I was recently invited to speak at the media breakfast of the 35th Australasian Oil and Gas (AOG) Conference in Perth. The event is the largest annual gathering of oil and gas professionals in Australia with over 10,000 attendees from 25 countries.
The invite made me pause and reflect on the current challenges facing the oil and gas industry globally and here in Australia. The state of play in the oil and gas industry is one of constant, unexpected and unpredictable change. Throughout the course of the industry’s history we have seen many once firmly held beliefs and the best laid plans change practically overnight.
Over the past 10 years, Australia’s liquefied natural gas (LNG) industry has been at the centre of ambitious plans, world firsts, mega projects and sometimes even mega projects within mega projects. Australia is now on the verge of becoming the world’s largest LNG producer and we have reached a time where the sector will thrive or face decline.
After AU$200bn in investment resulting in the development of the most technologically advanced integrated gas assets in the world, I believe the time is now to thrive and secure Australia’s place as the world’s largest, most economic and reliable supplier of LNG.
We can shine on the world stage, ready to take on the challenges of the multi-decade operations and maintenance phase which will result in AU$550bn of investment over the next 25 years, even excluding new greenfield investment. And, if that were not enough, we have a third wave of challenges around decommissioning of older assets with the liability for decommissioning in Australia estimated at AU$27bn (US$21Bn) over the next 50 years.
During the commodity price collapse of the last two years, costs have been cut and losses written off or absorbed. Now it’s time to flick the growth switch, or we risk an unpleasant decline and the potential of shutting in our new assets.
It is up to us to secure our place as the world’s most economic and reliable supplier of LNG. We need to leverage innovation and technology to leap frog the competition and collaborate to make Australia competitive in the global markets. In order to do this we need to share information, do things differently and leverage technology to make us more competitive globally.
Company and government leadership must focus on the long-term view and not chase commodity cycles retroactively. After two years of little to no investment in exploration and deep cuts to the bone in terms of staffing, it is now time to demonstrate confidence and unite around a positive vision for the future.
The New War on Talent has begun, and despite the rise of robotics and automation taking over oil field operations, the industry will still require the best cadre of skilled and talented PEOPLE to get the job done. Australian assets will be in production for more than 40 years, and this will require patience, commitment, resilience and innovation to be world class in operations and maintenance phase.
We need to share infrastructure to create economies of scale and improve resource and capital productivity. Sharing information and activities between operators and service providers will enable us to do things that are not currently possible, we can optimise across warehouse, logistics, people, parts, equipment, tools and shared critical resources. We are no longer siloed. The emergence of new digital platforms, like GLX for LNG cargo trading, will enable this.
By creating new business models and new markets, Australian companies can and are leading the way in penetrating new markets and developing new applications for LNG.
We must share best practices and ruthlessly borrow leading practices from existing analogues in other regions and industries. We are not a lone wolves; we participate in a complex market where we are all undertaking similar activities, producing the same products and competing.
Australia can no longer go it alone. We need to work together to collaborate and innovate, otherwise we will continue to lag behind the rest of the world. The choice is ours.