With the US shale revolution now starting to have an impact on global LNG markets with Cheniere Energy recently sending its first cargo into the world and East Africa on the horizon, Australia faces increasing global competition for investment dollars for future oil and gas development.

With the challenge of proving up the case of adequate returns in a capex constrained low oil price environment, the Australian industry's response so far has been to cut heads, however, Deloitte's Western Australia oil and gas lead Michael Lynn said the forecast productivity improvements based on head count were unlikely to make the sector profitable enough to encourage investment with oil prices below $US60/barrel.

With Chevron's Gorgon LNG project having just dipatched its first cargo and Queensland's three megaprojects up and running, only Wheatstone, Royal Dutch Shell's Prelude floating LNG and Inpex's Ichthys project are still to come online, now that Browse, Australia's last greenfield LNG development, has been canned.

The next wave of LNG trains will likely come from further trains at Gorgon or Wheatstone, developing Browse via the North West Shelf or even, as Wood Mackenzie suggested, developed through the facilities of Prelude or Ichthys, which present possible lower cost future options.

Shell, which took over BG Group in a quest to become the world's biggest LNG producer, would likely tie its shelved Arrow LNG plans into its newly acquired Queensland Curtis LNG project or it could deal with Origin Energy, ConocoPhillips and Sinopec's Australia Pacific LNG and/or Santos at Gladstone LNG.

Either way, it's going to take collaboration, and with brownfields developments the future of Australian LNG for the foreseeable future, corporate ego needs to be removed to convince investors that they'll get a decent return on their dollars to entice that next wave of investment.

The trouble is, that is a very, very hard nut to crack.

While industry and government often cite the $70 billion of investment sunk to get Curtis Island's three megaprojects up, the investors themselves would have been happier if they had been developed at a fraction of that cost, which could have happened if the Queensland projects had collaborated more.

Delusional advantages

While the die is cast, Lynn believes there are still plenty of opportunities for collaboration, simply by taking a hard look at where the competitive advantages lie.

But even there, Lynn says industry needs to cast aside its delusions about just what those advantages are.

For individual companies, the focus is around their access to the resource, relationships with customers, with not a lot in between.

As a country, Australia has proximity to markets and access to resource so Lynn says governments - both state and federal - need to be leveraging that as a "privileged asset" and treat that as a competitive advantage against other regions that are sources of hydrocarbons.

The problem, he says, is that the sector has been talking about collaboration for ages, but a range of factors including trust, focus and innovation in investment have all held the oil patch back from truly lowering the cost base to where it needs to be sustainably internationally competitive.

"Traditionally the operators in Australia have seen each other as competitors, so there are a lot of instances of duplication of infrastructure, targeting specialised staff," Lynn said.

"Therefore salary costs have increased exponentially, as opposed to truly effective working groups working on how we all look at this part of our supply chain together and drive an outcome that's much more efficient and cost effective because it doesn't affect our sustainable competitive advantage individually but it does as a collective.

"That can sit in so many areas, whether it be maintenance, safety and environment, scarce specialist resources, learning and development programs, shared services … there are so many examples of collaboration globally that we're yet to break into and truly monetise in Australia.

"That's a huge white space for us, like in the North Sea and Europe more generally. It will happen, but it needs to happen at pace."

He remains amazed that the Gladstone project proponents built the Curtis Island infrastructure as three separate operations without roads or gates connecting them.

While there is plenty of duplicated infrastructure that can't be reversed, Lynn said some tough decisions need to be made to optimise their collective cost base moving forward - and it can still be done, but for corporate egos and lack of trust which is still playing out and making it tough to look at the critical path around grabbing value.

"We're finding that it's very, very difficult to get a five-way agreement on a collaboration vehicle that everyone can invest in," Lynn, who will address APPEA 2016 in Brisbane this year on exactly this topic, told Energy News.

The solution Lynn proposes is equally applicable in WA as it is over east.

"The pathway of least resistance is to get agreement between two operators - say Woodside and Chevron - and get that proven and up and running, then Inpex and Shell can come in on the back of it, rather than expend all the emotional and conceptual energy up front to get four or five groups involved," he said.

"Once you move beyond ownership and sale of the hydrocarbons, everything in between I could mount an argument that there is no sustainable competitive advantage. There might be short-term, like running a piece of kit better, but everything in between is open for collaboration, so why don't we on Curtis Island have a common workforce?

"We need to break down all the barriers, and just account for the hydrocarbons coming in and out, treat all that as joint infrastructure, get the optimisation of the hydrocarbons flowing through and out the other side for the least cost possible, uplifting the skills of the essential staff in doing so."

He suggests running common shared services - not in relation to accounting services but engineering, maintenance -as much as possible away from the site and have a service hub that deploys to Curtis Island or the various sites in WA.

This is a big jump from the mindset of where the organisations are at the moment, because, from Lynn's experience, they still consider data transferring into information providing insight to be a competitive advantage.

"I don't buy that argument," Lynn said.

"If you've got the best operator and I've got the best maintainer then there are opportunities to share and collaborate, and create opportunities to uplift operations.

"It's a bit radical, but it's not overly so.

"Do we need to be running a workforce of 3000 people as maintenance staff when, if we actually got our timing right, we would only in fact need 1500 and they would all be much more productive because they would be working on a lot more kit?"

So while he's excited about the browfields as Australia's next best potential for investment, Lynn says industry needs to get its cost profile down to a significant percentage where that investment becomes attractive.