oil&gas australia 2011

AustraliaEnergy reportAugust 2011

AUSTRALIA:In any continental sized country there exists room for several mega-industrial

regions. Not to be outdone by surging offshore activity in Western Australia, the

eastern seaboard states of Queensland, New South Wales, and Victoria are devel-

oping their own prized assets at a frenetic pace. Onshore coal seam gas (CSG) deposits

estimated at 250 trillion cubic feet have the industry abuzz. The viability of their conver-

sion to liquefied natural gas (LNG) received major votes of confidence with recent final

investment decisions for two large-scale projects. Meanwhile, Victoria, the birthplace

of Australia’s oil and gas industry, will soon commence another 40 years of offshore gas

production, adding to its already rich history as the source of 30% of the country’s gas.

Eastern rising

PT.II

This sponsored supplement was produced by Focus Reports.

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www.ogfj.com • Oil & Gas Financial Journal August 2011 energy.focusreports.net 1

Fairview compressor sta-tion, Queensland Australia. Courtesy of Santos

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2 energy.focusreports.net August 2011 Oil & Gas Financial Journal • www.ogfj.com

“We see the LNG industry as

an opportunity to create a new

generation of employment and

prosperity in Queensland,” says

Anna Bligh, the state’s premier.

“We have just come out of the

global financial crisis, and are

still building the recovery. We

identified the LNG industry as a

very important part of rebuild-

ing and creating new industries.”

Despite the challenges confront-

ing Queensland from devastating

floods in early 2011, the burgeon-

ing CSG industry is still gaining

momentum. The government

has played an instrumental role in

creating the correct environment

to encourage the development

of the world’s first CSG-to-LNG

projects, and today four liquefac-

tion terminals are planned for the

coastal town of Gladstone. Speaking in December 2010, Bligh

explained that “the emergence of the CSG and LNG industry is

a natural progression from our gas policy – our energy policy – in

the early part of this century. But it is equally true that it could not

have reached the stage that it has, as quickly as it has in the last 8

months, without enormous focus from government.”

As a well-established coal exporter for several decades,

Queensland has taken advantage of relatively new technologies

to bring gas out of the state’s coal seams in response to global

shifts towards cleaner energy. As Bligh explains, “these projects

are, in both resource and investment terms, as big as the Gorgon

Project in Western Australia. They have been brought to regula-

tory approval and financial decision stage within 2-3 years which in

world terms is remarkable.”

Eastern flagshipsOver the past year huge progress has been made to ensure that

Australian CSG-to-LNG will deliver. Of the four mega-LNG projects

planned, two have reached final investment decision (FID) total-

ling over $30 billion, and one has crossed the crucial threshold of

environmental approval.

Queensland Gas Company, a subsidiary of British Gas, reached

FID for its $15 billion Queensland Curtis LNG Project (QCLNG)

in November 2010. A 380 km pipeline will link CSG fields in the

Surat Basin to its 8.5 mtpa LNG plant on Curtis Island with first gas

expected in 2014.

The Santos-Petronas-Total-Kogas consortium rang in 2011 with

FID for its $16 billion, 7.8 mtpa Gladstone LNG (GLNG) project.

With first gas expected for 2014, Mark Macfarlane, ceo of GLNG,

describes it as “a world class CSG-to-LNG project that will put

Gladstone and Queensland on the world LNG stage. It is a project

of great significance for Queensland and all of Australia.”

The ConocoPhillips and Origin Energy joint venture, Australia-

Pacific LNG, gained federal environmental approval in February,

paving the way for FID by mid-2011. Still waiting in the wings is

environmental approval and FID for Royal Dutch Shell and Petro-

China’s Arrow Energy LNG project.

Economic studies indicate that a medium-sized 28 mtpa LNG

industry – far below what Queensland will produce – could create

over 18,000 jobs, generate $40 billion of private sector invest-

ment, and increase gross state product by one percent. Output

from these four projects will propel Australia to become a top-two

global LNG exporter over the coming decade.

A rising tideMovement from the majors is mobilizing industry across the greater

eastern seaboard. Much of the buzz about Queensland and New

South Wales CSG stems from the relative proximity of fields to

mass markets and their connectivity to existing infrastructure.

Feedstock for LNG is an enticing option. But when considering

domestic clean energy targets which favor investment in gas-fired

plants, then asset prospectivity becomes highly valued for internal

2000

1750

1500

1250

1000

750

500

250

0

Mm

bls

bcf

300

250

200

1501998 2000 2002 2004 2006 2008 2010

Liquids (oil, condensate, LPG

Gas (bd):

CSG

Conventional gas

LNG

Historical Australian oil and gas production

Source: APPEA

Hon. Anna Bligh, Premier of Queensland

Mark Macfarlane, CEO, GLNG

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CarNac_OGFJ_1108 1 7/14/11 11:24 AMwww.ogfj.com • Oil & Gas Financial Journal August 2011 energy.focusreports.net 3

consumption. “New South Wales

currently imports 7% of its energy

requirements and consumes

about 27% of Australia’s total

energy,” states Ian Halstead, ceo

of Sydney-based junior Planet

Gas. “Another 12-14 gas-fired

power plants are projected for

construction between now and

2016. Additionally, large scale

LNG projects in Queensland will

consume much of the gas produced in the eastern Australia, leav-

ing a potential deficit in the domestic market. Planet is targeting

that deficit.” Backing Halstead’s assertion are Planet Gas’s well

addressed CSG licenses in the Sydney and Gunnedah Basins that

are adjacent to existing discoveries; Cooper Basins blocks contain-

ing significant thicknesses of coal with high gas formations; and

exploratory shale potential in its Cooper reserves. With a diversi-

fied portfolio of asset classes in strategically proximate areas to

market and infrastructure, Planet Gas embodies the strategy for

success of the next generation of

CSG-minded juniors.

While gas-fired plants are in

the planning phases and the major

LNG projects ramp-up construc-

tion, some companies have more

independent ambitions. Rather

than waiting for the big consortia

to bring LNG facilities online,

Eastern Star Gas is building one

of its own. Originally focused

on conventional oil and gas, Eastern Star Gas shifted to CSG in

2005 in New South Wales – away from the traditional hotbed of

Queensland. David Casey then joined as managing director to

apply his 20 years experience in CSG to the company’s new assets.

The company currently has three agreements to provide over

1,700 petajoules to domestic power generation companies. But,

as Casey explains, “the challenges from a CSG perspective were

produceability: the fact that unlike a conventional reservoir you do

not get maximum production on day one. Looking at those chal-

David Casey, Managing Director and CEO, Eastern Star Gas

Ian Halstead, CEO, Planet Gas


lenges, we realized that you cannot change how a CSG field can be

developed; so we looked at how to liquefy it, and not necessarily at

the liquefaction process itself, but rather the size and scaleability.”

The company is now progressing to front-end engineering and

design on a mid-size LNG plant with Hitachi and Toyo. This is

particularly groundbreaking given the size of the company and their

ambitions for the future scale of their plant. “Small scale has been

done elsewhere,” says Casey. “What hasn’t been done is looking at

a large project using small-scale technology: genuinely looking at

a project that could deliver four million tons, but doing it in half mil-

lion ton increments. One of the attractive qualities for Hitachi and

Toyo in dealing with Eastern Star Gas is the opportunity to prove

that their technology and their skill sets can actually match world-

scale projects, only with smaller trains. The more we look at it the

more we get excited by the prospects and the benefits of using

smaller scale technology.”

Start local, think globalIn addition to innovative methodologies, international players have

been converging on the state to strengthen their global brands.

“In terms of development oppor-

tunities there is nowhere in the

world that has as many opportu-

nities as Queensland does right

now,” says Terry Bayliff, Laing

O’Rourke’s global leader for oil

and gas. The British construc-

tion giant recently made its first

foray into the hydrocarbons sector

bringing Bayliff on board to lead

the charge after a distinguished

career at Bechtel.

The global oil and gas move

began in Australia with a contract

to build a liquefaction plant for

mid-scale specialist LNG Ltd. The

deal was suspended when Arrow

Energy, the plant’s originally slated

buyer, was acquired by a Royal

Dutch Shell-PetroChina joint ven-

ture. Undeterred, Laing O'Rourke

has since been awarded contracts

for a Gorgon Gas utility project and a BG water treatment plant.

The company also recently completed the Dalby Power Project for

Origin Energy, which is powered by gas from unconventional fields.

Bayliff is confident in Laing O'Rourke’s strengths to compete in a

crowded oil and gas construction market. The company special-

izes in multi-discipline, self-perform construction for which there

are few general contractors in Australia. “Most contractors are

single discipline,” says Bayliff. “They are either civil, mechanical, or

they are electrical disciplines. Laing O'Rourke offers a full suite of

packages.”

Bayliff hopes to use Australia as a springboard for launching

Laing O'Rourke’s oil and gas offering across the world. “I expect

that there will be a period of up to three to five years of growth

here in Australia: winning projects and demonstrating excellence

in execution. This is the offering we are going to take around the

world and it has to be grown here in Australia initially.”

The Australian experience that Bayliff aims to replicate at the

global level has already come to fruition for another multinational

resources contractor, Nacap. The Dutch pipeline construction

company looks to Australia for a high benchmark of technical learn-

ings and, more lucratively, 30% of total global turnover. “Australia

is somewhat unique in our global pipeline market,” says Mark

CarPla_OGFJ_1108 1 7/14/11 12:00 PM

Mark Bumstead, Managing Director, Nacap in Australia

Terry Bayliff, Global Oil & Gas Leader, Laing O'Rourke

CarsSta_OGFJ_1108 1 7/14/11 12:56 PM


Bumpstead, managing director

of Nacap Australia. “Contrary to

most other Nacap markets, our

pipelines here are characterized

by long distances.” Indeed, the

tyrannies of distance and strict

environmental codes in Australia

require many service companies to

streamline logistics and innovate

their operational models. These

models will certainly be tested

with the construction wave of transmission infrastructure to connect

CSG fields to markets. “When considering not just the trunk lines

but the upstream gathering facilities, there are many thousands of

kilometers of pipelines to be built to support these CSG projects,”

says Bumpstead.

Daunting as the challenge might be, a company such as Nacap

leans on paramount experience. Nacap is currently construct-

ing pipelines for two nationally significant projects – a $5.4 billion

desalinization plant in Victoria and 940 km of looping for an Epic

Energy pipeline from Queensland

to South Australia. Traversing vast

stretches of Australian outback,

the Epic Energy project, QSN3, is

being constructed at astonishing

rates of 4 ½ - 5 km per day. As

Bumpstead notes, “it is a long

way to even walk each day much

less construct a pipeline.” As a

result of successful execution and

project delivery, “Nacap world-

wide has benefitted very much from its presence here. A lot of the

risk management systems, procedures, and practices that we have

developed for ‘business as usual’ in Australia have been taken to

Nacap globally.”

Aussie rulesDespite Laing O’Rourke and Nacap’s success, the trap for new

players in the sector can be huge. Australia’s rich resources can

naturally invoke exuberance amongst service companies from afar.

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CarSyn_OGFJ_1108 1 7/14/11 11:58 AMCarEas_OGFJ_1108 1 7/14/11 11:30 AM

Michael Carroll, Managing Director, Synertec

Troy Campbell, CEO, Easternwell Group

CarLai_OGFJ_1108 1 7/14/11 11:27 AM

Integrated Seismic

Technologies

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Design ñ Drilling ñ Acquisition ñ Processing ñ Interpretation ñ R & D

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CarVel_OGFJ_1108 1 7/14/11 11:55 AM8 energy.focusreports.net August 2011 Oil & Gas Financial Journal • www.ogfj.com

Mat-supported jackups fared well in hurricanes

Steve Hearn, managing director and chief geophysicist of Velseis, a Queensland-

based geophysics company explains the merits of a local company over larger seismic players, and the challenges of bringing a science-focused company to the market. For the full interview, log onto energy.focusre-ports.net.

What can Velseis offer to clients that they cannot get from the bigger geophysi-cal companies?

There are definitely some things that the bigger players can offer that are arguably more difficult for us, one of which is volume. Sometimes there will be a need for a com-pany to supply a huge amount of equipment for a very big project. It is possible for Velseis to compete for these projects. We have some long-standing arrangements with rental orga-nizations – when we want to push our channel count up we bring in more gear. However, it is perhaps easier for the larger players to do those types of projects.

Velseis’s unique offering comes in the com-pany’s ability to tailor a service to a particular

problem or technical requirement quickly and efficiently. The company has an effective in-house R&D division, which is perhaps unusual for a company of our size. We routinely do specialized software devel-opment - this might be to tune a particular acquisi-tion program, or to model a particular geological problem. This is all about giving our clients custom-ized, scientific service. I am a geophysicist and am always willing to explore something interesting or something new, and I am the one that has to sign off on it. Arguably this enables more flexibility than in some bigger companies where developmental work might be subject to more formal procedures.

A lot of geophysical start-up companies are very science driven, very into innova-tion, but trying to commercialize that in a

competitive marketplace can be difficult. Why is Velseis different?

It is quite possible that if more entrepre-neurial people had been running the company, it might have had a totally different direction, but this is the way that it has come out. The people running the company generally make reasonably intelligent decisions on the basis of information available to us. We like to think that there are upsides to the model that we have. There have been plenty of cases with the big geophysi-cal companies starting out as technology driven companies, and at some point in the growth cycle they have moved to having

more professional business people running the companies, which hasn’t always worked out for the better.

Steve Hearn, Managing Director and Chief Geophsyscist, Velseis

0 10 20 30 40 50 60 70 80 90 100Percent

WA55%

VIC19%

QLD14%

JPDA7%

SA4%

TAS1%

(NSW,NT<1%)

Western Australia and Victoria remain the largest gasproducing states in Australia, while Queenslandproduction, predominantly from coal seem gas,continues to increase its share.

Source of gas production

Source: APPEA


quite well. We specifically design our kit to be compliant to local

regulations, but with the restrictions in work crews we innovate the

rigs and design the equipment to have the least amount of people

operating them.”

Local market insight paid dividends for another Australian

company further down the value chain. In February 2011, multi-

But the country’s array of regulatory and environmental codes can

prove difficult for new companies who do not fully comprehend the

impact of regulations on project delivery. Troy Campbell, ceo of

Easternwell Group, Australia’s largest integrated well servicing and

drilling provider for CSG and mining, concurs. “Foreign companies

are entering a very restricted market. There is also a complexity

around the logistics and management of operations.”

An established local presence and strong market familiarity

breed an Australian advantage. Easternwell Group’s industry

standing is a result of a series of diversifications in response to mar-

ket needs. Originally focused on well servicing and drilling since

1976, the surge in CSG exploration from 1999 onwards and an oil

price spike that attracted foreign players led Easternwell Group

to enter new service sectors. By merging into a broader mining

services group in 2009 and most recently, joining forces with main-

tenance and service heavyweight Transfield Services, Easternwell

Group now has access, as Campbell describes, “to the front and tail

end of projects.” Integrated services combined with local market

knowledge produce a winning formula for Easternwell Group.

“Obviously being an Australian contractor we know the conditions

CarUndeRev_OGFJ_1108 1 7/25/11 2:18 PM


discipline consultancy and special-

ist engineering firm Synertec was

awarded a landmark contract for

the QCLNG project. In one of

the largest orders to an entirely

Australian systems integrator, Syn-

ertec will engineer 45 analyzers

for lead EPC contractor Bechtel.

Managing director Michael Carroll

specifically noted Synertec’s Aus-

tralian edge. “In terms of process

analytics, one of our big differentiating points is local knowledge

which starts with standards and follows right through to environ-

ment. Curtis Island, sitting in a hurricane prone area, calls for very

complex Australian standards which are not just a derivative of the

US or Europe. Bechtel was very engrossed in the rigidity of Aus-

tralia’s standards and dove into specific details with our experts.”

Originally specialized in process analytics for pharmaceuticals,

Synertec diversified into oil and gas as the pharma market consoli-

dated and CSG expanded. The commonality that enabled the shift

was expertise in equally complex,

risky, and stringently regulated

Australian industrial environments.

A growing company still break-

ing into the CSG market with IP

in sampling systems, Carroll is

confident that local knowledge,

local presence will pave the way

for Synertec. “International play-

ers are converging on Australia.

Australian engineering is innova-

tive and has an in-depth understanding of the regulatory environ-

ment that will overlay all of these projects.”

Victoria: back to the futureWestern Australia and Queensland fittingly grab the lion’s share of

headlines given the size of their offshore and CSG industries. Yet

as the state of Victoria demonstrates, size and industrial weight do

not necessarily go hand-in-hand. Resting at the foot of continental

Australian and smaller than every state except Tasmania, Victoria

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CarUni_OGFJ_1108 1 7/14/11 11:57 AM

Mark Paton, CEO, Cue Energy Neil Doyle, CEO, Oil Basins

CarEne_OGFJ_1108 1 7/14/11 11:45 AM


was the birthplace of the country’s petroleum industry and is still

very much a cornerstone of its future.

“Victoria has up to 30 years in proven conventional gas reserves

spread across three producing basins – Gippsland, Bass and

Otway,” says Michael O’Brien, Victoria’s minister for energy and

resources. “GeoScience Victoria estimates that 4-8 trillion cubic

feet of gas remains to be discovered along with up to 600 million

barrels of liquids.”

Australia’s first oil discovery was in Victoria

in 1924 at an onshore field with an estimated

50 million barrels of oil in place. In December

1964 the Glomar-III exploration vessel drilled

Australia's first significant offshore well and

discovered gas. In 1967 the Kingfish-1 well

encountered Australia's largest oil field with

1.2 billion barrels recoverable. Fifteen of the

Victoria’s first 16 offshore wells were success-

ful, yielding three major gas fields and Austra-

lia’s two largest oil fields to-date.

ExxonMobil, the country’s oldest oil and

gas company, was instrumental in all of these

discoveries. John Dashwood, chairman of

ExxonMobil Australia notes that “we have

a long history and heritage of developing

resources for the benefit of this nation. We

have produced two-thirds of the country’s oil

out of the Gippsland Basin and one-third of

the country’s cumulative gas. There is indeed

a legacy feeling that Australia has been a real

jewel in ExxonMobil’s history.” Modeling the

economic impact of its Gippsland Basin Join

Venture’s operations, ExxonMobil calculates

that its Bass Strait hydrocarbon production has generated over

$200 billion to Australian GDP over the past four decades.

As Bass Strait oil production declines, gas output still has

substantial life ahead. “We are only about halfway through the

gas reserves and have a significant number of years to continue to

extract gas,” adds Dashwood. While production in the Gippsland

Basin is 40 years old, we are about to put the biggest steel

structure in the Bass Strait – the Marlin B platform – to develop

the Turrum field.” ExxonMobil Australia’s Kipper Tuna Turrum

Project is currently one of the largest domestic gas developments

on the eastern seaboard. An estimated $4 billion project which

holds enough natural gas to power a city of one million people for

35 years, Kipper facility construction is expected to be complete

by 2012 and Turrum in 2013. “There are still another couple of

decades of production to come from the Bass Strait and a lot of

business yet to be done here.”

Eyes fixed northWhile Victoria’s offshore basins are largely the plays of majors such

as ExxonMobil, BHP Billiton, and Santos, there is still substantial

SE Gobe production facility

activity amongst juniors who

accumulate acreage through joint

ventures and proprietary bid-

ding. Juniors such as Bass Strait

Oil Company, Oil Basins, and Cue

Energy are all active in coastal

Victorian waters.

However, the compelling

presence of majors in a relatively

confined offshore space leads

many Victorian-based juniors to

seek more distant markets. Leading the charge of Melbourne-

based companies with eyes fixed north is Cue Energy behind its

new ceo Mark Paton. With an extensive background in produc-

tion and operations Paton joined Cue Energy in early 2011 keen

to build on its already successful corporate foundation. While

Cue joint ventures in the Bass Strait, its operational strengths stem

from international markets. Cue Energy is among the rare batch

of Australian juniors that enjoys mature production – slightly over

half a million barrels in 2010 – through tenements in New Zealand,

Indonesia, and Papua New Guinea. The company will see a further

production boost when its joint venture Wortel field, operated by

Santos, comes onstream in December 2011 in Indonesia.

Paton is now targeting $1 billion market capitalization over the

next 3-5 years by combining new exploration plays with maximiza-

tion of existing assets. “Rather than meteoric growth from a zero

base asset, we see value in assets that are near to or in production.

We are long on exploration opportunities but short on near term

additive production opportunities. I do not want to wholly rely on

exploration success for growth.”

Although keen to maximize existing production, Cue is

CarAus_OGFJ_1108 1 7/14/11 11:53 AM

John Bell, CEO, Australian Drilling Associates

Cue Energy Maari drilling activity with wellhead platform and FPSO


equally well-poised to capitalize off exploration in the Carnar-

von Basin – Australia’s “hot” offshore LNG province. “We have

extremely good partners in these blocks,” admits Paton, refer-

ring to Woodside and Apache. Having firm partnerships with the

companies who are looking to aggregate additional gas and build

more LNG trains speaks a great deal to the fine work done by my

predecessor.”

Operating under a similar philosophy is Oil Basins Limited which

explores in the offshore Gippsland Basin; offshore Carnarvon

Basin; and onshore Canning Basin in Western Australia. Like Cue

Energy, Oil Basins’ acreage is in strategically proximate areas to

existing or future development infrastructure. Since listing on the

Australian Stock Exchange in August 2006, Oil Basins has signifi-

cantly expanded its initial portfolio of two permits and now stands

to earn interests in

drill-ready assets in

both the Gippsland

and Canning Basins.

The company’s

upstream interests

which hold game-

changing potential

include 100% rights

to Backreef, a low

cost oil play in the

Canning Basin,

and 100% equity in

R3 situated in the

Carnarvon Basin. Oil

in place for the undeveloped Cyrano Oil Field within the R3 block

was upwardly revised by 250% in April 2011.

Oil Basins aligned with LNG Ltd last August to evaluate projects

in the Canning Basin using future Oil Basins gas as feedstock. Oil

Basins will have the right to invest up to 20% on an at-cost basis

in any LNG project, with a maximum of 30% should the company

deliver certified 2P gas reserves of at least 1 Tcf. A potentially

significant long-term investment opportunity, it is consistent with

the company’s strategy of “sweating the value of its assets” nearby

existing or future infrastructure. With the agreement in place,

Oil Basins is confident in its ability to attract farm-in interest in its

strategic and untapped CSG and shale gas portfolio.

The enablerDespite the promise and potential of attractive petroleum plays,

life as a junior can be tough in

Australia. A long coast, huge

mobilization costs, and hefty

compliance fees make it difficult

for naturally cash-strapped juniors

to fund offshore campaigns. The

commodity price spike of 2006-

2008 exacerbated cost dilemmas

while engendering a new model

of consortium management to

assist juniors exploring offshore.

“The rapid rise in oil prices in 2006 created a worldwide short-

age of offshore drilling rigs,” says John Bell, ceo and founder of

Australian Drilling Associates (ADA). “Every oil company wanted

to drill and the

demand in Australia

was unprecedented.

It was also difficult

for the smaller inde-

pendents to get the

attention of drilling

contractors for a one

or two well program,

particularly when rig

utilization worldwide

was peaking at 98%.”

Recognizing the

synergies of scaling

costs, the oppor-

tunity arose for Bell in 2006 to create consortiums comprised of

junior independents and medium sized E&Ps with sufficient terms

to attract drilling contractors with rig availability. “The consortium

model spread the mobilization and demobilization costs, reduced

third party costs as a direct consequence of purchasing volume,

and gave flexibility for campaigns to drill more wells with the added

commercial benefits normally expected for major oil companies,” he

explains.

Over the past two years ADA has managed several consortiums

which equated to $1 billion worth of exploration and appraisal

wells. By coinciding with diminishing recruitment rates of drilling

personnel by the majors over the past 20 years, ADA functions, as

Bell describes, as “a virtual traditional drilling department where we

could make a contribution to the industry by optimizing on person-

nel resources and drilling equipment. We provide well engineering

Ron van der Schalk, Managing Direc-tor, Uhde Shedden

GLP Micro LNG Plant in Westbury, Tasmania


and well planning; materials and logistics management; procure-

ment of well consumables; contracting of all associated services to

drill; HSE management; and well operations management just as

any oil companies drilling department would.”

Victorian innovation “Melbourne is Australia's knowledge, innovation and technology

capital and is home to a large cluster of research institutes ready to

collaborate on innovative cross-sector projects,” asserts Minister

O’Brien. Outmatched by Western Australia and Queensland on

resource size, Victoria’s culture of innovation gives it a comparative

advantage in cutting-edge hydrocarbon infrastructure. Several gas

process engineering firms lead the way in revolutionizing Australia’s

downstream landscape.

Uhde Shedden, a ThyssenKrupp company specialized in gas

processing and multi-disciplinary engineering for the oil and gas and

petrochemical sectors, relies on Australia as a fulcrum for rotating

talented labor amongst its global projects. “We very much benefit

by utilizing Australia as a skills base from which to move smart peo-

ple around the region for various projects,” says managing director

Ron van der Schalk. Already a major player in CSG processing, van

der Schalk is looking beyond traditional industry to other avenues

where Uhde Shedden can build sustainable legacies. According to

van der Schalk, Australia lacks a robust national chemical complex to

turn energy from natural gas to downstream projects, a void which

Uhde Shedden and ThyssenKrupp technologies can fill. Having pre-

viously managed Uhde Shedden in Thailand, he admires Thailand’s

ability to turn natural gas into specialty chemicals through a serious

of processing stages whereby converting several dollars per giga-

joule of gas to thousands of dollars per ton of chemical product.

Another Achilles heel of Australian oil and gas, and potential

Uhde Shedden breakthrough, is the unanswered question of utiliz-

ing salt in water that is co-produced with CSG. “We are inter-

ested in finding those solutions since part of our business involves

understanding how to turn salt into chlorine through the technology

of our parent company. We are looking at how to develop solu-

tions that deal with salt and convert it to a potentially marketable

product.”

More than wishful thinking these technological revolutions have

tangible inroads through synergies with parent company ThyssenK-

rupp’s knowledge and expertise. “Because we are part of a larger

conglomerate we are looking at how to integrate other ‘family

company’ expertise into our solutions. We are always trying to look

for a unique problem and determine the issue at play.”

A big stimulus for new technologies is the potential introduction

of Australia’s much-mooted but still elusive carbon tax which many

believe will provide investment certainty. Until that comes, however,

Australian companies are taking the lead in creating new markets

and forging new trends.

Pandora’s Box“All I wanted to do was produce facilities and service our customers

in a more professional manner than what I had seen in the past,”

admits Peter Ramsey, founder and managing director of The GLP

Group (GLP). “My initial vision was to move into larger projects in

alternative energy. However, with the picture being drawn up about

the energy boom we quickly got involved with natural gas process-

ing.” The pinnacle of that trajectory was launched in February

2 questions about LNG to David Dennison, managing director – Wood Mackenzie – Australia

Do you think that Australia’s gas con-nectivity to foreign markets and the true globalization of LNG will eventually lead to pricing parity between Atlantic and Pacific Basin LNG?

The key question on peoples’ minds will instead be, “what will happen to gas prices in Australia?” Anyone who has a gas /LNG project on the eastern side of Australia exposes themselves to oil price linkages. We have a positive view on oil prices in the medium to long term therefore having an attractive LNG project in eastern Australia

and exposing yourself to international gas pricing with its inherent oil price link would have its appeal.

The global LNG market has many lump-sum projects coming on stream . Considering increasing supply, voracious Asian demand, and declining LNG pro-duction out of Southeast Asia over the next decade, is LNG a buyer’s market or a seller’s market?

Actually we see the market is quite well balanced. We have however seen prices

come off the highs of 2007/08 and there appears to be downward pressure on prices for proponents of the CSG to LNG projects versus the more conventional. The key issue is around cost inflation and the challenge to the more recent projects is to deliver on time and as close to budget as possible. The LNG business is cyclical in nature and not so long ago the race was on to fill the perceived shortfall of gas in the large US gas market. Subsequently we saw the meteoric rise of unconventional gas that has negated the pressing need for LNG into North America.


with the opening of Australia’s

first micro-LNG plant in Tasma-

nia, constructed by GLP. Using

BOC/Linde’s liquefying phase

technology, the country’s flagship

micro-LNG plant will provide fuel

for over 120 natural gas-powered

heavy vehicles in the state.

Initially looking to import units

from overseas, BOC recognized

GLP’s engineering flexibility and

ultimately contracted with the family-owned company to design,

build, and commission the Westbury Micro-LNG plant. According to

Ramsey, while GLP originally designed the plant for 50 tons per day

of output, recent runs have pushed capacity up to 55 tons per day.

“This can be attributed to our optimized process plant design and

careful quality control during construction,” he notes.

As CSG-to-LNG projects break barriers in size and scale, BOC and

GLP are proving that micro-LNG has boundless potential to usher in a

mega-trend for transport fuels. With proven technology, micro-LNG

Process Plant Solutions ï LNG Plants ï CO2 Capture

ï Clean Fuel Technology

ï Scrubbers

ï Natural Gas Dehydration and Fuel Gas Conditioning

Engineered Products

ï Demisters

ï Internals

Vessel Internals ï Mist Eliminators

ï Ejectors and Eductors

Process Materials ï Catalysts Absorbents

ï Ceramic and Alumina Supports

Design

Consult

Construct

Install

Commission

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www.glp.com.auPhone:Fax:Email:

(03) 9335 9000(03) 9334 [email protected]

CarGLPRev_OGFJ_1108 1 7/22/11 10:19 AM

is currently used for long haul transport applications. Ramsey, how-

ever, believes that future LNG plants will be able to service any fuel

consuming commercial transport. “The diesel market in particular

will dry up in 5-10 years especially if India and China continue rapid

energy consumption growth. The mining sector sees the benefit to

convert from diesel to LNG with the idea of having a central LNG

processing facility that links to satellite stations for fuel dispatch. I

believe that this is where the micro LNG market is headed in the

future for Australia.” Beyond Australia Ramsey sees micro-LNG as

greatly beneficial for countries that cannot afford to build extensive

gas pipeline networks. “It is much cheaper to build a central micro

LNG processing facility and distribute the LNG by tanker trucks, and

get those areas to convert their transport to LNG.”

As one Melbourne-based engineering executive confident in

the country’s ability to continuously break new grounds, stated, “I

like to think of Australians as innovative because we challenge the

norm. We are an isolated country so we must be ingenuous. When

people think of Australia I would like for them to think ‘innovative,

thorough, and well built.” The degree of innovation coming out of

Victoria indeed justifies this Aussie assessment.

Peter Ramsey, Managing Director, GLP

email: [email protected]

oil&gas australia 2011

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