Coalition Government’s election commitment to abolish the Carbon Tax. On the 17th of July, 2014 the Hon Tony Abbott MP, Prime Minister of Australia released a statement about the repeal of the Carbon Tax. The Prime Minister said, “The Coalition promised to abolish the Carbon Tax and today the Government has delivered on our promise. Scrapping the Carbon Tax will save the average Australian household $550 a year. The Carbon Tax was a $9 billion a year hit on the Australian economy. Australian businesses either had to absorb the costs or pass it on the consumers. Scrapping the Carbon Tax will take a cost burden off Australian businesses. It will make it easier for them to compete and create more jobs”.

Len Fretwell

Publisher / Managing Editor Digging & Drilling Australasia and WARR Magazine

Australian resources company, Cauldron Energy Limited (ASX: CXU) has secured $11m from Chinese Investors for support of Yanrey Uranium Project in Western Australia, commencement of exploration activities at the Marree base metals project in South Australia and the highly prospective Argentinian uranium-copper-silver asset via a series of share placement agreements. Cauldron conducted a fund raising road show in Beijing in late 2013, which culminated in the execution of a mandate with one of the leading investment companies in China, Shanghai Joseph Limitless Investment (“Joseph Limitless”), to raise funds for the Company. Of the Placement Funds, A$9 million is attributable to funds raised under this mandate from new investor Guangzhou City Guangrong Investment Management Co., Ltd (“Guangrong Investment”) and funds directly from Beijing Joseph Investment Co. Ltd / Joseph Investment International (“Joseph Investment”) and Joseph Investment’s controlled entity Guangzhou Joseph Investment Co. Ltd (“Guangzhou Joseph”). “Cauldron has proven it has made a strong strategic alliance with Dr Joseph Chen, the Chairman and Founder of Joseph Investment,” said Executive Chairman Tony Sage. “Cauldron’s non-executive director Mr Qiu Derong also continues to support the Company by committing AU$2 million further funding,” Mr Sage added. A survey into the attitudes of 1,216 randomly selected South Australians towards uranium and nuclear power commissioned by the South Australian Chamber of Mines and Energy (SACOME), found that 48% support nuclear power while only 33% recorded any level of opposition. The 2013 SACOME survey, conducted by market research company, ReachTel, also found consistency across all age groups, recording a majority support for nuclear power. Less than one-third of all respondents opposed it, and one-fifth remained neutral. “A key aspect of responses to this question was the level of strong opinions expressed, with 29% strongly supporting and only 20% strongly opposing nuclear power - in other words, there are more staunchly pro-nuclear than anti-nuclear advocates,” Jason Kuchel, Chief Executive, SACOME, said. Mr Kuchel also said; “The results of this survey and message from key groups sends a clear message to our politicians: South Australians want to see the possibility of nuclear power at least considered for future use, and put on the agenda for discussion.” We are always looking for interesting energy & resource sector innovation and news content so, please feel free to contact me with any news or content that may be of interest to our readers. I hope you enjoy reading this 2nd Birthday edition and as always, I look forward to your comments and feedback. Best regards

Len F retwell www.diggingdrilling.com

www.warrmagazine.com

WHAT’S IN THIS 06» ISSUE

IN THIS ISSUE 3 EDITOR’s LETTER 6 MOMENTS IN PICS: AOG 2014 CONFERENCE - PERTH 10 News in Brief: Oil & Gas News highlights for the month 12 Olympic Dam Expansion Approved 18 Project PostCard: BHP Billiton’s Mt Whaleback Iron Ore Mine 20 Santos Southern Amadeus JV to proceed 24 COVER STORY: ACEPT FUNDING BOOST 28 Could China enter the Coal Market? 32 nsw natural gas development

Digging & Drilling AMP TOWER - LEVEL 28 Australasia 140 St Georges Terrace Perth WA 6000 Tel: +61 1300 284 637 Fax: +61 (8) 9300 9435 Feedback info@diggingdrilling.com News inquiries editor@diggingdrilling.com Advertising inquiries len.fretwell@diggingdrilling.com • Mobile: 0417 001 080 Editor Writers GUEST Writer SPECIAL FEATURES

Len Fretwell Robin whitlock, Stephen Dawson, ANDREW BURRELL NATASHA (KITTY) CANN, Lesley Kemp EMMANUEL SOLOMON

Graphic DESIGNER wATER LI Subscription SUBSCRIPTION@diggingdrilling.com Publishing Digging and Drilling is a Trading name of LF Family Trust Information ABN: 97 893 623 301 VISIT US AT www.diggingdrilling.com Follow us on twitter @DiggandDrill SISTER PUBLICATION WARR MAGAZINE WWW.WARRMAGAZINE.COM COVER Wa Apprentice of the Year and ACEPT graduate Emma Stevenson Digging & Drilling Australasia welcomes comments and suggestions, as well as information about errors that call for corrections. We are committed to presenting information fairly and accurately. Disclaimer: Reasonable care is taken to ensure that Digging & Drilling magazine articles and other information are up-to-date and accurate as possible, as at the time of publication, but no responsibility can be taken for any errors or omissions contained herein. The opinions expressed are those of the authors and do not necessarily reflect the views of Digging & Drilling Magazine. The publisher, editors, contributors and related parties shall have no responsibility for any action or omission by any other contributor, consultant, editor or related party.

4 DIGGING & DRILLING MAGAZINE AUG 2014 - OCT 2014

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MOMENTS IN PICs »

AOG PERTH 2014

6 DIGGING & DRILLING MAGAZINE AUG 2014 - OCT 2014

AUG 2014 - OCT 2014 DIGGING & DRILLING MAGAZINE

EXCLUSIVE INTERVIEW WITH KENT MATLA I left the Embassy towards the end of 1997 to return to Australia so that my wife and I could have our son. During this time I consulted to a few companies, and I established my own corporate advisory and investment consulting business between Perth and Beijing. This business provided services to a range of Chinese and international clients in the areas of commercial strategies, solutions, and opportunities; commercial structures; and public listings. In January 2004, I merged this business to form a joint venture with GNS International and one of my key Chinese high-networth entrepreneurial clients to establish GNS China. I took the role of Managing Director and CEO of GNS China, and built and ran the business over 10 years, through some good and tough times. Kent Matla was introduced to me at an AustCham function in Beijing, PR China in 2006, when I was living and working there. Kent, then the Treasurer of the Australian Chamber of Commerce (AustCham) in Beijing, helped me to better appreciate the intricacies of doing business in China, with his insight and many years of on the ground experience. Kent is the Managing Director and CEO of GNS China, a boutique corporate advisory and investment banking firm in Beijing. I caught up with Kent in Perth to arrange this exclusive Q&A recently and learned that Kent is relocating to Perth.

D&D: I know you spent a lot of time and energy in your various roles with AustCham Beijing, please elaborate. KM: I was elected to the inaugural Board of Directors of AustCham Beijing when it was founded back in 1996. AustCham Beijing is a not-for-profit organisation registered and approved under the authority of China’s Ministry of Civil Affairs, and operates independently from government. Together with their sister AustChams in Hong Kong, Shanghai, and Guangzhou, works to promote strong trade and investment links between Australia and China.

D&D: For the benefit of our readers that may not know of your diverse background, please offer an outline of your career path and experiences.

I served on the Board for 13 years, including the roles of Vice Chairman between 2010 and 2011, Deputy Chairman between 2008 and 2010, and Treasurer between 2003 and 2008. I was also chair a number of committees and working groups.

Kent Matla: My interest and fascination in Chinese culture surfaced when I was a teenager, but I started becoming actively involved in the Chinese community and its culture in Perth from around 1988.

I also had the honour of being invited to be an official judge of the AustCham Australia-China Business Awards in 2010 (in Shanghai), 2009 (in Beijing), and 2003, 2004, 2008 (in Hong Kong).

During this time I became the deputy troupe leader of the Chungwah Lion & Dragon Dancing Troupe, and teaching martial arts to children at one of the Chungwah Chinese Schools on Saturdays for example. I also started to learn Mandarin at the Central College of TAFE and backpacked by myself around China for 2 months at the end of 1990.

D&D: What do you see on the horizon for Kent Matla?

After a number of trips to China, I was luckily offered a job to set-up and run an office in Taiyuan, Shanxi Province, jointly between Austrade, and a small Perth consulting company in early 1993. Wanting to truly understand Chinese culture, living and working in China had to be the next step, so I left my job, sold my house and car, and moved to China. After 3 years as Post Manager for Austrade and Chief Representative of the Perth consulting company, I moved to Beijing early 1996 to take a role with the Australian Embassy. At the Embassy, my position involved economic and political research as well as assisting in the coordination of Australian federal minister’s visits to Beijing.

KM: I am presently a non-executive director of a couple of companies, and I am looking at a few different opportunities. I am looking at the potential to take a fulltime senior executive position, establish my own corporate advisory business, or maybe even a professional non-executive director. I am very keen to not only use my corporate advisory and mergers & acquisitions experience and skills, but also provide my extensive China experience and knowledge to value-add to companies wanting to expand opportunities with China, whether seeking investment from China or looking to expand into China, through to companies that are already working in China or with Chinese investors/partners. I believe the value-add of my China experience, knowledge, and networks will provide companies a seriously completive advantage and strategic positioning.

Interview by Len Fretwell 8 DIGGING & DRILLING MAGAZINE AUG 2014 - OCT 2014

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NEWS IN BRIEF »

Oil & Gas News highlights for the month

Apache Strikes Gas in Phoenix South-1 Carnarvon Petroleum Limited has advised that gas and indications of associated liquid hydrocarbons were observed in the Phoenix South-1 well prior to a drill bit failure, which has necessitated the drilling of a minor side-track around a small portion of the well bore. In the past two weeks Apache Energy, the Operator of the Phoenix South-1 well, had drilled to a depth of 4,321 metres Measured Depth (“MD”) and, as at 06:00 hours this morning, the well was preparing to side-track at around 4,000 metres MD to complete the drilling to the expected Total Depth (“TD”) of 4,500 metres. Managing Director, Adrian Cook, said: “The observance of gas and associated liquid hydrocarbons validates the conceptual exploration model created by the interpretation of the original Phoenix-1 well outcome drilled by BP in the early 1980’s. These observations are encouraging, although I would caution that they are untested, unquantified and preliminary observations only. This outcome has provided Apache with the encouragement to continue drilling, justifying the additional cost and time delay associated with drilling a second side-track well bore. It is my intention to update the market once the estimated cost and time delay caused by the second sidetrack is known, however I can say that these delays are expected to be significantly less than the initial sidetrack. The plan is continue drilling to the target depth of 4,500 metres MD in order to test the sands that were observed to this depth in the Phoenix-1 well.

Chevron Makes $5.7 Bln in Q2 Foreign currency effects decreased earnings in the 2014 quarter by $232 million, compared with an increase of $302 million a year earlier. Sales and other operating revenues in second quarter 2014 were $56 billion, compared to $55 billion in the year-ago period. “Our second quarter earnings and cash flow were solid,” said Chairman and CEO John Watson. “Current quarter earnings reflected stronger market conditions for crude oil, although some of these benefits were offset by lower production volumes as a result of planned maintenance activity at Tengizchevroil in Kazakhstan. Gains on asset sales also contributed to our results, as we completed important sales under our three-year divestment program.” U.S. upstream earnings of $1.05 billion in second quarter 2014 were down $29 million from a year earlier, as gains on asset sales and stronger crude oil and natural gas realizations were more than offset by additional depreciation, exploration and operating expenses. The company’s average sales price per barrel of crude oil and natural gas liquids was $92.44 in second quarter 2014, up from $92.25 a year ago. The average sales price of natural gas was $4.09 per thousand cubic feet, compared with $3.78 in last year’s second quarter. International upstream earnings of $4.21 billion increased $344 million from second quarter 2013. The increase between quarters was primarily due to a gain on the sale of interests in Chad and Cameroon and higher realizations and sales volumes for crude oil, partially offset by higher exploration and depreciation expenses. Foreign currency effects decreased earnings by $147 million in the 2014 quarter, compared with an increase of $275 million a year earlier.

“At this stage it is premature to make any conclusions around the quality of the observed gas or liquid hydrocarbons, their volumes or whether they will flow and accordingly whether they could result in any commercial development. Further drilling and evaluation is required before we are able to be more definitive and I will update the market as soon as we have the necessary information to hand The primary target within the Early to Middle Triassic Lower Keraudren Formation sands was intersected as expected at approximate 4,160 metres MD, around 10 metres high to prognosis. Elevated gas readings were observed through this sand, with gas peaks being encountered from around 4,170 metres MD as the sands being drilled were cleaning up. The equity interest holders (upon satisfaction of the farm in agreement terms) are: Carnarvon Petroleum 20%, Apache Energy (Operator) 40%, JX Nippon 20%, Finder Exploration 20%.

10 DIGGING & DRILLING MAGAZINE AUG 2014 - OCT 2014

The average sales price for crude oil and natural gas liquids in second quarter 2014 was $101.15 per barrel, up from $93.71 a year earlier. The average price of natural gas was $5.98 per thousand cubic feet, compared with $5.93 in last year’s second quarter. Watson added, “We continue to make significant progress on our major capital projects which are expected to underpin a 20 percent increase in production by 2017 and enable significant growth in our cash flows. In the deepwater Gulf of Mexico, our production is expected to benefit in the near-term from start-up of the Jack/St. Malo Project later this year and the Big Foot Project in 2015. In Australia, our Gorgon and Wheatstone LNG projects continue to reach important interim milestones. Gorgon remains on track for expected start-up in mid-2015. We are also advancing the development of our liquids-rich, unconventional properties in the United States, Canada and Argentina.”

WORKPLACE HEALTH AND SAFETY Why don’t they listen when you’re just trying to keep them safe? Studies of adult learning show that adults do not respond well to being told. When members of a workforce are told what to do or how to do something this immediately creates questions and builds resistance, even when the advice is helpful and designed to keep the audience safe. To be most effective any change of behaviour needs to occur from within the group. The people who have the power to create the desired changes are always within the group, usually those who stubbornly demonstrate the undesirable behaviour.

healthcare and custodial. We have reduced bullying, increased health and safety, managed staff compromise and increased retention and recruitment across a range of cultures. Our success working in this area is rooted in the fact that we look at the problem from a different perspective. We have combined our experiences teaching adult learners with our years of marketing knowledge and created initiatives that create real results.

• Increase in workers compensation

Delivery

• Increate in incidents of bullying and workplace stress

To change your workforce you either change your workforce or change your workforce, as the old adage goes.

• Increase in recognised incident patterns • Increase in near miss occurrences

Over the last ten years we have helped organisations create positive change in high-pressure environments such as mining, Guest Writer: Lesley Kemp

Most companies are surprised when graphic messages fail to reduce incidents such as accidents, escapes, or the spread of infection.

To hit home messages need to show the all too real impact of the incident. How will it affect you, your wives, family, and mates – what is the real impact?

• Increase in sickness rates

Although these may have an impact for the short term, they are rarely long lasting. So, why don’t people listen?

Context

Very often this is because the workforce are conditioned to accept this as an acceptable occupational hazard. ‘I see it happen but it won’t happen to me’.

Traditional symptoms of a workforce in need of positive development include:

The tried and tested approach to breaking the cycle is to consult with Health and Safety specialists or to obtain a psychological evaluation of the workforce. These often result in videos, posters, presentations and handbooks containing the message “You should… You shouldn’t…” supplemented with graphic photographic reminders of what can happen when it goes wrong.

your message to cut-through the background noise it must speak directly to the workers concerned. If it doesn’t stand out and stand up in their environment, it will simply be dismissed as ‘wallpaper’.

To make people listen your message must have three vital components: 1. It must be relevant 2. It must be in context 3. It must be delivered from within Relevancy What is relevant to you is not immediately relevant to me. The FIFO environment of your workforce on the ground is significantly different from the environment of your office-based staff. In order for

Creating a more healthy and productive workplace is not about softening the saw tooth pattern of incidents and accidents but about improving workplace education, attitude and culture. This is a far more effective and economic way of dealing with workplace issues and creates real and lasting change. Digging & Drilling Australasia magazine have invited us to work with them on a series of articles designed to address your questions and concerns about improving workplace culture. Send your questions in confidence to us at info@gdadesign.com Put us to the test. Find out how we can help you. All of your questions will remain anonymous.

AUG 2014 - OCT 2014 DIGGING & DRILLING MAGAZINE

FEATURE ARTICLE»

Olympic Dam Expansion Approved

ining giant BHP Billiton (ASX:BHP) is unlikely to a pprove a long awaited expansion of its Olympic Dam copper and uranium mine in South Australia’s outback this decade. This news comes as the world’s biggest miner disclosed plans to build a pilot processing plant at the mine and conduct a four-year long trial of a processing method BHP hopes will help make the project profitable. The miner, which put the US$33 billion expansion plan on hold two years ago, as a result of falling commodity prices and higher costs, was supposed to begin work at the site last year. Doubts about the lauded project first emerged in early 2012 when BHP told markets of its intention to cut back an $80 billion capex programme. A JP Morgan research note out a few weeks later also suggested the Olympic Dam would not go ahead “for at least three or four years, if at all.” Then in September, chief executive Andrew Mackenzie said the long awaited expansion was in need of a technological breakthrough that can make it happen. The ambitious expansion was expected to create the world’s largest uranium mine within 11 years. It included the construction of 270km of power lines, a 400 km pipeline, a new desalination plant and a 105km railway. The miner has been searching for cheaper ways to develop new smelting and extraction technologies to cut costs and offset lower commodity prices. One of the processes it has been testing is heap leaching, a complex chemical process used to extract copper, uranium and precious metals from ores. If BHP is granted permission to build the plant it would start construction in July next year, with a three-year operation period slated to begin in October 2016. “While the application is for a trial, a successful trial will not necessarily lead to a 12 DIGGING & DRILLING MAGAZINE AUG 2014 - OCT 2014

full-scale heap-leach project,” BHP said in the statement. “Further, the extent and n ature of any potential full-scale project is not known at this stage.”

The Olympic Dam, already Australia’s largest underground mine, currently employs over 3,500 people. The mine features the world’s largest uranium deposit, and fourth largest copper and gold deposits.

BHP’s request is only to study processing the ore, but there is no mention of how it plans to access the deep orebody.

Image Caption: The US$33 billion expansion plan was shelved in 2012. Image courtesy of BHP Billiton

14 DIGGING & DRILLING MAGAZINE AUG 2014 - OCT 2014

Caltex diesel underpins Roy Hill mine emergence Caltex Australia has commenced on-site diesel supply to Roy Hill as part of a twoyear, $200 million contract with the emerging Pilbara iron ore miner. Caltex’s National Manager Business to Business Sales, Phil Amos, said a safe and reliable supply of diesel was essential as Roy Hill – Australia’s biggest mining construction project – ramped up operations ahead of the first export shipment targeted for 2015. “Caltex is supplying about 120 million litres of diesel to Roy Hill over the course of the contract to meet all the mine’s fuel needs during this important start-up phase and as production is expanded,” Mr Amos said. “We recently commissioned on-site fuel storage infrastructure at Roy Hill as part of our commitment to manage all of the mine’s diesel requirements. “Deploying a fleet of four dedicated road trains, we will transport diesel about 400 kilometres by road from Caltex’s 40 million litre storage terminal at Port Hedland to facilities at the Roy Hill mine.” The diesel will be used to fuel on-site equipment, including mining trucks, and for some power generation. From 2015, Caltex will also supply the diesel-powered locomotives that will carry the iron ore to Port Hedland for export. Mr Amos said the Port Hedland fuel terminal was one of 12 operated by Caltex nationally as part of a comprehensive supply network essential to keeping Australia moving. “As Australia’s leading transport fuel supplier, Caltex is investing alongside its customers so that industries such as mining, transport and agriculture can invest in the confidence that their fuel and lubricant requirements will be met,” Mr Amos said. “Caltex, Australia’s only locally listed and managed fuel supplier, is pleased to be working alongside another Australian business as it fulfils its growth plans.”

Caltex Australia With more than 3,500 employees across Australia, Caltex is the nation’s leading fuels marketer and is underpinned by a flexible and reliable supply chain. The integrated business incorporates supply, refining, logistics and marketing. With about 22,000 shareholders, including institutions, retail investors, employees, and Chevron Global Energy Inc., Caltex is the only oil refining, fuel and convenience marketing company listed on the Australian Securities Exchange. Caltex’s vision is to be the outright leader in transport fuels across Australia.

Deerings are now the state agents for My Zone safety products

POSTCARD r My Africa: Kenya PROJECT» BHP BILLITON’S MT WHALEBACK IRON ORE MINE

Image Courtesy: BHP Images Library

AUG 2014 - OCT 2014 DIGGING & DRILLING MAGAZINE

FEATURE ARTICLE»

Santos to proceed with strategically focused Southern Amadeus JV entral Petroleum Limited (ASX:CTP) (“Company” or “Central”) today announced that Santos has elected to proceed to Stage 2 of an amended Southern Amadeus Joint Venture with Central under terms that will allow the JV to give priority to spending on areas of highest prospectivity. It is expected that Santos will determine its position regarding further Mt Kitty testing and its commitment to the North West Mereenie joint venture by around the end of August. Central has now regained 100% ownership of the Ooraminna Gas Discovery in RLs 3 & 4 which will form a hub of future opportunities to be pursued after the successful conclusion of a further gas sales contract. Central sees great strategic merit in regaining control of RLs 3 &4, particularly where RL3 is a mere 10km from Central’s recently acquired the Dingo Gas Field and 50km Dingo Pipeline currently under construction. Central and Santos have concurred that the prospectivity of the Southern Amadeus has been confirmed by the results of Mt Kitty and the 1,587km of 2D seismic acquired during Phase 1 of the farmout. As a result, an additional 300km of seismic has been added to the current 1,000km of 2D seismic earmarked for the more prospective Southern Amadeus following Central and Santos’ election not to proceed as a joint venture in the Pedirka Basin (EPs 93 & 97). The Santos farmout Stage 2 will therefore result in a further 1,300km of 2D seismic being acquired in the Southern Amadeus area (estimated to cost around $12 Million) earning Santos 40% participating interest in the permits listed in the schedule (the “Southern Amadeus Joint Venture”).

Images: Courtesy of Santos

AUG 2014 - OCT 2014 DIGGING & DRILLING MAGAZINE

FEATURE ARTICLEÂť Central has been able to temporarily suspend its permit work commitments in the Pedirka Basin to enable it to negotiate a more targeted acreage holding in that Basin. Following an extensive review of the data Central and Santos has determined that the drilling of Pellinor was not the best use of capital and Central is looking forward to concentrating on opportunities in EPs 93 & 97 now on a 100% basis. The Wiso Basin will become a Company priority following the review of existing and recently acquired data. This review of data for all its application areas has reaffirmed interest in the Northern Territory sector of the Amadeus, and downgraded the prospectivity of the Western Australian acreage applications which will no longer be pursued. â&#x20AC;&#x153;Central is pleased to continue to have the opportunity to work with Santos as it has over the last 2 years. The financial commitment and technical efforts Santos has brought to exploration has enabled the prioritisation of opportunities to be advanced in the next 18 months. We are excited by regaining 100% of the gas prone acreage around Dingo allowing the Company to leverage off the Dingo investment to enhance future incremental economic opportunitiesâ&#x20AC;? said Richard Cottee, Managing Director.

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FEATURE ARTICLE»

FLNG graduates at the ACEPT Training Centre

FUNDING BOOST PREPARES ACEPT FOR ENGINEERING SURGE specialist engineering training centre will be built at Challenger Institute of Technology’s Australian Centre for Energy and Process Training (ACEPT) following a $15 million funding commitment by the Western Australian Government. The funding, announced in the State Budget last week, will increase ACEPT’s capacity to meet the future workforce development needs of the Australian LNG industry through the training of electrical and instrumentation control engineers and engineering technicians. Challenger Institute chief executive officer Liz Harris said the new centre would double ACEPT’s annual training capacity to 1,800 students. “With several new LNG projects entering the operational phase over the next few years, demand for highly skilled operators to operate and maintain plants safely and efficiently will increase dramatically,” Ms Harris said. “To meet this growing demand and continue to support the workforce development needs of the LNG industry, we will need to expand ACEPT’s physical and virtual training infrastructure.” ACEPT currently provides training services in process operations from entry level to advanced diploma and supports a growing number of electricians completing advanced trade qualifications in instrumentation. The new engineering centre will support the delivery of a wider range of qualifications focused on developing the high level technical skills required for the operation and maintenance of LNG plants, including advanced diplomas in mechanical, electrical and structural engineering. ACEPT director Greg Guppy said the engineering centre, to be located at the ACEPT campus in Henderson south of Perth, will offer an applied LNG learning environment incorporating hands-on practical experience at ACEPT’s closed loop processing plant. It will also build on ACEPT’s training strategies to provide foundation skills for new entrants to the oil and gas industry, upskill existing workers and deliver gap training for tradespeople, as well as target programs for under-represented groups. AUG 2014 - OCT 2014 DIGGING & DRILLING MAGAZINE

FEATURE ARTICLE» ACEPT’s Industry Advisory Board chair Keith Spence said the funding commitment by the State Government demonstrated the importance to WA of ensuring a job-ready workforce to meet the projected needs of the oil and gas sector. “Workforce demand for oil and gas projects, including construction, engineering and operations growth, is expected to substantially increase by 2018,” Mr Spence said. “With access to operational plants currently limited, the hands-on learning environment at ACEPT is valuable and unique among oil and gas training providers. “Sustaining ACEPT’s high level service delivery into the future, as major LNG projects move into an operational phase, will require extending ACEPT’s scope and capacity. “The new engineering centre will significantly build on ACEPT’s ability to provide comprehensive workforce development services and, more generally, to ensure a skilled and industry-trained workforce.”

The ACEPT process plant provides a hands-on learning environment

26 DIGGING & DRILLING MAGAZINE MAY 2014 - JULY 2014

Why mentoring is the first step towards a successful career A survey earlier this year by the NSW Minerals Council found that the largest proportion of women working in NSW’s mining industry – 30 per cent – were employed as machinery operators or drivers. The survey, Women in Mining: A snapshot, also revealed that the lowest proportion, 0.5 per cent, worked in management or featured on the board of companies. The subsequent media coverage rightly raised the issue of how to make mining more attractive to women, something I’ve been passionate about for the last decade. Like the majority of the women in the survey, I too drove trucks, starting as a trainee with Rio Tinto. But perhaps unlike most miners, mining has been part of my life since the day I was born; it is well and truly in my blood. I am a fourth generation miner and proud to follow in the footsteps of mygreat-grandfather, grandfather and father. But, as you can guess, I’m the first female in the family to do so. Indeed, I’m part of the first generation of female miners, which makes this a very interesting time for the industry. There have been some great steps forward for women in the last couple of years. Industry bodies and large mining and resources companies have introduced programs and networking groups to help women develop their careers, such as WINWA, which I strongly advocate and contribute to. Yet, in my experience, it is mentoring that makes the most difference to career progress, for both men and women. I first realised the power of mentoring 10 years ago. I was working with smart, capable women yet I saw the hesitation some had about pursuing their careers. I became very mindful of not only the challenges facing women working in the sector, but also of mums maintaining their careers during pregnancy and returning to the workforce while raising their families. Then, after informally coaching Stephanie to leverage her skills and abilities to advance her role, and mentoring Kylie into a female contract

Guest Writer: Natasha (Kitty) Cann

planner role, I realised that I could use my skills beyond my immediate maintenance planning team leadership roles.

Events to catch this issue are – WIMWA ANNUAL SEMINAR | Perth Friday 12th September 2014

This gave me the idea to use my skills to increase the ratio of women working in the mining and resources sector. I’ve been mentoring women ever since.

“Communication, Confidence & Change”

Mentoring is not life coaching. And it’s not just about setting career goals. It’s about giving women confidence to pursue their careers. Last year I set up two no-cost mentoring services, Mining Mentors and Mining Mums. These services foster talent by giving women in mining a venue to ask any question about any aspect of their work and careers. They are natural extensions of my efforts over the last decade to help women, such as Susan, a female graduate engineer, who contacted me when she was about to start her first onsite job. She was asking, among other things, where she could purchase high visibility safety socks. Although this seems insignificant, if she had asked the question onsite, the story would have followed her career. Asking in a safe environment saved Susan embarrassment and time searching for a non-existent product.

WOMEN IN RESOURCES NATIONAL AWARDS | Brisbane

http://womeninmining.com/connect-withpeers/one-day-seminar/ and

The inaugural Thiess Women in Resources National Awards (WIRNA) recognise and celebrate the contributions and achievements of women in Australia’s resources sector. Tuesday 2nd September 2014 https://www.qrc.org.au/02_cal/details. asp?ID=295 Natasha Cann @natashacann

I am a mentor on the Australian Women in Resources Alliance’s e-Mentoring program, which is delivered by AMMA and funded by the Australian Government through the National Resources Sector Workforce Strategy. Initiatives such as this are priceless. It’s a great comfort to know that whatever stage you are at in your career in mining, if you need advice or guidance, there are there are plenty of enthusiastic, experienced people out there to support you with one-onone mentoring. You just have to put your hand up.

AUG 2014 - OCT 2014 DIGGING & DRILLING MAGAZINE

FEATURE ARTICLE »

Could China enter the

Coal Market?

ven though global coal production has swelled up, there have been no signs of production slowing down in major coal-exporting countries, stretching the already oversupplied market. Global coal oversupply has been a major contributing element to the current weak coal market conditions. According to data available with SNL Energy, coal shipments from seven major exporting countries during the January-May period were roughly 40% of the total coal export targets estimated for these nations during full 2014. A Reuters report said global market for seaborne thermal coal will be oversupplied by roughly 10 million tonnes in 2014. Bank of America Merrill Lynch has forecasted a global surplus in metallurgical coal over the next several years despite an estimated 20 million tonnes of announced production cuts. The growing surplus and slowing demand is prompting some to forecast a shift in Asian import-export trends. China, which had turned into a net coal importer in the recent years, could return to being an opportunistic coal exporter within the next couple of years, as the country looks to hit its peak coal consumption in 2016, declining thereafter, Tim Buckley, director of energy finance studies at Institute of Energy Economics and Financial Analysis, told SNL Energy. Coal shipments to China, the current largest coal importer in the world, totaled 327.1 million tonnes in 2013, almost 192 million tonnes more than what was shipped in during the same period by the next big importer, India. In May, China’s coal imports were 24 million tonnes, compared to 15.6 million tonnes imported by India. China still consumes 50% of the world’s thermal coal and forms 20% to 30% of all the coal import demand today, making it the driver of the global seaborne coal demand, Buckley said. On the other hand, there have been numerous factors signaling India was still way behind in steering the global coal export market. India recently got a new prime minister, who has been focusing on revitalizing domestic energy production rapidly, including of coal, Buckley added. The Indian government recently increased coal customs duty to 2.5% from 2% for importing thermal coal. For coking coal imports, the customs tax has been increased to 2.5% from none previously.

Also, a tax has been doubled on all coal consumption to 100 Indian rupees/ tonne to fund the country’s energy goals, Buckley said. In addition, there have been already calls from climate experts and environmentalists pressing India for the use of renewable and nuclear energy sources in order to satisfy the country’s power needs, a news report suggested.

the Asian import coal market alongside China, India and Japan. South Korea’s coal imports are expected to touch 98 million tonnes in 2014, up 2.1% from 2013 levels, BREE said. The country has started imposing taxes on thermal coal imports from July, but, according to BREE, the law may not affect its coal appetite.

Another factor that may slow down Indian imports is domestic electric utilities, the largest consumers of imported coal in India, were not stepping up coal purchases despite global prices hovering at multiyear lows. A report from The Economic Times said Indian utilities were unwilling to pay for costly power generated by plants running on imported coal.

“South Korea will provide a big boost to the [coal] demand-side. From now until 2017 it is adding around 12 GW of new coal-fired capacity, with the bulk of the additions scheduled for 2016. This will boost seaborne [coal] imports by 25-30 [million tonnes], and beyond that there are plans for even more coal capacity additions,” Stefan Ljubisavljevic, an analyst at Macquarie Securities, told SNL Energy.

Indian utilities’ surprise move comes at a time when thermal coal prices at the port of Newcastle in Australia, considered an Asian benchmark, are hovering around $70/tonne. The international met coal benchmark also has been down, with contracts for the second and third quarters settling at $120/tonne, marking the lowest level seen in seven years. Australia, the second-largest coal exporter in the world, is still seeing strong output growth from domestic coal producers. Major new expansions in Australia, expected to come online in 2014-2015, have been crossing out any advantage raised due to production cutbacks and active closures of mines, according to Buckley. Mines expansions from Peabody Energy Corp., BHP Billiton Ltd., Anglo American Plc, Whitehaven Coal Ltd. and Cockatoo Coal Ltd. “will add 30 [million tonnes per year] of new supply, [against] the 4 [million tonnes per year] of closures recently announced by Vale SA and Glencore Plc in Australia,” Buckley added. Take-or-pay contracts were also deterring Australian coal producers to limit output, worsening the supply glut situation. “These long term contractual obligations are often US$15-30/[tonne] spanning 5-10 years and amount to hundreds of millions of dollars of contingent liabilities should a mine close,” Buckley said. Coal exports from the major ports in Australia reached 18.3 million tonnes in May. Australia’s Bureau of Energy and Economics had put the country’s total coal exports target at 364 million tonnes in 2014. South Korea is one of the largest buyers of Australian coal, playing a major role in

Another Asian coal buyer, Japan, saw its coal imports reach 13.5 million tonnes in May, according to data from Trade Statistics of Japan. While Japan traditionally has been a massive importer of Australian coal, another major coal exporter, Indonesia, has been betting on coal demand growth from Japan amid collapsing Chinese demand. Indonesia exported 36.5 million tonnes of coal in May, up from 35.7 million tonnes shipped in April, data from Bank Indonesia showed. Indonesian coal producers have continued to boost their output, with production reaching 213 million tonnes of coal in the first six months of 2014, a news report said. However, the country has introduced rules to prevent exploitation of its coal reserves and retain the fuel for domestic purposes. Among the measures include capping annual coal production, as well requiring companies to register themselves with the government in order to export coal out of the country. Indonesia’s domestic thermal coal consumption is expected to reach 151 million tonnes by 2022, according to a report. Besides Australia and Indonesia, Colombia and South Africa have been a major force in aggravating the global oversupply situation. Colombia increased its 2014 annual coal production forecast to between 94 million and 97 million tonnes, up from the previously estimated 89 million tonnes. This comes even though the coal operations saw several disruptions, including labor strikes. Thermal coal

AUG 2014 - OCT 2014 DIGGING & DRILLING MAGAZINE

exports from the country are set to touch 84 million tonnes in 2014, compared to 77 million tonnes in 2013, which would pile up additional volumes in the global market. Colombia exported 12.5 million tonnes of coal in May, more than double from 5.4 million tonnes it shipped out in the previous month, according to Colombia’s statistics agency DANE. Colombia exports most of its coal to Europe. Seaborne coal imports into Europe are expected to drift down over the next five years as the European Union policy on emissions, starting with the U.K., pushes coal off the grid, Ljubisavljevic said. “Currently, strong renewables generation and falling gas prices are also pressurizing European coal demand,” he added. Coal shipments to Germany, one of the largest coal importers in Europe, totaled 17.9 million tonnes in the January-April period, up 5.5% over the year-ago period, according to data from a German coal importer association. Coal exports from the U.S. to Germany in the period totaled 3.8 million tonnes. Another country that is boosting exports is South Africa, which shipped out 5.6 million tonnes of coal in May, up from 5.5 million tonnes in April. The coal was exported from South Africa’s largest coal terminal, Richards Bay. About 69% of coal shipped in May went to Asia, while Europe accounted 24% of the total coal exports, according to the data. U.S.-based coal producers have been particularly impacted by the oversupply situation and have curbed output in response to the low pricing environment. According to an analyst at Bank of America Merrill Lynch, U.S. coal exporters may not return to the seaborne market at current prices given their cash costs at the mine.

Canada shipped out 3.5 million tonnes of coal in May, up from 2.7 million tonnes in April, according to data from a government statistics agency. South Korea was the largest receiver of Canadian coal, importing roughly 1 million tonnes of coal in May, while Japan imported 740,557 tonnes of coal in the same month, the data showed. Russia’s coal exports in May reached 13.6 million tonnes, up 13.5% from the year-ago levels, according to Port News. In the five months through May, Russia’s coal exports totaled 62 million tonnes, up 15.5% from the prior-year period, the report said. Russia’s largest terminal of Vostochny, in the far east of the country, saw a 20% year-over-year surge in coal shipments in May, to nearly 2 million tonnes, according to data from Russia’s Association of Commercial Sea Ports. According to BREE’s earlier estimates, Russia may export a total of 106 million tonnes of coal in 2014, and is well on its way to meeting that goal. An expansion initiative for a planned coal terminal in Russia by debt-laden Mechel OAO was shelved by the company. The expansion, a report claims, would have created additional difficulties for Mechel, which has outstanding debts of over US$8 billion. Author: SNL Energy

30 DIGGING & DRILLING MAGAZINE AUG 2014 - OCT 2014

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FEATURE ARTICLE Âť

New South Wales natural gas development

he recent draft decision on regulated gas prices by the Independent Pricing and Regulatory Tribunal (IPART) highlights the urgent need for increased natural gas exploration and production in NSW.

Australia’s second biggest onshore natural gas field is within NSW borders, yet 95 per cent of the state’s natural gas supply is imported from other states. This is despite indigenous reserves that would fulfil the state’s natural gas needs for the next 20 years and potential resources that could supply NSW with a cleaner burning energy source well into the next century. APPEA has long argued that downward pressure cannot be applied to rising gas prices if restrictions on developing natural gas from coal seams in NSW are allowed to continue. The successful natural gas development story unfolding in most parts of Australia, but not NSW, is underpinned by sufficient gas reserves to meet both domestic and export markets The ability to access international markets has stimulated the development of a whole new export industry in eastern Australia. Coupled with LNG developments in Western Australia and the Northern Territory, this has powered recent Australian economic growth and, if not impeded, will continue to do so for decades to come. Domestic and export demand is driving growth in the east coast gas market from 700PJ to 2800PJ by 2016-17. Indeed, there are now more than 1.1 million gas users in NSW alone. Just last year, the IPART identified the development of NSW natural gas as one of the most effective ways to put downward pressure on prices. Developing NSW gas reserves would also increase employment and economic activity in NSW, as has been the experience in Queensland.

AUG 2014 - OCT 2014 DIGGING & DRILLING MAGAZINE

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