Former AJ Lucas director and Lucas' engineering and construction general manager, Andy Lukas, sees great potential for a turnaround in the Australian oil and gas industry. However, he believes the worst isn't behind the industry yet.
"Not unless all in the chain from wellhead to burner and government and community can work together for win-win," Lukas told the Australian Pipelines and Gas Association conference in Perth last week.
"Waiting for government to solve this is like leaving the porch lights on for Harold Holt," he said.
"We need to be proactive, we need to be more aggressive, and we need to drag government forward with us, because I don't believe we can rely on them."
Lukas, who has over 40 years of experience in the industry, said Australia needs coherent and consistent energy planning; and investors need certainty.
Drivers for a turnaround
Lukas identified three trends that could drive a turnaround for the Australian industry: growing Asian demand, domestic demand and the role of gas in the electricity mix.
The cost competitiveness of US LNG combined with the widening of the Panama Canal concerned Lukas.
"Does that mean we are going to see US gas go into our markets in Asia?" he pondered.
"The only answer for us is to reduce our costs. We must reduce our costs to be able to remain competitive."
Lukas also asked what the industry was doing to meet domestic gas opportunities.
"The cheap gas in the US has had an unbelievable impact on the economy in the US, yet here everybody is trying to push up the gas price," he said.
Lukas cited Adelaide's Coopers brewery as an example of the benefits of distributed gas power. The brewery has power throughout the recent SA blackout due to its co-generation plant.
"There is a growing demand for distributed power in harmony with solar and wind … [that] we need to be paying attention to," he said.
Accessing the gas
Lukas is bullish about Australia's oil and gas resources. He quoted the US Energy Information Agency that calls the Cooper Basin one of the most prospective places for oil and gas in the world.
"We don't think about the Cooper Basin that way. All we hear about is the Cooper Basin running out of reserves," he said.
"The question is how do we get it out? We need someone with deep pockets to get it out.
"They can't afford to have crazies like we have in the NT saying you're not getting a crack."
Lukas had equally strong words for other opponents of gas exploration.
"You've got these loonies … down in Sale who said that extraction of gas … leaves behind awful ramifications for soil, water and the environment," he said. "That's nonsense. Why do we put up with it?"
Lukas said the industry isn't doing enough to counter opposition to gas exploration.
"I didn't see … anybody standing up and fighting these people. They control the agenda. We don't control the agenda. We need to control the agenda."
