steven gerhardy, appea - potential for natural gas developments in the northern territory
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Katherine Regional Mining and Exploration Forum
Potential for oil and gas developments in
the Northern Territory
Steven Gerhardy: Director – Northern Territory
29 May 2014
Who are we?
• Peak national body for Australia’s upstream oil and gas industry
• 85 full member companies - 98% of Australian oil and gas production
• 250+ associate members
Our Objectives
• Development of Australia’s oil and gas resources in a manner that maximises the returns to the Australian industry and community.
• Regulatory and commercial conditions that enable member companies to operate safely, sustainably, and profitably.
• Increase community and government understanding of the upstream petroleum industry by publishing information about the sector’s activities and economic importance to the nation.
A new era for NT oil and gas
• Growing gas demand
• Potentially huge onshore gas resources
• Exploration required to understand extent and accessibility
• Development unlikely to be rapid – rigs, infrastructure, skills, geology
• Opportunity to prepare, engage and derive regional benefits
Current oil and gas production
• LNG is already the NT’s largest export :
– Darwin LNG commenced 2006
– Ichthys project to more than treble LNG exports from 2016
• Blacktip (Wadeye) - gas to PWC for power generation
• Mereenie - NT’s oldest operating oil and gas project (1984)
• Surprise oil - NT’s newest project (March 2014)
• Dingo gas - development commenced
Source: DME as at December 2013
Growth drivers – gas demand
Source: Santos 2013
Drivers - gas resources and technology
• Large undeveloped offshore discoveries
• Potentially large shale oil and gas resources in the NT’s onshore basins:
– 262 tcf of potential shale gas resources (larger than Australia’s identified conventional gas resources)
• Development of Floating LNG (FLNG):
– Shell Prelude FLNG project to be world’s first (3.6 mtpa)
– Bonaparte FLNG FID planned for 2015
– Supply base opportunities for Darwin
• Improvements in horizontal drilling and hydraulic fracturing of shales at depths of 2-5 kms
Onshore activity
• Airborne surveys and seismic programs resulting in greater drilling
– 25-30 wells in 2014 (2 in 2013)
• Central Australia:
– $100 million 8 well program at Mereenie (Santos)
– $50 million 5 well program in southern Georgina (Statoil)
– Smaller programs by Central Petroleum and Tamboran
• Top end:
– Beach Energy in the Bonaparte
– Origin, Santos and Pangaea in the Macarthur
– Armour Energy in Georgina Source: DME as at March 2014
Producing shale oil
and gas
• Drawing from formations 2-5 kilometres below ground
• Existing technologies –drilling, fracking, monitoring
• Aquifers protected by well construction and geology
• Risks to the environment have proven to be very low
Shale gas is well understood
• Comprehensive independent review of impacts by ACOLA
– 252pp of peer reviewed science by 2300 leading Australian scientists and scholars
• CSIRO and others have the skills
to assist with
– interpretation
– analysis
– communications
• Inquiry into Hydraulic Fracturing
The potential benefits
• US shale oil and gas has created 1.7 million jobs by 2012 (2.5 million jobs by 2015).
• Queensland CSG has revitalised regional centres, new sources of training and jobs, work for local businesses and revenue for governments.
• Expansion of the NT onshore industry would deliver jobs, economic growth and improved infrastructure in remote and regional areas:
– the long operating lives of large gas projects provide large, long-term benefits to local economies.
• Major boost to NT Government royalty receipts.
Onshore development timetable
• Adapting US shale experience to Australian geology will take time
• Oil discoveries (Surprise) and gas discoveries close to existing pipelines (Moomba-191) can be quickly commercialised.
• New gas projects may take many years of work before being ready to proceed:
– Resource definition, preliminary engineering, supplier pre-quals
– Pipelines and other infrastructure
– Markets (overseas or local)
– Finance
– Joint ventures with larger companies to access technology and share costs and risks
Collaboration the key to success
• Ensuring effective regulation (DME) and facilitation• A strategic framework which sets course for development • Local, Territory and Federal consistency• Stakeholder engagement
• Promoting a code of practice • Building partnerships with stakeholders • Peak body engagement, regional forums and public advocacy• Individual operator consultation and communications
• Sharing fact-based information, listening and responding• Developing an access agreement with pastoralists
• Ensuring input to operational and regulatory strategies
Governments
Industry
Community
Working with landholders
• Workshops/ engagement with the NTCA
• NTCA/APPEA model access and compensation agreement:
– Fairness and equity
– Respectful engagement
– Transparent information
– Balanced negotiation (and dispute resolution mechanisms)
– Fair compensation and other benefits
• Working with Land Councils to help communities understand the industry and embrace the opportunities for benefits
Northern Australia inquiry and White Paper
• The Northern Australia parliamentary inquiry and the development of a northern Australia white paper are strongly supported:
– increased oil and gas investment could form one of the key pillars of regional development
• APPEA has identified four key policy areas that government at all levels need to focus on to realise the potential of the oil and gas industry in Northern Australia:
– regulatory reform
– workforce mobility
– infrastructure
– indigenous opportunities
Conclusions
• The shale gas industry is an exciting prospect for the Northern Territory
• Industry is working to engage with Traditional Owners and pastoralists
• Industry committed to best practice management, regulation and transparency and has demonstrated over many decades that onshore oil and gas can be produced safely with minimal risk to the environment
• Comprehensive independent information is available – ACOLA, CSIRO
• The potential of onshore gas should be incorporated into regional planning
• The process of community engagement and provision of science-based information will be important
Further information and contacts
Steven GerhardyDirector – Northern Territory
sgerhardy@appea.com.au(08) 8943 0675
WA Onshore Gas website – www.wa-onshoregas.infoAPPEA – www.appea.com.auCSIRO Gas Industry Social and Environmental Alliance – www.gisera.org.auAustralian Council of Learned Academies – www.acola.org.au
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