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Journal of Australian Energy Producers
RESEARCH ARTICLE (Non peer reviewed)

Enhancing the capital efficiency of LNG/CSG projects

Paul Prass A and Kevin Hansen A
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S2V Consulting.

The APPEA Journal 53(2) 501-501 https://doi.org/10.1071/AJ12112
Published: 2013

Abstract

More than half of worldwide LNG industry construction activity now takes place in Australia. Based on the $US175 billion presently committed to LNG projects, by 2020 Australia will be one of the largest, if not the largest, LNG producer in the world. LNG project costs in Australia have quadrupled during the past decade. Analysts now believe the combined project costs of the three approved Queensland CSG projects will be 37% higher than the original $US51 billion budget. WA projects may be at the same or even higher risk of cost inflation. To complete Australian projects on time and on budget is proving to be problematic.

The changing nature and uniqueness of the projects (e.g. low performance of CSG wells, intricacy of Barrow Island logistics, etc.) adds complexity to the efficient management of capital. Capital budgets come under pressure, impacting economics, and cash flow. The challenge is for the timely identification of opportunities for proactive cost management, optimising near-term cash spend while delivering project objectives and robust economics.

A proven new proactive approach using rapid and lead indicators affords the ability to deliver the project while optimising use of capital and meeting contractual requirements. This approach:

  1. takes an external view of the complex interrelationship between subsurface, field development, and project execution to create a holistic independent view of the major issues.

  2. creates, quantifies, and validates hypotheses that will improve capital efficiency and economics;

  3. employs a short and sharp timescale;

  4. uses robust processes plus operational data analysis, baselines, and comparator insights;

  5. guides and empowers leadership to deliver radical change; and,

  6. is multidisciplinary in nature with subject matter experts (e.g. business, commercial, surface, subsurface, and plant).

Paul has been at Caltex for 20 years, where he has been involved mainly with international assignments in process engineering, supply and distribution, product engineering, shipping, sales/marketing, and strategic planning.

He ran Caltex’s Japanese operations, its worldwide strategic planning in Dallas, its shipping operations in Bahrain, and its Australian lubricant division.

Following Caltex, he spent a decade in lead consulting and operational roles within major Australian energy projects including Sasol Chevron’s Gorgon gas-to-liquids project, Hazelwood power station’s brown coal beneficiation efforts, and Natural Fuels’ biodiesel plant in Darwin.

He went on to develop KPMG’s oil and gas advisory business with specific focus on major projects working with key clients: Chevron, Woodside, Shell, INPEX, Santos, Origin, and BG/QGC.

He now leads S2V’s global business consulting.

Kevin has more than 25 years of experience in the oil and gas industry having gained a broad base of experience including field development planning, conceptual design, technical assurance, operations support, process design, flow assurance, facilities, production, and reservoir engineering.

He has worked and lived in western and eastern Canada, the Middle East, and Australia.

He is now the developments director for S2V Consulting Pty Ltd in Perth. This role involves numerous aspects, including business development; marketing; study/project management; workshop facilitation; and, strategic advice regarding field-development planning, conceptual design, and overall project assurance.