CRITICAL ISSUES IN DRILLING & COMPLETIONS
A pair of workers inspect a turret on the Pyrenees FPSO, located in the shallow-water Pyrenees field offshore Western Australia.
The Australian Energy Producers has pressed for an increase in the development of Australia’s gas field s, noting the signifi-
cant role that natural gas will have to play in the energy transition. The association is focusing much of its efforts on com-
municating that message to policymakers and hopes it will translate into supportive reforms.
agreements were not able to be made dur-
ing this period because of the uncertainty.
That’s had a really big impact on the East
Coast market.
In parallel, we’ve had changes to
the Australian Domestic Gas Security
Mechanism, which provides the govern-
ment with the option to interrupt LNG export
contracts if supply to the domestic market
is considered inadequate. These changes
have caused some concern for interna-
tional partners who rely on our gas to keep
their lights on. We’ve also had changes to
the Safeguard Mechanism – this is about
industrial emissions reductions that apply
to LNG facilities – and to the taxation and
environmental approvals regimes. There
has been a whole suite of changes and
reforms in a relatively short span of time
that have added to the uncertainty and the
cost of operations in Australia.
32 Still, I believe it’s inescapable that we
will need more gas for the energy transi-
tion, both domestically and across our
region, so I’m confident that we will be
able to overcome some of the challenges
we’ve seen. We just need to create a more
supportive approvals environment as that
will be key to attracting new investment
and developing that gas supply.
Currently, approvals are taking far too
long when we consider the timeframe
in which we’re targeting our net-zero
goals. We just can’t afford to have approv-
als processes for our projects take years
and years. We need much greater clarity
around that. We also need to minimize ad
hoc interventions in multi-million-dollar
investments. We need policies that provide
stability and certainty so that companies
have confidence to invest.
You’ve been vocal about the impor-
tance of the oil and gas industry being
leaders in Australia’s energy transition .
What would you like to see the indus-
try d o?
Again, it’s important to recognize that,
even when we’re talking about net zero,
that doesn’t mean that fossil fuels disap-
pear. Even in the International Energy
Agency’s (IEA) net-zero pathway, by 2050
we’re still going to see 20% of the energy
mix being met by fossil fuels, and gas is
going to be a key part of that.
In addition to that ongoing role for gas
production, there will also be a broader role
for our industry in supporting emissions
reductions. Low-carbon hydrogen is a key
part of that, as well as carbon capture and
storage (CCS). These technologies are vital
for the transformation, and our industry
JAN UARY/FEB RUARY 2024 • D R I LLI N G CO N T R ACTO R
CRITICAL ISSUES IN DRILLING & COMPLETIONS
The Chevron-owned Asia Excellence LNG tanker is one of several VLCCs (very large crude carriers) the operator is using to
deliver LNG throughout the Asia Pacific region. LNG exports are a key lever in Australia’s energy policy. However, recent chang-
es to the Australian Domestic Gas Security Mechanis m and the Safeguard Mechanism, as well as to tax and approvals
schemes, have led to concerns from international investors over the reliability of the country’s energy supply.
is well positioned to lead in their deploy-
ment. When we look at the IEA pathways, we
need to move from the 40 million tonnes
of CO 2 being captured and stored today to
about 6.2 billion tonnes by 2050. That’s a
huge challenge, but it’s also a huge oppor-
tunity for our industry. We have the skills
and expertise, particularly with the sub-
surface, to drive that deployment.
CCS looks to be a huge part of Austra-
lia’s decarbonization efforts: The
country is home to one of the largest
commercial CCS projects in the world,
the Gorgon project, and the govern-
ment announced new offshore green-
house gas storage permits in 2022.
You’ve mentioned in the past that
Australia has unique technical and
geological advantages to CCS. Can
you elaborate?
We have fantastic geology. We’ve done
quite a bit of work in terms of mapping that
geology and understanding it. We have the
skills and expertise of the oil and gas indus-
try. We have mature legal and regulatory
frameworks – Australia was one of the first
jurisdictions to have an offshore CO 2 stor-
age framework, and we’re close to meeting
domestic demand for CO 2 storage services.
We’ve already had strong interest from
countries in our region that don’t have
the same geological advantages and
know they’ll be relying on CCS technolo-
gies. They’re looking to export their CO 2 to
Australia for storage. This is another oppor-
tunity for Australia and for our industry to
support regional decarbonization.
What are some of the obstacles you
see in scaling up Australia’s offshore
CCS capability? Going from 40 million
tonnes to 6.2 billion tonnes would be a
massive undertaking.
I would just take a step back with that,
though, and say that such a massive scale-
up in CCS technologies underscores the
challenge of transforming the global ener-
gy system to net zero by 2050. The chal-
lenges of scaling up CCS are not dissimilar
to the challenges of scaling up in other
sectors. We’ve got to triple our investment
in clean energy. There’s a whole range of
scale-up required across the system, and
that underscores why we actually need a
portfolio of technologies to get there.
We know that CCS technology works.
It’s been around for decades – there have
been projects operating in the US since
the 1970s, and Sleipner has been operating
in the North Sea for more than a quarter-
century, storing 3 million tonnes a year.
We know we have the skills and expertise
to deploy it.
I think the challenge with CCS is just
making the business case for it, providing
the incentive for companies to actually
make that investment. We can see in terms
of what’s happening globally right now that
there’s huge momentum behind CCS.
Once those incentives and that policy
support is in place, we’ll see huge interest
in investing in projects. Globally, when we
look at the projects that were either oper-
ating or in development in the early 2010s,
there were maybe 50 projects. Today, we’re
up to around 400. While the scale-up is a
challenge, it’s not an insurmountable one.
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