Jun 12, 2012

Liquefied natural gas industry faces skills crunch


Total has added its weight to the skills shortage debate, warning Julia Gillard of a looming crunch in the booming LNG industry.

Speaking at the World Gas Forum in Kuala Lumpur at the end of last week, Total chairman and chief executive Christophe de Margerie said he had raised the issue when he met the Prime Minister two weeks ago.

"It is true that in Australia, especially with a long-term view, it may become short of skills if you want to develop all of those LNG projects in the northwest (of Western Australia), Darwin and Brisbane," he said. "It's up to the government to see what they have to do. What we raised with the government is, 'Be careful'."

Total has a 24% stake in the $34 billion Ichthys development and a 27.5% interest in the under-construction $16Bn Gladstone LNG project in Queensland. Together, the projects will employ several thousand people while they are built.

With more than a dozen LNG projects representing about $200Bn in investment either under construction or planned for development here, competition for skills has already intensified and developers have looked overseas for labour.

Woodside Petroleum's Pluto LNG project relied on 457 visas to import skilled workers for specialised short-term jobs in the project's construction. A number of other LNG projects planned or being built are expected to use Enterprise Migration Agreements that allow the import of labour from overseas.

Companies such as Woodside and Royal Dutch Shell have also considered building plant components overseas to avoid higher labour costs in Australia.

Mr Margerie said labour issues were less significant in Darwin, where the Ichthys LNG plant would be built, as it was the only plant under construction there.

The issue was more apparent in Queensland given the number of competing projects, he said, with Total having sent expatriates from France and other nations to work on the development.

Mr Margerie confirmed Total would exercise its option to lift its interest in Ichthys from 24% to 30% in a matter of "days or weeks".

Separately, the head of integrated French energy company GDF Suez said Europe could meet its ambitious emissions targets at a significantly cheaper cost if it focused more on gas instead of renewable energy.

GDF Suez chairman and chief executive Jean-Marie Dauger said a greater focus on gas could shave E400Bn to E500Bn ($500Bn-$630Bn) off the estimated E1.2 trillion in costs by 2030 under Europe's emissions reduction plans. Using more gas to cut emissions could also protect 20-25 million jobs in Europe.

"Today this issue of economic optimisation of the energy mix simply cannot be ignored at a time of extreme financial and economic instability," Mr Dauger said.

"It is essential that the affordability of energy policies is seriously considered."

BPCL, Videocon Mozambique gas discoveries hold big reserves


Bharat Petroleum Corp Ltd (BPCL) and Videocon Industries' Mozambique gas discoveries may hold up to 100 trillion cubic feet of in-place reserves, the block operator said.

US energy major Anadarko Petroleum Corp said the total estimated recoverable natural gas resource in Offshore Area 1 was between "30 and 60 Tcf, and the current upside for total gas in place for the discovered reservoirs on the block is approaching 100 Tcf".

Bharat PetroResources Ltd, a wholly owned subsidiary of BPCL, and Videocon Hydrocarbon Holdings Ltd, a wholly owned subsidiary of Videocon Industries, hold 10% stake each in Area--1.

Anadarko, which holds 36.5% interest in the block, plans to put up plants to liquefy the gas (liquefied natural gas or LNG) so that it can be shipped to consumption centres in cyrogenic ships. The two LNG trains will have the capacity to produce 5 million tonnes of liquid fuel each.

First gas exports from an initial train is expected in 2018 and the second train in 2010. A final investment decision is scheduled for late 2013, it said.

Anadarko said in a statement that its "Atum exploration well discovered another significant natural gas accumulation within the Offshore Area 1".

The Atum discovery well, which encountered more than 300 net feet (92 meters) of natural gas pay, is connected to the recent Golfinho discovery located approximately 16.5-km to the northwest in the Offshore Area 1.

"We estimate this new complex, which is located entirely within the Offshore Area 1 block, holds 10 to 30-plus Tcf of incremental recoverable natural gas resources," said Bob Daniels, Senior Vice President at Worldwide Exploration. "We plan to immediately commence a four-well appraisal programme of this complex, which has the potential to underpin a large LNG development."

The reserves are more than the 11 Tcf of resources in Reliance Industries' eastern offshore KG--D6 fields. RIL had in 2010 produced over 61 million standard cubic metres per day of gas from its KG--D6 gas discoveries before technical problems led to a drop in output. The output is enough to produce about 15 million tonnes of LNG per annum.

Anadarko estimates that there is sufficient gas in place in Area-1 for up to 10 LNG trains for a total of 50 million tons ayear of LNG capacity.

Cove Energy Mozambique Rovuma Offshore Ltd holds 8.5% interest in the block and Mitsui E&P Miozambique another 20%. The balance 15% is with Empressa Nacional de Hidrocarbonetos (EIH), the national oil company of Mozambique.