The 2016 Australian Petroleum Production and Exploration Association (APPEA) conference, Australia’s annual gathering of oil and gas executives, suppliers and regulators drew to a close in Brisbane recently. It is the biggest oil and gas conference in the Southern Hemisphere. What were the four key takeaways from this year’s event? 1. The industry has a pulse The demise of the industry is vastly exaggerated. Despite the crushing weight of low commodity prices for oil and gas, the serious shortage of capital for resource development, and the absence of any new project announcements, the domestic industry still turned out in force with almost all of the big players making it. While overall attendance was down from last year, there was just the right buzz in the sessions and the trade show. But a first time visitor to APPEA could have wrongly concluded there’s almost no Australian mid-market still active and that it is a domestic show. Aside from a couple of booths, the mid-market players were few in number. The big international investors clearly decided to scale back their budgets this year, including the usual group of global players from Kuwait, Saudi Arabia, Indonesia, Russia and the US. 2. A race to nowhere? Plenary speakers offered a number of high-level warnings to the industry about the global direction of travel for fossil fuels. The question is whether the suppliers or producers are hearing the message yet. On the one hand, the Paris accord on climate change (or COP21) has successfully grabbed everyone’s attention. Gas producers are aligning to the notion that the planet will have to embrace gas alongside renewables as the only plausible solutions to the carbon problem of providing reliable, affordable and sustainable energy. On the other hand, speakers provided strong evidence and thoughtful argument to the contrary. They concluded governments will need to honour their commitments to reduce their carbon contribution; existing fossil fuel investments, particularly thermal coal plants, are going to consume national “carbon budgets” very quickly. Gas may soon be viewed as too little carbon relief too late, and indeed part of the problem, not the solution. Solar, batteries, and renewables are advancing very quickly and are threatening to overwhelm the glacial pace of innovation of the fossil fuel sector. Key fossil fuel solutions such as carbon capture and storage are getting little attention from the industry. They asked a profound question: Is the industry running its own race against its peers, moving at its own geologic pace to its terminal destiny, while the rest of the world is aggressively running a different race to energy alternatives? 3. Deep supplier frustration The majority of the conversations at APPEA were about supply issues in the industry. Procurement departments are now considered as being firmly in charge of the supply chain. Suppliers see no interest from procurement in measuring the value created by suppliers, compensating on value, embracing innovation, or exploring value equations. Suppliers have complied by reducing unit prices, but margins are now at critical levels, and many are speculating about leaving the industry for better opportunities. Clever innovations demanded by gas industry leaders and developed by the supply chain are getting stalled at the gate. Unless the gas industry shows even a token interest in these innovations, many suppliers will simply move on or abandon Australia for more welcoming basins. Finally, collaboration in the industry is getting lots of airplay, but there is a lack of practical interest in collaborating with the supply chain. The industry is not well structured to collaborate, doesn’t measure it well, and even lacks the devoted people power to drive collaboration. 4. Elephants in the room Perhaps most surprising was the lack of discussion on the usual topics that keep the industry up at night: Gas shortages. Have we finally hit peak discussion on gas shortages for the domestic market? Quite possibly, as gas demand is drifting downwards in the big consuming states. In any event, there was little conversation devoted to gas shortages, market balancing, and domestic pricing. Blame the election year. The bankability of the industry. The discussions on new projects appear to have faded entirely. There are no big projects trundling along, and the last decision to proceed with a project was back in 2012. There’s no new capital. International competition. In years’ past, there would vigorous speculation on the impacts of US LNG exports. Not this year. Prices are so low the US gas likely cannot land in Asia economically. Crisis averted for now. Land release for exploration. There was some angst by governments that the delays in releasing land for exploration purposes were a problem, but in fact, there’s no capital to devote to exploration. A big non-issue. Gas development. No one seemed too alarmed about the paradox of how few exploration rigs are actively proving up gas resources, while the east coast plays are in shipping overdrive, at rates well above faceplate capacity. Potential supply shortages on the horizon. Oil markets. Unlike other conferences where oil market movements would be the subject of speculation and analysis, it seems Australians no longer care. Lower for longer.