todd creeger - conocophillips - leveraging australia’s lng advantage in a competitive global...
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Todd Creeger
President Australia-West
SEAAOC, 20 August 2014
Leveraging our LNG advantage
in a global market
Cautionary Statement The following presentation includes forward-looking statements. These statements relate to future events, such as anticipated revenues, earnings, business strategies, competitive position or other aspects of our operations or operating results or the industries or markets in which we operate or participate in general. Actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that may prove to be incorrect and are difficult to predict such as oil and gas prices; operational hazards and drilling risks; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas development projects; unsuccessful exploratory activities; unexpected cost increases or technical difficulties in constructing, maintaining or modifying company facilities; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations or from pending or future litigation; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; general domestic and international economic and political conditions, as well as changes in tax, environmental and other laws applicable to ConocoPhillips’ business and other economic, business, competitive and/or regulatory factors affecting ConocoPhillips’ business generally as set forth in ConocoPhillips’ filings with the Securities and Exchange Commission (SEC). We caution you not to place undue reliance on our forward-looking statements, which are only as of the date of this presentation or as otherwise indicated, and we expressly disclaim any responsibility for updating such information. Use of non-GAAP financial information – This presentation may include non-GAAP financial measures, which help facilitate comparison of company operating performance across periods and with peer companies. Any non-GAAP measures included herein will be accompanied by a reconciliation to the nearest corresponding GAAP measure in an appendix. Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. We use the term "resource" in this presentation that the SEC’s guidelines prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other reports and filings with the SEC. Copies are available from the SEC and from the ConocoPhillips website.
Australia Pacific LNG
CSG to LNG project in Queensland
Constructing 2 x 4.5 MTPA trains, first LNG mid-2015
ConocoPhillips operator of downstream LNG facility on Curtis Island
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ConocoPhillips Exploration & Appraisal Programs
Understanding reservoir & assessing commerciality
Greater Poseidon fields Exploration, Browse Basin
Ten wells since 2001
Caldita-Barossa fields Appraisal, Bonaparte Basin
Three wells 2014/15
7
Potential Development Options
Offshore processing facilities and back-fill Darwin LNG
Floating LNG
Offshore processing facilities and expansion Darwin LNG
JV partners appraising/exploring across northern Australia
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Australian LNG Projects
Existing projects: 24.3 MTPA North West Shelf (WA), 1989, 16.3 MTPA
Darwin LNG (NT), 2006, 3.7 MTPA
Pluto (WA), 2012, 4.3 MTPA
Under construction: 61.8 MTPA > $200 billion
Seven large LNG projects by 2020
Gorgon (WA), 15.6 MTPA
Prelude (WA, FLNG), 3.6 MTPA
Wheatstone (WA), 8.9 MTPA
Ichthys (NT), 8.4 MTPA
Queensland Curtis LNG (QLD), 8.5 MTPA
Gladstone LNG (QLD), 7.8 MTPA
Australia Pacific LNG (QLD), 9 MTPA
Next wave in doubt
10
Source: APPEA
Potential in Northern Australia
Significant discovery volumes, with further appraisal/exploration
12
Source: Wood Mackenzie data
Acreage
Source: WA Department of Mines & Petroleum and EnergyQuest (July 2013) *Source: EIA World Shale Gas and Oil Resource Assessment 2013
Australia’s Advantage
Stable fiscal and regulatory regime
Close to LNG customers
Skilled and experienced workforce
Existing infrastructure
Abundant discovered and proved resources
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Liquefaction Capacity v LNG Demand (Source: Wood Mackenzie 2014)
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If probable, possible and speculative capacity is built, we may see potential LNG oversupply (affecting Australia)
Diverging Trends: Evolution Capacity Costs Global LNG Projects
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“I think two years ago I said there wouldn’t be another greenfields (project) in Australia for LNG; I’m starting to wonder if there’ll be a brownfield in the next decade.”
Federal Industry Minister Ian Macfarlane, APPEA Conference, April 2014
2/3rd Australian projects
US projects
Brownfield Development
Use existing infrastructure to reduce capital costs
Leverage operations best practice e.g. experienced operator, skilled workforce, existing construction and operator relationships
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ConocoPhillips Example of Brownfields Advantage
Darwin LNG Cost advantage of tying into
existing infrastructure
Permitted for 10 MTPA
Expansion land available
Australia Pacific LNG Cost advantage of tying into existing
infrastructure
Permitted for 18 MTPA
Land available for 2 additional trains
Leverage Operations Best Practice Strong relationships with train
construction companies
Experienced operator ConocoPhillips Optimized Cascade© Process
Regional Infrastructure
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Technological Innovation
Complement not replace existing options
One Australian project committed: Shell Prelude Project
Preferred development option: Woodside Browse & Sunrise Projects
Opportunity to position Australia as a global FLNG hub Centre of excellence: operations, maintenance, supply chain and support
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Potential Business Risk: External Influencers
Environmental groups/NGOs Ideologically oppose non-renewable energy sources
Influence policy setting by public opinion: NSW and VIC moratoriums
Case Study: Queensland Genuine community engagement
4,000+ signed access agreements
Peak petroleum industry body estimates economic benefits 30,000+ new jobs Private sector investment $60b+
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Source: Ruth Alice White, via ClimateHoward
Resources Do Not Equal Development
Policy makers must think big Stable fiscal regimes attract global
investment
Cutting approval timelines
Sound regulation based on prudent scientific fact is vital
Remain open to innovative technology such as FLNG
Laws should promote investment
Domestic gas reservation policies deter investment
Support industry investment in training
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Resources Do Not Equal Development
Industry must act responsibly Continuously improve safety and
environmental performance
Continuously improve technologies, processes and safeguards
Better inform & engage stakeholders
Commit to local content that builds capacity & economic participation
Collaborative training approach Commitment to an industry-wide
skills training and development
Work together to increase skill pool including diversity
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Summary
Australia has delivered world class LNG projects
Australia’s advantage Close to LNG customers
Existing infrastructure
Highly experienced workforce
Abundant resources
Challenged to remain cost competitive in a global marketplace
Addressing challenges Brownfield developments
Innovative technology – FLNG
Investment decisions need certainty Stable fiscal settings
Sound regulatory policy
Industry must remain committed to transparency and sustainability
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Conventional Gas Resources, Proven Basins & Infrastructure
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Source: Geoscience Australia, 2014 Australian Energy Resource Assessment (Second Edition)
Analysis suggests that multiple LNG supply sources could be competitive into Asian markets
“I think two years ago I said there wouldn’t be another greenfields (project) in Australia for LNG; I’m starting to wonder if there’ll be a brownfield in the next decade.”
Federal Industry Minister Ian Macfarlane, APPEA Conference, April 2014.
Delivered Cost of LNG to Japan
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Source: Wood Mackenzie, LNG Tool H1 ’14
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