AUSTRALIA • CHINA • INDIA • JAPAN • NEW ZEALAND • SOUTH EAST ASIA
DIGGING&DRILLING MAY-JULY, 2013 • ISSUE 4
AUSTRALASIA
AUSTRALASIA’S QUARTERLY OIL, GAS & MINING MAGAZINE
FORTESCUE OPENS FIRETAIL MINE Fortescue Metals Group has opened its Firetail iron ore mine in Western Australia’s Pilbara region as part of a $3.2 Billion development
PLUTO BEGINS LNG PRODUCTION Woodside is producing LNG from its Pluto LNG project near Karratha in WA, and will soon load its first cargo aboard the Woodside Donaldson LNG Tanker
2窶ク DIGGING DRILLING JULY SA F R A N C I&S C O P A RMAGAZINE IS S H A| N G H2012 AI
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Editor’s Letter This is an interesting time for the energy and resource sector throughout the Asia Pacific region and for Australia in particular, there is a lot happening with some very good news. Australian companies are mining zircon in Malaysia and gold in Cambodia while Asian companies are investing in Australia’s iron ore lodes to feed their growing steel demand. Shell are developing their gas fields off the northwest coast of Western Australia, Rio Tinto anticipate creating over 2,000 jobs in the Western Australia’s Pilbara region with expansion of their iron ore operations and Fortescue Metals Group have opened their Firetail iron ore mine in the Pilbara, as part of a wider $3.2 billion development. The energy and resource sector is vitally important to Australia’s growth and for our future prosperity. Apart from the fact that Australia is one of only eight countries with the goldplated AAA rating with a stable outlook from all three major global ratings agencies, our interest rates are at a record low and may drop lower and stay low for a prolonged period and Western Australia’s surplus is expected to be up by $100million this year and grow to a healthy $390million next financial year. It was also reassuring to recently hear the Australian Shadow Treasurer, The Hon. Joe Hockey MP say he does not believe Australia is heading for a recession.
LEN FRETWELL Managing Editor and Co-Founder Digging & Drilling Australasia
Growth in the Pilbara region is rapidly expanding with major players mining crude oil, salt, natural gas and iron ore. When the energy and resources sector grows in any country or region, so does the supporting business and property in these regions. For this reason, we have introduced the first of a series of property investment features and the Pilbara region in Western Australia is highlighted in this edition. There is an amazing amount of infrastructure and property development investment taking place in the Pilbara and this is good for Western Australia and our nation. It is interesting to note that the Pilbara region in Western Australia has a greater GDP than New Zealand. I had the pleasure to meet and chat with Rosco McGlashan OAM, ‘The fastest man in Australia’ and Driver/Project Leader of the Aussie Invader R5, world land speed record challenge Jet Car. Our conversation prompted me to introduce a Special Interest/Entertainment feature section in D&D Australasia magazine. We are always looking for interesting energy and resource sector news and innovation content and I invite you to contact me with any news that may be of interest to our readers. I look forward to your feedback. Best Regards
Len Fretwell Managing Editor and Co-Founder
MAY 2013 DIGGING & DRILLING MAGAZINE 3
WHAT’S IN THIS 06» ISSUE
IN THIS ISSUE 03 EDITOR’S LETTER 06 MOMENTS IN PICS: OFFSHORE TECHNOLOGY CONFERENCE 08 NEWS IN BRIEF: MINING NEWS HIGHLIGHTS FOR THE MONTH 10 NEWS IN BRIEF: OIL & GAS NEWS HIGHLIGHTS FOR THE MONTH 12 FORTESCUE OPENS FIRETAIL MINE 18 PROJECT POSTCARD: COAL MINE IN THE BOWEN BASIN 20 PLUTO BEGINS LNG PRODUCTION 24 CLEAN TECHNOLOGY INVESTORS SHIFT FOCUS TO DRILLING 28 WOODSIDE TO EXPLORE FLOATING LNG AT BROWSE 30 AUSSIE INVADER 5R ROSCO MCGLASHAN WORLD LAND SPEED CHALLENGE DIGGING & DRILLING LEVEL 28 AMP TOWER AUSTRALASIA 140 ST GEORGES TERRACE PERTH WA 6000 P. O. BOX 445, SOUTH PERTH 6951 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 LEN FRETWELL WRITERS STEPHEN DAWSON, ANDREW BURRELL GUEST WRITERS KINSLEY HAYFORD GRAPHICS ELVIN WONG SUBSCRIPTION WWW.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 COVER COAL MINE IN THE BOWEN BASIN, QUEENSLAND, AUSTRALIA 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 MAY 2013
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Moments
MOMENTS IN PICS »
EVENT: OFFSHORE TECHNOLOGY
6 DIGGING & DRILLING MAGAZINE MAY 2013
CONFERENCE, OTC 2013 HOUSTON IN PICS
MAY 2013 DIGGING & DRILLING MAGAZINE 7
NEWS IN BRIEF »
MINING NEWS HIGHLIGHTS FOR THE MONTH
CHINA FUELS UP FOR FUTURE WITH RECORD OIL AND GAS SPEND
JP MORGAN, BARCLAYS OVERTAKE GOLDMAN, MORGAN IN OTC ENERGY TRADE
The Federal Government has welcomed a binding $2 billion investment by a Chinese company in a massive Queensland liquefied natural gas (LNG) project. Under the agreement, the China National Offshore Oil Corporation (CNOOC) will acquire a larger interest in the first production train of the BG Group project at Curtis island in Gladstone in central Queensland.
NEW YORK, April 22 (Reuters) - JP Morgan and Barclays snatched the top spots among energy derivative dealers last year, opening a commanding lead over Goldman Sachs and Morgan Stanley for the first time, according to a new survey.
The Federal Government says LNG exports due to start next year will create thousands of jobs across Queensland. CNOOC will increase its equity ownership of the Queensland Curtis Island LNG project from 10 to 50 per cent.
Wall Street giant JP Morgan and UK-based Barclays each dealt with an estimated 39 percent of all companies that used over-the-counter derivatives to hedge energy prices, according to Greenwich Associates’ latest annual survey, which included responses from 276 company treasury professionals across the globe taken late last year.
SANTOS LNG PORTFOLIO ON TRACK
PAPUA NEW GUINEA - INDOCHINE INTERSECTS HIGH GRADE GOLD
Santos Ltd says its liquefied natural gas (LNG) portfolio is on track, as the group looks to unlock more of its resources.
Further high-grade gold mineralization has been intersected at Indochine Mining’s Mt Kare Gold-Silver Project in the Central Highlands. The first four drill holes in a 3000 metre diamond drilling program at the Western Roscoelite Bonanza Zone (WRZ) have returned high-grade assays which the company says continue to demonstrate the significant potential of the zones.
Santos chief executive David Knox told shareholders at the gorup’s annual general meeting the LNG portfolio was critical to the business, but also flagged a new willingness to innovate. “The result is a very different Santos to the one you saw four years ago, but it will deliver significant value to shareholders,” Mr Knox said. “Our strategy to unlock the company’s resources and to do so safely, sustainably and profitably – will not change.
Highlights include 14 metres @ 15.3 grams/tonne gold and 9 grams/tonne silver from 36 metres down hole, including 7 metres @ 23 grams/tonne gold and 14 grams/tonne silver. The highest grade intercepted was 1 metre at 58 grams/ tonne gold and 19 grams/tonne silver.
MINER CELEBRATES NICKEL MINE PRODUCTION
OBAMA TO SUPPORT NEW PLANTS TO EXPORT MORE LNG
Canadian miner First Quantum Minerals has posted its best production quarter results at the Ravensthorpe nickel mine since taking over the deposit in 2010.
The Obama administration has signalled support for more plants to export liquefied natural gas, as the US embraces its surging energy production as a key new element of its national security policy. Barack Obama said at the weekend the US was likely to be a net gas exporter by 2020, the strongest sign yet that the president is swinging his support behind higher energy sales overseas.
First Quantum bought the mine after BHP Billiton shut down the mine in 2010, resulting in 1,800 job losses. The grade of nickel was increased from 1.5 per cent nickel to 1.7 per cent, after new areas of higher grade ore were exposed in December. First Quantum says it expects to release updated capital costs later this year.
The Department of Energy is studying applications for new liquefied natural gas terminals, with approval of one in Texas likely within months. It would be only the second such approval granted for sales to countries without trade agreements with the US, such as Japan, the world’s largest importer of LNG.
OFFICE & WORKSHOP 49 Candlewood Boulevard, Joondalup 6027 Tel: (08) 9300 3135 Fax: (08) 9300 3236 Email: mark@mechbro.com.au
MechBro Australia has been set up to respond to the demand for Heavy Duty Diesel Mechanics and Fitters involved in the repair, maintenance and servicing of earthmoving, mining and transport equipment as well as light vehicles. Our business is based in Perth and also services regional areas, including the Pilbara. Our people are highly skilled and motivated to provide the highest level of service to companies throughout Western Australia. With a fleet of mine specified and fully equipped service utilities, we are unique in that we are not simply a labour hire company. Because with MechBro you don’t just get a capable individual, you get the strength of our entire team! MechBro’s team of mechanics and fitters are committed to the economic success of our customers. And so, before joining us, must demonstrate they possess the passion, skills and attitude required to satisfy our customers. Accordingly, we believe this set of values will help to ensure the mutual economic success of all parties.
OUR PEOPLE Whether it be a civil or mining project, every person on our team knows that to keep plant operating means productivity. We work hard and use our heads! As a collective, our team of highly skilled mechanics diagnose, repair and maintain a wide variety of plant and equipment, dozers, excavators, graders, scrapers, profilers, dump trucks, bobcats, heavy haulage road transport, etc. Our team has the experience, qualifications and equipment to work on all aspects of these machines including engine rebuilds, hydraulics, track and frame, electrics and air conditioning and on all brands, including, but not limited to; CAT, Hitachi, Komatsu, Terex, O&K, Volvo, Bell, Vermeer, Cummins. As a team of mechanics, fitters, servicemen and fabricators we keep machines going, as well as being involved in site mobilization where we establish containerized workshops complete with domes and commission machinery ready for operation. Upon project completion we demobilize workshops and plant and are often the last to leave site.
Throughout a project we are able to manage all parts ordering and delivery, including urgent hot shots. Our tilt tray can pick up and deliver parts and 20’ containers up to 8.5T.
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WHERE WE’VE WORKED
MACHINERY AND VEHICLE HIRE
MechBro has the capability and authorisation to repair your air conditioning units.
During the last 18 months we’ve worked at many major mine sites owned by BHPB, RIO, FMG, Sandfire Resources and more recently Onslow Quarry. Our people understand the rigorous requirements of working on these sites and act accordingly.
Mechbro can provide a variety of machinery and vehicles to suit your needs. MechBro currently have 6 mine specified service vehicles supported by a tilt tray truck capable of loading and unloading 20’ sea containers and moving items of plant up to 8 Tonne.
SAFETY FIRST
Having established MechBro Pty Ltd on May 9th 2011, with 2 mechanics we have experienced rapid growth and now have a great team of mechanics and service men. In 2012 we also acquired a light vehicle workshop in Joondalup. Within the next 12 months we will be establishing a heavy duty workshop where we can service, repair and store larger equipment.
Our aim is to conduct our business using systems and practices which will ensure that our workforce and the community are protected from injury and harm. Safety and productivity go hand in hand with our people working as problem solvers to get the job done.
WORKSHOP & ONSITE SERVICE We have the equipment and the facilities to service your machinery and vehicles. We will also invest in our business and tailor to your requirements.
For more info, contact Mark Nielsen Mobile: 0438005655
www.mechbro.com.au
NEWS IN BRIEF »
OIL & GAS NEWS HIGHLIGHTS FOR THE MONTH
CANADIAN PRODUCER SECURES AUSTRALIAN EXPLORER TAKEOVER APPROVAL The Federal Court of Australia has approved Canadian gold and silver producer Primero Mining’s acquisition of junior explorer Cerro Resources. Primero’s US$118.7 million bid for the precious metals explorer will see it acquire Cerro’s Mexican based Cerro Del Gallo project. The Cerro Del Gallo gold and silver deposit is located in the Guanajuato province, it has an expected mine life of 14 years, low strip ratio, and estimated production of 94,500 ounces of gold each year at $516 per ounce. Under the terms of the acquisition, Primero will acquire all issued and outstanding ordinary shares of Cerro Resources on the basis of 0.023 of a Primero share for each Cerro share, Mining Technology reported. All Cerro’s non-Cerro Del Gallo assets will be transferred to Cerro’s wholly owned
subsidiary Santana Minerals. Primero first struck a definitive agreement to acquire the company’s asset in December last year. The acquisition is expected to be finalised later this month. Cerro Del Gallo’s feasibility study was released last year and at the time the company said it was continuing with pre construction work, permitting, and gathering funding to meet capital expenditure. Australian Mining has previously reported that in 2011 it was estimated that there are about 300 to 400 Canadian mining companies were operating in South America. At the time Dan Sullivan, trade commissioner at the Australian embassy in Lima Peru told Australian Mining that Australian companies were missing out
on valuable opportunities. “The Canadians are all over South America, which means that Australian mining companies are missing out on the opportunities here, and this worries me,” Sullivan said. Cerro Resources also has two other potential gold and silver exploration projects namely the Namiquipa silver project in the country’s north, and the Espiritu Santo greenfield package in neighbouring Jalisco state to the west of Guanajuato. “We’re already seeing veins exposed at the surface carrying gold and that’s opportunity,” Cerro Resources managing director Tony McDonald previously told Australian Mining about the Espiritu Santo project.
LOOKING BEYOND AUSTRALIA AUSTRALIA is the third most popular investment destination for Chinese companies and funds are being directed not just to mining and resources. Chinese companies with operations in Australia are investing more in highend manufacturing and non-mining industries than mining, a HSBC survey found. Twelve per cent of the 250 respondents said they had set up an operation in Australia, behind the US with 22 per cent and Singapore at 18 per cent, the China Outbound survey said. The figures excluded Chinese investment in neighbouring Hong Kong, Macau and Taiwan. HSBC Australia head of commercial banking James Hogan said Australia’s business-friendly conditions made it an attractive investment destination for China. “While 80 per cent of China’s investment
into Australia to date has been in mining, its increasing demand for highend manufacturing, renewable energy and agriculture will open up new opportunities for Australia,” Mr Hogan said Companies that hadn’t previously done business in Australia were focused on non-mining sectors. While Chinese investment in Australia accounted for less than three per cent of the nation’s total foreign investment in 2011, it has ranked in the top-three sources for proposed investments in the past three years. “We are clearly front of mind for Chinese companies for exports and imports,” Mr Hogan said. Australia is now China’s seventh-largest trading partner. The survey showed 52 per cent of Chinese companies in Australia were involved in manufacturing and 28 per cent were in
10 DIGGING & DRILLING MAGAZINE MAY 2013
non-mining import/export industries, while just 20 per cent were involved in mining. Mr Hogan said China’s total direct outbound investments were expected to exceed $US150 billion ($A145.57 billion) per year, growing at around 17 per cent per annum. “This diversification of Chinese investment beyond mining, particularly by middle market and corporate Chinese businesses, aligns with the Australian economy’s rebalancing towards non-mining sectors,” Mr Hogan said. He said Australia’s key advantages were its proximity to China, and its legal infrastructure and good governance. The companies already investing and doing business overseas found it easier to do business in Australia as the new Chinese leadership begins focusing on outward investment.
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FEATURE ARTICLE»
FORTESCUE OPENS FIRETAIL MINE
Fortescue Metals Group has opened its Firetail iron ore mine in Western Australia’s Pilbara region, part of a wider $3.2 billion development. The company has described the opening of the mine at Solomon, 60km north of Tom Price, as one of the most important milestones in its 10-year history.
Photo - Iron Ore Conveyor
A
ustralian iron ore innovator, Fortescue Metals Group Ltd (FMG) has taken another step toward becoming Asia’s leading supplier by announcing the official opening of the Firetail iron ore mine at Solomon Monday.
One of the most significant milestones in its ten-year history, FMG’s 60 metric ton per annum (mtpa) Solomon mine is a major component of the company’s ambitious expansion to 155 mtpa by the
end of this calendar year. Australian Mines and Petroleum Minister Bill Marmion joined Fortescue chairman Andrew Forrest and chief executive Nev Power at Solomon, 60 km north of Tom Price, to formally open the first stage of the $3.2-billion development.
represents a valuable source of new production from long- life, low-cost mining operations that allow us to blend with Chichester ores to create an enhanced product for our customers - the new Fortescue Blend,” said Power.
The company began commissioning the Firetail ore processing facility last month Firetail will produce 20 mtpa and production is expected to of iron ore while the second ramp up quickly, increasing stage of the development, Fortescue’s capacity to 115 the Kings mine, will produce mtpa. Mining at Firetail has another 40 mtpa. “This been under way since late
FEATURE ARTICLE»
last year, with ancillary inpit crushing used to produce ore and commissioning feed for the processing and train loadout facilities. Among many milestones over the last decade, Fortescue has placed quiet emphasis on the potential of the Firetail mine since the first train carrying ore on the new Fortescue Hamersley Line rolled out in December 2012. Fortescue has also shown deep faith in the China story despite a volatile spot price and a wavering confidence in Australian commentators over the last 12 months. Andrew Forrest told Xinhua that China had made the right decision to ensure confidence
and growth. “In everything I do, I look first at the people what’s motivating the people; what kind of people they are. I’ve been fortunate enough to meet with your China leadership and I have met with people who I believe in: empathetic, strong, intelligent, though humble, very focused on their people and the interests of their people - my personal view is that China is in good hands,” he said. Fortescue’s net realized iron ore price for the last quarter was A$131 a ton, off an index price of 148 a ton. Power said that the price would remain strong into the near- term. “It’s probably going to trade in that range of $120 to $130 a ton
14 DIGGING & DRILLING MAGAZINE JULY 2012 MAY 2013
for the foreseeable future, but we will have some fluctuations around that. And in the short term, I see this sort of price level at $139, $140 a tonne continuing because there are very low iron ore stocks.” Power, speaking earlier this week, also showed FMG’s confidence in the market. “I’ve got to say that China looks very strong going forward and we’ve got renewed confidence in the continued industrialization and urbanization growth in China, and therefore, steel demand and iron ore demand.”
Wi-Fi First in Bowen Basin In what is believed to be a world first for the resources sector, Greyhound Australia has installed Wi-Fi on 13 of its mining coaches. The introduction of wireless internet to Greyhound’s Bowen Basin coaches promises to help resources companies get miners out of cars and onto buses. Greyhound Commercial Manager Ben Tune said the company will continue to roll out the high-speed Telstra Next G service on coaches in the Bowen Basin. “There are inherent dangers involved in commuting to and from work in the Bowen Basin and miners often travel long distances at night and on remote roads,” Mr Tune said. “Offering Wi-Fi on a coach is an added incentive for workers to rest and unwind in comfort and safety, and it means fewer cars on the roads.
“Offering Wi-Fi on a coach is an added incentive for workers to rest and unwind in comfort and safety, and it means fewer cars on the roads.” “It also offers FIFO miners a chance to Skype or email their families at the end of the day. “As far as we know, this is a world leading service for the resources sector”. General Manager Resources Mike Goodall said Greyhound was aiming to deliver first-class travel for all of its passengers and benefits for mining companies.
“We want to offer ways to turn bus travel into productive time by making use of our Wi-Fi technology to conduct employee site inductions or online training on the coach. We expect this will result in cost savings for mine companies. Visit www. greyhoundcommercial.com. au for more information or call 1300 304 199.
“We’re taking it up to the airlines in terms of passenger experience,” Mr Goodall said.
www.greyhoundcommercial.com.au
GOODBYE FIFO – KARRATHA IS BECOMING A CITY TO CALL HOME.
K
arratha in WA’s North West is known as a strong mining community that has a fluctuating population due to the FIFO work culture. The town relies heavily on servicing the transient mining population, but lacks economic diversity and the key infrastructure needed to sustain long term growth. But this is in the midst of change.
apartment living, which offers a greater degree of climate control in the tropical environment” Mr Wallace commented.
a mining town to world class regional city.”
More investment in Karratha’s future is continuing with $10 Karratha’s City of the North Plan million of Royalties for Regions is a three-phase strategy that will funding allocated for upgrades to guide the development of future the Nickol Bay Hospital. Karratha’s housing, open spaces, commercial CBD is being redeveloped, with activities, tourist accommodation, $65 million going into developing entertainment and retail areas entertainment and retail precincts, as well as service infrastructure, particularly along Sharpe Avenue. The Shire of Roebourne and transport, education and This main road will become a the WA Government are community facilities. place where people want to visit, implementing exciting new plans shop and live. Also on Sharpe to transform Karratha from a One of the most significant Avenue is Pelago Apartments, small mining town into a world- community facilities to be the Pilbara’s first modern highclass City of the North, with a delivered to date is The Karratha rise residential and commercial population of more than 50,000. Leisureplex, which is nearing development. Pelago is just This Plan forms part of Pilbara completion and is on track to a short walk from Karratha’s Cities which was established open to the public mid-2013. evolving central business district, in April 2010 to vastly improve Shire of Roebourne CEO Chris offering residents an inner-city, infrastructure and amenity to Adams said that he is excited luxurious lifestyle right in the eventually grow the permanent about the project and believes the heart of Karratha. Leisureplex will be the Pilbara’s population. premier sport and recreation With so much focus and According to Regional Technical precinct. investment in the town’s future, Director for Economics, Mark mining and resource companies Wallace from RPS Australia, the “The facilities currently under will soon be looking to house population growth in Karratha construction include an aquatic their employees in Karratha as region is certain to continue. precinct, indoor and outdoor it evolves into a vibrant, diverse “Karratha will need between courts, fitness centre, playing City of the North, leaving FIFO 40,000-50,000 workers by 2035 fields and clubrooms as well as to be an expensive trend of the in order to sustain the resources a café, commercial office space, past. For more information on sector and its anticipated growth and function and meeting rooms.” Karratha and Pilbara Cities, go in the medium term. As Karratha Mr Adams said. “This first-class to www.pdc.wa.gov.au grows, we’ll see this reflected in facility will reflect that of a major the demand by corporates for city and is a huge step towards accommodation and in particular Karratha’s transformation from Below: A recent photograph of the Karratha Leisure, due to open mid-2013.
DUE FOR COMPLETION DEC 2013
Karratha’s only high-rise luxury development
LONG TERM LEASES ARE AVAILABLE IN WA’S NORTH WEST. Is your organisation starting to question whether it should really be in the space of owning, managing and maintaining property? For many companies, it may not be the best use of valuable capital and resources, taking the focus away from core business activities. Now there is no need to burden your business with ongoing property concerns. Remove the majority of the property maintenance issues by taking out long term lease arrangements and eliminate the high capital commitment of buying or building. Finbar is WA’s largest and most trusted apartment developer and have recently completed Pelago West Apartments in Karratha WA. Furthermore, Stage 2 Pelago East is well under construction and plans for multi-storey residential development in Port Hedland are being fast tracked. Accommodate your valued employees at Pelago Apartments in Karratha •
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r My AFRICA: Kenya POSTCARD PROJECT»
COAL MINE IN THE BOWEN BASIN, QUEENSLAND, AUSTRALIA OPERATOR: IMAGE COURTESY:
18 DIGGING & DRILLING MAGAZINE JULY 2012
BMA AUSTRALIA BHP BILLITON
JULY 2012 DIGGING & DRILLING MAGAZINE 19
FEATURE ARTICLE»
Pluto LNG project on the Burrup Peninsula in 2012. Photo courtesy - Woodside
PLUTO BEGINS LNG PRODUCTION
Woodside is producing LNG from its Pluto LNG project near Karratha in Western Australia, and will soon be loading its first cargo aboard the Woodside Donaldson LNG tanker. Pluto is expected to contribute 17 to 21 MMboe to Woodside’s 2012 production. In steady-state production, Pluto is forecast to add a long-term average of about 37 MMboe to Woodside’s annual volumes.
W
oodside is producing Pluto is expected to contribute LNG from its Pluto 17 to 21 million barrels of oil LNG Project near equivalent to Woodside’s Karratha in Western Australia 2012 production, in line with and will soon be loading previous guidance. In steadyits first cargo aboard the state production, Pluto is Woodside Donaldson LNG forecast to add a long-term tanker. average of about 37 million barrels of oil equivalent to Woodside CEO Peter Coleman Woodside’s annual volumes. said the first production of LNG from Pluto was a defining Mr Coleman paid tribute moment in Woodside’s history to the thousands of people and marked the beginning of in Australia and overseas a new era for the company. who had played a part in Pluto’s success: “Today is the “Pluto cements Woodside’s culmination of millions of position as a major supplier of hours of work by our own LNG to the Asia-Pacific region people and the hundreds of and builds on our position as businesses that worked on a global leader in upstream the construction phase of this oil and gas,” Mr Coleman said. project”. “Execution of the Pluto LNG “We appreciate the support Project, from discovery of the development has received the gas field in 2005 to first from governments, the LNG in 2012, demonstrates communities in the Pilbara Woodside’s significant region in which we operate, offshore and onshore and our customers and fellow capabilities.” project participants Tokyo Gas and Kansai Electric,” Mr Approved for development Coleman said. in July 2007, the foundation project processes gas initially Pluto generated more than from the Pluto gas field, 15,000 Australian jobs during located in the Carnarvon Basin the life of construction and about 190 km north-west of delivered more than A$7.6 Karratha. billion in local content. The initial phase of the project comprises an offshore platform in 85m of water, connected to five subsea wells on the Pluto gas field. Gas is piped through a 180km trunkline to the onshore facilities, which include an LNG processing train with a forecast production capacity of 4.3 million tonnes a year.
The Pluto LNG Project joint venture participants are Woodside Burrup Pty Ltd (90% and operator), Tokyo Gas Pluto Pty Ltd (5%) and Kansai Electric Power Australia Pty Ltd (5%).
Courtesy: from Woodside Website
MAY 2013 DIGGING & DRILLING MAGAZINE 21
FEATURE ARTICLE»
RENAISSANCE MINERALS CAMBODIAN GOLD PROJECT
Perth based, ASX listed gold company, Renaissance Minerals acquired its flagship Cambodian Gold Project a little over 12 months ago but has already made great progress with the project. Renaissance was able to hit the ground running in May of last year, as the acquisition came with an existing in-country team put together over many years by the previous owner, OZ Minerals. “These guys are really experienced in Southeast Asia and really gave us a good head start in work,” Renaissance Managing Director, Justin Tremain said. “We didn’t have to build a team, which can take some time. We inherited a team that was familiar with the project technically and have strong relationships with contractors and, importantly, with the government.
At the time Renaissance acquired the project, the only exploration target that had been drilled was the 100% owned Okvau Deposit which had a JORC resource of just over 700,000oz of gold. Renaissance’s first drilling program was focused on delineated additional mineralisation at the Okvau Deposit and the drilling return exceptional results. In March of this year, the company unveiled an impressive resource
upgrade for the Okvau Deposit of 15.6Mt at 2.4g/t for 1.2 million ounces of gold. The most important thing about the 1.2 million ounce resource is the grade of 2.4g/t, a high grade for a potential open pit mine. The deposit is at surface and it averages and exceptionally high 4000 ounces of gold per vertical metre.
The project has all the makings of the country’s first producing mine, and Renaissance has the advantage of being the first mover in an emerging country with an attractive investment regime and a stable democratic government that is pro-mining and pro-foreign investment However, it is the potential to make new discoveries in close proximity to the Okvau Deposit that got Renaissance excited about the project originally. “What really excited us with this
from the start was not only the ability to grow the existing Okvau deposit but the other targets sitting within a 15km radius. We’ve got numerous walk-up drill targets based on geophysics and most importantly geochemistry. We have defined some very impressive soil anomalies that still remain to be tested with drilling. Renaissance sees Cambodia as being the next frontier for mineral exploration. The geology and geochemistry does indicate the potential for large scale gold deposits best classed as
‘Intrusive Related Gold Systems’. Renaissance believes there is the potential to discover and prove up a multi-million ounce gold camp and in the process be the first mover in an emerging new world class gold province. This early mover status brings significant advantages and Renaissance has found the Government of Cambodia to be very supportive. For further information go to: www.renaissanceminerals.com.au
RENAISSANCE MINERALS LIMITED NON-EXECUTIVE CHAIRMAN AND MANAGING DIRECTOR PROFILES:
Mr Rick Hart Non-Executive Chairman Mr Hart is a well-known Western Australian businessman having founded the Rick Hart Group as a single retail outlet in 1979. Rick helped grow the business into a significant retail chain of outlets until it was acquired by the ASX listed Clive Peters Ltd in 2005. Rick was an Executive Director of Clive Peters Ltd from 2005 until his retirement in 2009. He is the former Chairman of the Fremantle Football Club, a former Vice Chairman of the Western Australian Turf Club, a member of the Australian Institute of Company Directors and an Honorary Convention Ambassador for the Perth Convention Bureau.
Mr Justin Tremain Managing Director B. Com Mr Tremain graduated from the University of Western Australia with a Bachelor of Commerce degree. Mr Tremain has over 10 years’ investment banking experience in the natural resources sector. He has held positions with Investec, NM Rothschild & Sons and Macquarie Bank and has extensive experience in the funding of natural resource projects in the junior to mid-tier resource sector. Most recently, Mr Tremain was a Director of Perth based mining advisory company, Optimum Capital Pty Ltd. Mr Tremain has undertaken numerous advisory assignments for resource companies, including acquisition and disposal assignments and project advisory roles.
MAY 2013 DIGGING & DRILLING MAGAZINE 23
CLEAN TECHNOLOGY INVESTORS SHIFT FOCUS TO DRILLING By Jonathan Fahey, AP Energy Writer NEW YORK (AP) -- A decade ago, large investors in socalled clean technology had a straightforward goal: finance companies that would help eliminate the world’s dependence on oil, natural gas and coal.
“Oil and gas will be with us for a long time. If we can clean that up we will do the world a great service,” says Wal van Lierop, CEO of Chrysalix, a Vancouver, Canada-based venture capital firm founded in 2001.
gas — and all the money that can be made helping drillers — has distracted clean technology backers from what once seemed to be their main goal: to make oil and gas a thing of the past.
Chrysalix still backs companies that fit the more traditional definition of clean energy — including Bridgelux, which makes more efficient light bulbs, and Agilyx, which turns plastic waste into fuel. But the firm, whose website boasts that it is “100 percent focused on clean energy” is a backer of MineSense, which helps miners operate more efficiently by assessing the quality of ore as it is being scooped. It also supports GlassPoint, which Today, clean technology helps drillers extract more oil investment funds are not by using steam generated with trying to replace the fossil fuel solar power. industry, they’re trying to help it by financing companies that Environmentalists have mixed can make mining and drilling feelings. They welcome less dirty. The people running technologies that reduce the these funds acknowledge the environmental footprint of apparent hypocrisy, but defend oil and gas development. But a more liberal definition of they worry the newfound clean technology. abundance of oil and natural
Mark Brownstein, who runs the energy and climate program at the Environmental Defense Fund, says “some don’t have the stomach for that and are simply going with the flow.”
But as profits from wind, solar, biofuels and other alternatives consistently fell short of expectations — and as the fossil fuel business boomed — things got complicated. Venture capitalists and other investment funds started stretching the definition of clean technology almost beyond recognition in an effort to make money while clinging to their environmental ideals.
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The shift has made even those who are helping to drive it squirm. “We’ve wrestled with it,” says Alan Salzman, managing partner of VantagePoint Capital Partners, one of Silicon Valley’s most prominent venture firms focused on clean technology. “If someone comes up with a more benign way of (exploiting fossil fuels), is that a good thing or a bad thing?” If fossil fuels become more palatable to society, Salzman says, we may end up burning more of them.
Ten years ago it seemed as if the world was running out of oil, and what was left of it was in the Middle East. Oil and natural gas prices spiked to alarming highs. And scientists showed that fossil fuels were causing troubling changes to the climate. Pushing for an end of the fossil age made sense for economic, political and environmental reasons. This had Silicon Valley venture capitalists drooling. “Cleantech” as they called it, would be the next big thing. And it was going to be very, very big. These firms saw a chance to profit from what many thought would be the biggest economic shift in history — from fossil energy to renewable energy. But the new energy technologies proved much harder to master than predicted. And oil and gas drillers, using technology advances of their own, learned how to unlock enormous new reserves of fossil fuels. Dozens of solar, biofuels and battery companies failed, unable to show enough promise to go public or attract the attention of bigger companies. “Investors are still waiting for their cleantech investments to produce returns,” says Dallas Kachan, who runs the San Francisco clean technology consulting firm Kachan & Co. “Nobody’s seen the stellar home runs they were hoping for 5 years ago.”
Even when clean energy companies have gone public, they haven’t fared well. An index of clean energy companies is down 69 percent since it began in 2005. A similar index of traditional energy companies is up 75 percent over the same period.
make natural gas production less harmful to the climate with its leak-detection system. — Neos Geosciences is backed by a “greentech” fund at Kleiner Perkins Caufield and Byers, where Al Gore is a partner. The company helps oil and gas companies find the most promising places to drill for oil and gas — and avoid drilling in ecologically sensitive locations — using sensors mounted on helicopters.
The value of global clean technology deals fell 29 percent last year to $7 billion, from a record $9.9 billion in 2011, according to the Cleantech Group. But the portion of that sum focused on conventional In 2007, a Sunnyvale, Calif.fossil fuels nearly tripled, to a based company called Liquid Robotics, Inc. began developing record $556 million. a seagoing drone that required A few clean technology no fuel. Its original purpose investors have stayed away was to transmit live songs of from oil and gas despite the humpback whales over the temptation. Khosla Ventures, Internet. for example, has been a major backer of advanced VantagePoint’s Alan Salzman biofuels even as most of these thought Liquid Robotics’ companies have failed to live technology was great, and he up to their promise. The firm had a good idea who might does not invest in companies agree. He set up a meeting with Schlumberger, the giant oil and that support fossil fuels. gas drilling services company, But the drilling boom has led and the two companies have to countless investments in this since formed a joint venture. gray area between clean and Liquid Robotics’ drones will dirty. likely be used to help detect — Axine, which is backed by leaks from drilling operations Chrysalix and Royal Dutch Shell, and make sure the water is free wants to make the drilling of whales when oil companies process known as fracking search for oil. But the robots less dangerous by treating will also help locate new wastewater produced during deposits of oil and gas. drilling without chemicals. “We are not philosophical — Picarro, one of the cleantech purists,” Salzman says. “We’re investments of Greylock investors.” Partners, is attempting to
26 DIGGING & DRILLING MAGAZINE MAY 2013
OFFSHORE CONVENTION INDONESIA 2013 4-6 SEPTEMBER, JAKARTA
OC Indonesia 2013 is the extension of OC Asia Event, which have been held in Malaysia, Australia, China, Vietnam and Myanmar in the last five years and have get together a total participants of 1,754 from 523 companies of 41 countries. OC Asia Event has itself as the MUSTATTEND event for companies looking at exploring new business opportunities in emerging offshore E&P markets in the Asia Pacific region. Contact: marketing@neoventurecorp.com www.neoventurecorp.com/oc/indonesia 278x215.pdf 1 2013/4/19 10:34:12
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FEATURE ARTICLE »
WOODSIDE TO EXPLORE FLOATING LNG AT BROWSE WOODSIDE has struck a deal with Shell to use floating technology to process gas from its Browse project.
FEATURE ARTICLE»
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t comes just after the WA company scrapped its $45 billion project to process gas onshore at James Price Point - due to escalating costs - deciding to explore other options, including floating technology.
strengthen our development and operational capabilities through the potential use of Shell’s ‘Design one build many’ FLNG technology,” he said today. “It also provides the opportunity for Western Australia to become an industrial, operational Woodside chief Peter Coleman and technology centre for previously said the company excellence for floating LNG had no preference for worldwide.” development, while Shell had stated it would prefer FLNG. Woodside will now meet with Woodside forthwith advised its other joint venture partners. shareholders it had agreed on It needs agreement from all “key principles” with Shell that parties to proceed with FLNG. would apply if the floating Woodside will now meet with option was selected. It said its other joint venture partners. the agreement would allow It needs agreement from all the project’s joint venture parties to proceed with FLNG. partners to progress the FLNG concept. Mr Coleman said FLNG The decision will likely anger would be the quickest way Premier Colin Barnett who has to commercialise the project been strongly opposed to the and build on the company’s floating technology - arguing it would result in fewer jobs for relationship with Shell. WA and be less beneficial to “This agreement enables the state’s economy, Mr Barnett Woodside, as operator of the had previously conceded that Browse LNG development, to FLNG would bring “some”
benefits to the state. This afternoon, Mr Barnett was tight-lipped on the development, only saying that the State Government would: “continue to work to maximise the benefits to WA from any LNG project.’’ Opposition energy spokesman Bill Johnston said the Premier must do all he can to prevent offshore processing. “Floating LNG would be a disaster for Western Australia and Mr Barnett must do all he can to prevent offshore processing of Browse gas,” Mr Johnston said. He claimed that processing the gas offshore would mean no Browse gas would flow to WA’s domestic market, which he said would be a huge failure.
“IT ALSO PROVIDES THE OPPORTUNITY FOR WESTERN AUSTRALIA TO BECOME AN INDUSTRIAL, OPERATIONAL AND TECHNOLOGY CENTRE FOR EXCELLENCE FOR FLOATING LNG WORLDWIDE.” JULY MAY 2012 2013 DIGGING & DRILLING MAGAZINE 29
FEATURE ARTICLE »
AUSSIE INVADER 5R
ROSCO MCGLASHAN WORLD LAND SPEED CHALLENGE
Rosco McGlashan was born in Perth, Western Australia in 1950. His desire to beat Donald Campbell’s World Land Speed Record of 403 mph in 1964, has taken him many long years. His first motor racing break came in 1968, when he was given a drive in a Pro Stock Drag Car. Rosco was an instant success story in Drag Racing and has earned his living in this field for many years. Some of his high speed exploits can be seen on Rosco’s Past Machines page on his website, which include a V8 Motorcycle, Rocket Powered World Record Go Kart (253 mph), a Jet
Dragster, which achieved 315 their base in Western Australia, mph, Jet Funny Cars and even to prepare for their next attack a Jet Powered Truck. on the Australian Land Speed Record of 403 mph. In 1993, Rosco with the help of 25 professionals, all volunteers, 1994 saw a revamped Aussie assembled his first Land Speed Invader II and a much more Racer known as “Aussie Invader experienced race team. II”. This car was powered by a Rosco McGlashan became 36,000 hp Mirage Jet Fighter the “Fastest Aussie On Earth” Engine. This racer was with an official 500 a culmination of 10 mph (802 km/h) two years blood, sweat way pass. Not being and tears. On the first content to settle with outing Aussie Invader II an Australian Record, reached a speed of 450 Rosco convinced a mph. Due to bad weather, the nervous team that he would team were forced away from have a go at the World Land their Salt Lake race venue, in Speed Record, despite poor salt central Australia and back to conditions, rain and bad light.
FOR MORE INFORMATION GO TO WWW.AUSSIEINVADER.COM
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Rosco ran his racer southbound on a track in very poor condition. At 580 mph Aussie Invader II broke through the salt surface and tram-lined through the timing equipment, 200 yards away from the tracks measured mile. Aussie Invader II was a write-off. Immediately the team went to work on a newer, sleeker and more powerful car, Aussie Invader III. The Aussie Invader Team returned to Lake Gairdner in South Australia in 1996. After some test passes, the car recorded a peak speed of 638 mph (10.28 km/h)which was faster than the World Land Speed Record held by Richard Noble at 633 mph, however to claim a new world record, two passes must be made in opposite directions within one hour and again bad weather prevented the team from achieving this goal. In 1997 the British in their twin jet engine car ran 763 mph, creating the biggest jump in
the history of the Land Speed Record, with their car going supersonic on the way. This effectively made Aussie Invader III redundant.
to 1,000 mph (1,600+ km/h) in about 20 seconds. As the car enters the measured mile, the rocket is throttled down to about 3/4 power, not wanting to exceed the magic 1,000 After witnessing the success of mph barrier by more than 25 Spaceship One’s historic flight, mph, to limit the max rpm on Rosco knew he needed a BIG our wheel and bearing safety rocket motor to set his next rating. record and consulted Rocket Legends Bob Truax and Ken Rosco would love to run his Mason. From that meeting Land Speed Record attempt in came an introduction to Rocket Nevada, due to the mud lake Lab in NZ, with the aim to get surface found at the Black Rock him to the holy grail of a 1000 and Diamond Valley location. mph LSR. The 4,000 ft altitude means there is less drag and the zero After many years of planning fly population is very attractive. and testing, different designs and propulsion formats, work The car is making steady is now underway on Aussie progress, and as Rosco has Invader 5R. said to several of his land speed record contacts around Aussie Invader 5R is unique in the world, “I can build this car design, being built around a in my home state of Western 40’ bisalloy 36” tube, using a Australia for comparatively 62,000 lbs thrust liquid oxygen little cost, and that is what we and bio-kerosene motor. This are doing. However it is hard vehicle is designed to have a to put a completion date on dry weight of 6.2 tonnes and our project, all we can do is will go from a standing start keep on keeping on!
JULY 2012 DIGGING & DRILLING MAGAZINE 31 MAY 2013
FEATURE ARTICLE »
WHAT IS NEXT FOR BROWSE BASIN GAS?
W
oodside announced it would no longer be developing a gas processing plant at James Price Point in Western Australia. The announcement was greeted with enthusiasm by environmental groups. But this is by no means the death knell for gas development in the Browse Basin.
requires no onshore processing or long pipeline to shore due to the “floating” technology that will be used so it is relatively unaffected by isolation issues.
The table below compares some of the major projects off the shore of north-west Australia, providing some perspective to the positioning of the Browse Peter Coleman, CEO and Managing Director Development in the current mix of development or Woodside, has reinforced the value of the projects. Browse Development and Woodside’s continued Development Operator On-line Estimated reservces tcg commitmentto develop resources in the area. NWS Venture
Woodside
1984
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Woodside 2012 5 A particular hurdle to development in the Browse Pluto Chevron 2014-15 40 Basin is its relative isolation. The majority of Gorgon Chevron 2016 4.5 development off the shore of north-west Australia Wheatsone Inpex 2017 12.8 is concentrated in the Carnarvon Basin, south-west Ichthys Shell 2016-17 3 of the Browse Basin, and in the Bonaparte Basin, Prelude Woodside - 15.5 north-east of the Browse Basin. Each region has the Browse accumulated experience of many existing platforms and pipelines and operating onshore production Woodside’s decision to rethink the initial Browse facilities. But the Browse Basin is essentially Development concept ended months of speculation undeveloped. about the project’s feasibility. The initial concept, developed in 2009, involved floating tension leg The Browse Basin covers approximately 140,000km2 platforms at the deepwater locations. These would - about twice the land area of Tasmania. If it was be tied back to a central processing facility closer to easy to develop Browse, it would have been done shore in shallower water, with a 350km trunkline before now: the gas fields were discovered in 1971. to an onshore processing plant at James Price Point.
Woodside’s Browse Basin gas development is big – even by that state’s standards. It has estimated resources of 15.5 trillion cubic feet of dry gas and 417 million barrels of condensate. Developing the reserves was always going to be challenging: it involves three fields (Torosa, Brecknock and Calliance) 425km offshore in water depths of 750m. The other key project in the Browse Basin is the Ichthys Development, on the eastern fringe of the basin, about 200km offshore in relatively shallow water. Gas from Ichthys will travel nearly 900km through a subsea pipeline to an onshore LNG plant in the Northern Territory (following speculation that the gas may be brought onshore in Western Australia). The project is now in the construction phase, following a Final Investment Decision (FID) in January 2012, and is due for first gas in 2017. The Prelude Development. operated by Shell, is also located in the Browse Basin. It is due to produce first gas in 2016-2017. In contrast to the Browse JPP solution and the Ichthys Development, Prelude 32 DIGGING & DRILLING MAGAZINE MAY 2013
Since the initial concept was selected, costs and technology have changed. This will affect the options on the table when Woodside and the joint venture partners work out the alternative strategy for developing Browse. At this point alternative concepts may include a pipeline to existing facilities in the Pilbarra, a smaller on-shore option around James Price Point or floating LNG technology. Any decision about the development of Browse is going to be complex at many levels – in terms of technology, regulation and balancing needs across the social and environmental spectrum. In the days since the announcement, the media has featured articles representing the pros and cons and winners and losers of the current decision and potential future decisions, underlining the complexity of the situation. Woodside’s CEO reinforced that the decision was a commercial one and was not influenced by
environmental or public policy the emergence of a world class issues. As a publicly listed company, petroleum services hub in Perth. Woodside’s ultimate responsibility Many oil and gas services is to its shareholders. providers now have expanded and The market viewed the decision diversified into new markets and positively, with share price technologies. This diversification increasing following Woodside’s and growth is driving a announcement. broadening and deepening of the Western Australian economy. But it is simplistic to believe development of WA’s offshore The skills and technologies reserves benefits only the oil and developed by this project gas company shareholders. and its suppliers continue to underpin new and planned oil On the 25th anniversary of the and gas developments. More North West Shelf Venture, Martin fundamentally – gas from the Ferguson, then Federal Resources Venture has provided energy to Minister told parliament it is an fuel WA’s minerals boom and economic and engineering feat industrial sectors and 20 years of of the same national significance LNG exports. as the Snowy Mountains hydro scheme. The project adds 0.7% to Technical expertise during Australia’s gross domestic product development of the North West and 5% to Western Australia’s Shelf Venture was mostly brought gross state product. in from overseas. In the subsequent 30 years, WA engineers have The North West Shelf Project has provided significant input into not only spawned a thriving WA local projects and exported oil and gas sector. It has driven expertise to global projects. the application of cutting edge technologies and has led to Perth is growing into a world-
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recognised engineering centre of excellence. Woodside, Chevron and Shell have all sponsored industry Chairs at the University of Western Australia, fostering large research groups in the areas of offshore engineering, geophysics and gas processing. Beyond Browse, the expertise and experience growing in Perth will contribute to a long term vision of WA having the same global status as other “go to” hubs of oil and gas engineering excellence, like Houston, Oslo or Aberdeen.
MAY 2013 DIGGING & DRILLING MAGAZINE 33
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