AUSTRALIA
Image Courtesy: Woodside
PART I
SPECIAL ADVERTISING SECTION PRODUCED BY ELITE REPORTS
The world’s largest LNG boom is about to vault Australia into the big league of petroleum nations
A
ustralia will enter the big league of the world’s petroleum producers over the next two years with the commissioning of seven new LNG projects costing almost $US200 billion. When the last of the new projects is commissioned in 2017, Australia’s LNG production will have grown more than three-fold to 85 million tonnes per annum (Mtpa). According to local consultancy EnergyQuest, national petroleum production will increase from less than 550 million barrels of oil equivalent (mmboe) in 2014 to an estimated 1,200mmboe by 2017, ranking Australia just outside the top 10 of petroleum nations. Along the way, Australia is likely to overtake Venezuela, Iraq and Brazil. EnergyQuest chief executive officer Dr. Graeme Bethune says Australia’s emerging status as a petroleum heavyweight is a remarkable achievement for a country that is oil-poor. “In fact, we are going backwards rapidly in terms of oil self-sufficiency, but when it comes to gas Australia has massive reserves. The discovery of giant new gas fields over the past decade is just the start of the success story. A whole range of factors — including low sovereign risk, technical innovation and proximity to rapidly growing Asian markets — have come together to create an LNG investment boom of unprecedented scale anywhere in the world.” The rapid growth of the energy sector has come with its challenges. The extraordinary level of demand for skills, labor and goods — exacerbated by a concurrent mining boom in
Australia — has inflated some construction budgets, including the technically complex Gorgon project operated by Chevron on the Exmouth Plateau. The three-train facility involves the world’s largest carbon sequestration project and is within a nature reserve on Barrow Island. This has placed Australia at the upper end of the global cost curve for LNG projects. Project operators have claimed they were still set to achieve their targeted levels of return on capital, although the recent collapse in oil prices has created a new challenge because of oil-linked pricing for LNG. Dr. Bethune says the LNG industry in Australia is set to enter a period of consolidation. “New projects will be much more difficult to approve, although the cost pendulum is swinging back with the downturn worldwide and the end of Australia’s development boom. Floating LNG, which Shell is pioneering at Prelude in the Browse Basin, also promises a new deal for operators in terms of costs, and will be watched very closely.” The industry is also keenly anticipating the first drill results from an exploration rush into the Great Australian Bight, where BP, Chevron and Statoil are investing more than a billion dollars in the hunt for multi-billion barrel oil fields. The Bight has similarities to the Niger Delta and has been rated by BP as one of its top five exploration projects in the world. If BP does strike oil next year, the petroleum-led transformation of Australia’s economy could begin another remarkable chapter.