Making upstream infrastructure collaboration happen
François Tibi A , Warrick Lanagan B and Whitney Merchant A CA Boston Consulting Group, Level 41/161 Castlereagh Street, Sydney, NSW 2000, Australia.
B Boston Consulting Group, Level 43/108 St Georges Terrace, Perth, WA 6000, Australia.
C Corresponding author. Email: Merchant.Whitney@bcg.com
The APPEA Journal 60(2) 551-554 https://doi.org/10.1071/AJ19156
Accepted: 18 March 2020 Published: 15 May 2020
Abstract
Major upstream and midstream developments are required in Australia to sustainably address the east coast gas price challenge and enable a new wave of liquefied natural gas (LNG) projects in Western Australia (WA) and the Northern Territory. Until now, each project in the WA offshore and Queensland coal seam gas systems has had its own midstream infrastructure, which is suboptimal for costs. Major players, including Chevron and Woodside, have expressed interest in a more optimal, shared ownership model, similar to others around the world. In the US Gulf of Mexico, pipeline owners established master limited partnerships to take advantage of tax benefits and to share cost with institutional investors. In Norway, high infrastructure costs led to government-mandated shared ownership. The momentum for change in Australia is gathering and includes increasing investor pressure on capital discipline for upstream companies, strong competition for final investment decisions across global LNG projects, stakeholder expectations to minimise the environmental footprint of energy projects, a strong appetite of infrastructure and pension funds for energy infrastructure assets and pipeline companies looking to expand their portfolios to realise synergies in view of increasing regulatory scrutiny and margin restrictions. This paper describes international benchmarks, identifies blockers and proposes action steps that will enable this crucial industry development.
Keywords: collaborative operator models, development, fair access, gas, gas markets, infrastructure investments, institutional investors, master limited partnership, midstream, midstream collaboration, pipeline, regulation, shared ownership, supply gaps, tariff models.
François Tibi is a Managing Director and Senior Partner in BCG’s Sydney office, and is the Leader of BCG’s energy practice in the Asia–Pacific, with considerable experience in operations, strategy, trading and optimisation and advanced analytics. François joined BCG in 2000 and has worked in the Paris, London and Perth offices. Before BCG, François served in the French navy and worked for Total in E&P, LPG trading/supply and mergers and acquisitions. François holds an MSc, with majors in Applied Mathematics and Fluid Dynamics, from Ecole Polytechnique and an oil engineer degree from the IFP School in France. |
Warrick Lanagan is a Managing Director and Partner and heads the Perth office of BCG. Warrick joined BCG in 2008 in the Melbourne office and helped establish the Perth office in 2011. Warrick is a core member of the industrial goods, operations and energy practices, with experience in large capital project delivery, mining and metals, utilities and EPC/EPCMs (engineering, procurement, construction/management). Warrick holds an MBA with distinction (majors in Finance and Private Equity) from the London Business School and a BSc from Curtin University (Perth, WA, Australia). |
Whitney Merchant is a Principal in BCG’s Sydney office, with 9 years of strategic consulting experience. Whitney is the sector lead for Oil and Gas in ANZ’s energy practice, and the energy node for the strategy and organisation functional practices. Whitney has worked on transformational strategy and organisational projects across Australia, Canada and Central Asia. Whitney holds a joint MBA and MSc from Stanford University in the USA, and a BCom with distinction from the University of Calgary, Canada. Whitney also has a certificate for Social Innovation from Stanford and a certificate in Corporate Social Responsibility and Sustainable Development from the University of Calgary. |
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