Open-access midstream infrastructure and its effects on the Australian gas market
Steve Lewis A , Jon Serfaty A C , Michael Brooks A and Ben Smith BA ATCO Australia, Level 12, 2 Mill Street, Perth, WA 6000, Australia.
B ATCO Australia, Level 5, 320 Adelaide Street, Brisbane, Qld 4000, Australia.
C Corresponding author. Email: Jon.Serfaty@atco.com.au
The APPEA Journal 57(2) 493-497 https://doi.org/10.1071/AJ16189
Accepted: 3 April 2017 Published: 29 May 2017
Abstract
Australia’s energy industry has evolved around a vertically integrated structure with exploration and production (E&P) companies carrying out production, processing and development of associated infrastructure, such as pipelines. We suggest the next innovation for productivity improvements is a ‘North American model’, whereby a midstream service industry develops, owns and operates shared gas processing and transport infrastructure, allowing the E&P sector to direct limited capital to focus on exploiting and marketing the resource without necessarily building or operating the associated infrastructure.
E&P companies are being challenged by the lower oil prices, and balance sheets are under strain from high debt levels. Large joint ventures are no longer the natural owners of gas processing facilities as the original gas reserves decline and other reserve owners seek to use spare capacity. Junior explorers are also challenged as capital is redirected elsewhere while oil prices remain low.
Herein we demonstrate that collaboration in shared infrastructure will restore value. Benefits to E&P companies include minimising upfront capital, lower unit cost through scale and sharing of risks with other projects and partners.
Midstream infrastructure owners and operators can provide additional benefits because they typically have lower rates of return expectations, lower capital costs and debt premiums, have specialist knowledge and enable sharing of production and transportation costs.
Through case studies, we outline the key commercial considerations from the perspective of both the explorer and the asset owner, demonstrate the potential financial benefits and promote further debate on what is stopping the development of this midstream service industry in Australia.
Keywords: business model, collaboration, commercial, development, energy infrastructure, gas infrastructure, gas plants, gas processing, gas transmission, midstream model, North American model, pipelines, productivity, shared infrastructure, sharing costs.
Steve Lewis is General Manager, Business Development at energy infrastructure company ATCO Australia, headquartered in Perth, Western Australia. Steve commenced his role at ATCO Australia in October 2015, having spent the previous 5 years with Australian gas pipeline owner the APA Group. As General Manager, Western Australia, Steve oversaw APA’s assets in the state, including five high-pressure gas pipelines, 32 gas laterals and an underground gas storage facility. Prior to that, Steve spent more than a decade with Woodside Energy in various senior roles at the company’s Perth and Tokyo offices, including General Manager, North West Shelf Gas; General Manager, Domestic Gas; and General Manager, North West Shelf LNG. An experienced and customer-focused manager, Steve is responsible for identifying and delivering on growth opportunities using ATCO’s wide-ranging expertise across the energy infrastructure value chain. Steve holds a BAppSc and a GradDipBusAdmin. |
Jon Serfaty is Commercial Advisor, Business Development at ATCO Australia, having commenced in February 2016. Prior to this role, Jon spent almost 9 years with APA Group in various engineering, project and commercial roles working on projects and opportunities across Australia. Jon is a member of the Society of Petroleum Engineers and has a BEng with first class honours and a BCom from the University of Western Australia. Jon is currently completing his Masters of Business Administration at the University of Western Australia. |
Michael Brooks has worked across Australia and New Zealand in a variety of downstream oil and gas roles. In 2016, Michael joined ATCO Australia as a business development manager. Prior to this, Michael’s roles included Commercial Operations Manager, Dampier Bunbury Pipeline and over 12 years with BP, including roles as Deputy General Manager, North West Shelf Gas; Supply and Stocks Manager BP New Zealand; and Strategic Infrastructure Manager BP Australia, as well as a variety of engineering, business development and commercial roles at BP refineries in Perth and Brisbane. Michael’s expertise spans the energy industry in Australia and New Zealand, with knowledge of domestic gas, oil and refined products supply and trading, biofuels, emissions trading and energy infrastructure in a mixture of commercial, strategy and engineering roles. Michael is a member of Engineers Australia, having a BEng (Enviro) Hons., BSci and MBA (Exec). |
Ben Smith has worked across four continents in a variety of commercial, upstream oil and gas roles. In 2016, Ben joined ATCO Australia as a commercial manager. Prior to this, Ben’s roles included Senior Commercial Advisor at the APLNG project as part of the Wholesale Gas Marketing Team and 4 years with BG Group, including roles as Lead Economist for the Armada Gas Hub in the UK North Sea, Commercial Advisor for gas evacuation at the Brazilian offshore oil fields, LNG Portfolio Optimisation Analyst based in Houston and Commercial Assurance Advisor working on BG Groups upstream investments in the UK. Ben has a BSc with first class honours from Loughborough University. |
