Wood Mackenzie's Perth lead oil and gas analyst Saul Kavonic told Energy News that sharing logistics alone could result in up to $150 million in savings per annum across the LNG sector in Western Australia and the Northern Territory, and provide an overall value to both industry and government of up to $1 billion.
"While Australia's LNG firms have had a poor track record for collaboration in the past, the oil price drop has provided the impetus for the sector to start seriously looking at opportunities for collaboration and sharing," Kavonic said.
"Nascent signs of this are being witnessed in the logistics sector in Western Australia.
"However, realising infrastructure and services sharing in LNG is complicated, with issues such as the allocation of legal liability, appropriated value sharing arrangements, agreements on common standards, and achieving alignment of interests remaining challenging. Only with sustained industry focus will these challenges be able to be overcome."
Kavonic will be presenting on the potential and challenges of LNG collaboration and sharing as part of his presentation The death of Australian LNG - and how to bring it back to life at APPEA in Brisbane in June.
When asked at LNG18 in Perth what keeps him up at night, Coleman said he worries about the sustainability and business models of those critical to the industry's success - the supply side and contractors.
"We often use technology and cover it in IP, and it then becomes a barrier to the industry being successful," he said.
"We need to open up technology, and commoditise it, because the reality is the IP doesn't last very long. The difference is in the execution and use of that IP; it's not in not in putting it in a covenant and not allowing others to come and get it."
He said giving suppliers access to new technological developments would help bring costs down, which was a widely recognised issue, including by Shell CEO Ben van Beurden, as a critical issue for industry.
"I build a handful of projects, [and] I'm not going to move the dial with respect to bringing costs down. The people who do that will be those who provide services broadly across our industry because they're able to commoditise that IP and put it out to many of us," Coleman said.
"You're already seeing where that's occurred."
He could be referring to the Southern North Sea, where collaboration on a phenomenal level, by Australian standards, has been occurring for the best part of the last 15 years - brought on by low oil prices in the late 1980s when the local sector was not expected to survive beyond 2010.
Netherlands-based Jan Schipper, regional director of fourth party logistics provider Peterson, witnessed this and, in a sign that low oil prices may finally be giving the wider LNG industry its own lightbulb moment, descended on LNG18 this week to witness what he described as unseen levels of willingness to finally ditch ingrained attitudes of mistrust and start seriously collaborating.
Between 1990 and 2002, there were nine companies involved in Southern North Sea collaboration that helped save the industry, with two ports serving offshore clusters, until operators took the leap to using a single port.
Peterson, which had already been working for Shell in the area since the 1970s, invested in a purpose-built supply base at Den Helder in 2004.
The collaboration is currently led by four majors in Total, Engie, Wintershall and NAM, a joint venture between ExxonMobil and Shell, with Taqa, the UK's Centrica, Dana Petroleum, Dutch firm Orange-Nassau and Oman's Petrogas also getting involved.
"It's the Dutch way - we fight, we talk, but in the end we come together at the same table and work things out," Schipper said.
"Offshore there are some 140 major and minor structures in an area within a circle of 250 nautical miles on the Dutch Continental Shelf, and a lot of them are closely related, owned and operated by different companies who collaborate with their supply chain.
"Both the production and drilling are served by a fleet, which Peterson facilitates as the charterer. We plan it and do everything regarding the marine operations, making sure we deliver the hydrocarbon cargo at the time the operators request, loaded and offloaded from one location."
At LNG18, Schipper said the demand for sharing and collaboration has "never been higher -from around the North Sea, but also Norway, Denmark, Canada, US, Australia, Middle East".
"It is opening doors that have been closed for a long time."
Cost concerns
Van Beurden told LNG18 delegates that companies like his own should no longer be satisfied with the status quo, and dismiss the current downturn with an attitude of "so long as we have a strong balance sheet, we can take a long-term view, because we've seen it before".
"We can't ignore the problem of affordability. You cannot spend money that you don't have," he said.
"Inevitably as an industry we will have to take measures into our own hands and reduce spend, ensuring that we not only are more efficient but pare back some activity that you would've otherwise would've done, simply for affordability reasons.
"My big concern is that we will end up destroying capability in our industry, in our supply chains, and some of it will be irreversible, and will just make this volatility worse and more difficult. That will hit the US and also Australia."
