PERTH (miningweekly.com) – Australia’s liquefied natural gas (LNG) industry has the potential to contribute more than A$55-billion to the country’s gross domestic product by 2020, but the country will have to improve international competitiveness, remove regulatory constraints and introduce a more flexible labour regime to secure its place as the world’s leading LNG producer, new analysis by New York-listed Accenture has revealed.
In a new report titled ‘Ready or Not? Creating a World-Leading Oil and Gas Industry in Australia’, Accenture found that over the next five years natural gas production would increase by more than 90%, the number of wells in production would increase by 400% and pipeline infrastructure in Australia would increase by 45%.
Total cumulative capital investment and operating expenses would reach around A$360-billion by 2020, 40% more than the A$250-billion invested during the recent capital investment boom.
Against this growth backdrop, greater industry and regulatory collaboration, accelerated workforce re-training and further investment in digital and automation would be required.
However, Accenture pointed out that a successful transition from construction to production could be a win-win for LNG operators, the Australian service sector, the government and the overall economy.
“If operators, the service sector and government can work together to get the transition right, we estimate the industry could collectively realise an additional A$50-billion to A$70-billion of shareholder value over the next 25 years – and this will have a positive impact on the whole economy,” said Accenture’s energy industry group Asia Pacific MD Bernadette Cullinane.
“The speed, scale and scope of the transition is unprecedented. The industry must be ready to support and maintain safe, efficient and reliable operations for the next 40 years.”
The report states that, according to Australia’s top-tier LNG operators and service providers, the industry was well prepared in several areas for this transition – building workforce capacity and capability, and tuning and adapting business models for production.
The companies surveyed rated workforce capability and capacity as the highest-scoring of the five readiness dimensions measured at 0.68 out of a possible 1.0, and 0.58 respectively.
The report, based on interviews with LNG operators and the companies that service them, comes as the Australian Petroleum Production & Exploration Association (Appea) Conference and Exhibition 2015 got under way in Melbourne this week.
“Australia has a real opportunity to use the next few years to become a world leading LNG producer, delivering long-term returns for all industry sectors. The construction phase has now peaked, and the industry is transitioning into an exciting new production and operation phase – an estimated 13 new LNG trains within seven new plants will come on line between 2015 and 2018,” Appea acting CEO Paul Fennelly said on Monday.
“It is imperative that everything – operations, equipment, workforce, the regulatory framework and industrial relations regime – is ready.”
The report also highlighted the areas that need to be improved with competitiveness rated at 0.37, regulatory framework rated at 0.40 and the industrial relations framework, which scored the lowest score at 0.32.
“The research overwhelmingly highlighted that there is room for more collaboration on key services such as turnarounds and logistics, with many stating the industry hadn’t done enough sharing during the construction phase.
“Accelerating industry collaboration and embracing innovation and digital technologies will help drive global competitiveness, attract the next wave of capital investment and transform Australia into the world’s largest and leading LNG industry,” added Cullinane.