解析：澳大利亞油氣開發的五大困境

As oil and gas industry leaders prepare to meet in Brisbane next week for the annual APPEA conference, Accenture challenges producers, service companies, regulators and the government to collaborate more effectively to stay competitive in an oversupplied global market.

For Australia to reach its potential as a leader in the oil and gas industry, local players need to rethink their current operating models, create more supportive ecosystems and invest in new technologies to help drive down costs and increase productivity.

Here’s why:

Australia is resource-rich but has an unclear path to growth

Large gas deposits, limited recent oil discoveries and a saturated and stagnant domestic gas market have left operators with Liquified Natural Gas (LNG) exports as the only means of growth. However between final investment decision (FID) and project completion several factors have conspired to make this market less attractive. The prospect of higher than forecast opex, US gas exports landing LNG at US$10-11/MMBtu in Tokyo bay, weaker demand and a lower for longer oil price will all contribute to lower than expected returns. Compounding these market factors, Australian LNG projects on both coasts have been hit by cost blowouts, in part due to construction coinciding with high oil prices pushing up the already high cost of Australian labour and services. These cost blow outs on projects already expensive by global standards have pushed Australian LNG to the higher end of the global LNG cost curve at around US$12-16/MMBtu.

This scarring experience coupled with the low oil price and saturated LNG market have quelled the appetite for new megaprojects in Australia, as seen in recent announcements. Once INPEX’s Ichthys comes online and Shell’s Prelude is producing, it is difficult to see where growth is going to come from in a country which is by no means resource scarce. The problem Australia faces is not one of resource availability but one of economic extraction of its resources to supply market demand.

East Coast production combines two incompatible business models

East coast Coal Seam Gas (CSG) -LNG operations are at the upper end of the upper end of the LNG cost curve requiring a $40-$50/bbl. oil price to breakeven on a Free Cash Flow basis. Such projects blend two Exploration & Production business models into one; the high up front debt-financed capex of megaprojects with the treadmill sustaining capex of US unconventionals. Players around the world have found this blended model difficult to manage. However CSG-LNG players are now trapped in such a model within a single asset. The persistently low oil price is leaving such companies struggling to find cash flow to invest in higher margin projects or payout dividends to shareholders once sustaining capex requirements and interest payments have been met. Share price has been impacted. These operators have been relatively successful at reducing well costs with up to 20 to 25 percent reduction experienced over the first 1000 wells drilled. However compared to the US unconventional players who have achieved up to 50 percent reduction in well cost, such efforts fall short. CSG-LNG players operating in isolation (drilling ~300 wells/year) are unlikely to have the scale and associated learning curve which made such a reduction possible in the US. Whereas the US players have worked closely with services companies to achieve their successes, east Australian CSG does not currently have a comparable ecosystem to support such collaboration

The West coast has lost its lustre for mega projects

Meanwhile on the west coast the situation is not much brighter. A lack of oil discoveries in recent years is leading to significant oil production decline. The lifting cost of mature oil fields such as Stag, Barrow Island and Mutineer Exeter and Fletcher Finucane in the Carnarvon basin is reaching the point where profitability is only reached at $60-70/bbl. Without a rethink of the strategy for life extension and the willingness to expend precious capital, some or all of these fields may be shut in in the next three years.

Gas has the reverse problem, the west coast basins are awash with undeveloped resources – and this is for a reason. Resources are often hundreds of miles from shore in remote areas of Australia in an operating environment of endemic high costs and limited cross-operator collaboration. The saturated domestic gas markets leaves LNG and often Floating LNG as the only viable means of exploitation. However the recent blowouts and current market conditions have made operators rethink development options.

Forget the US, LNG competition could come from Asia

The destination for Australian LNG cargoes, Asia, could itself be on the cusp of a gas revolution. Since the 1990s, South East Asia (SEA) oil and gas companies have been challenged to meet rising domestic demand by consuming domestic petroleum resources. Although SEA oil and gas companies have continued to discover new fields to increase production, efforts were insufficient to meet the growing demand causing SEA to become a net importer in the early 2000’s. To date, most of the easy-to-produce resources have been developed, leaving SEA with dwindling reserves and more technically difficult challenges such as marginal fields and deepwater.

However, a mere 10 percent reduction in wells and facilities costs would unlock significant Gas resources, whilst a 20 percent decrease would unlock even more of Oil and Gas resources. Developing and producing such gas fields through small FLNG units could break even at as low as $8/MMBtu. If sufficient scale is achieved, Australian producers could struggle to place LNG or be left producing into long-term contracts at uncompetitive prices.

The time for cost reduction is over, the time for cash flow management has begun

Within the past two years, each Australian operator has gone through a program of cost reduction, trying to manage an organization accustomed to oil prices in the $80-$120 range. The issues facing Australian companies (or regional affiliates) are diverse and each operator faces its own particular challenges yet the panacea is one and the same. Companies must stop tackling costs in the execution space and start looking at changing business fundamentals around their portfolios and operating models and improve the enabling environment around the supply chain and use of digital.

How operators, the services sector and government respond to these challenge will determine whether Australia is ready to step up and become a leader in the oil and gas industry. Twelve months ago we asked: is the Australian oil and gas industry ‘Ready or Not’, and outlined the significant benefits which could be gained if industry participants collaborated to improve capacity, capability and competitiveness. Today we encourage industry leaders to say, we are ready to think differently and work together to map out a clear path to growth.