Canberra
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Introduction
It’s good to be at the Gas Speak Colloquium once again.
I thank the Trust and all those who inspire new generations of leaders in the gas industry.
This year has been a big one for the industry.
In the twelve months since we last met, we’ve seen some major final LNG investment decisions taken, with more on the horizon.
They show that Australia is emerging as a major gas hub.
And that means two things – a wealth of career options for young Australians, and a path to enhanced energy security for Australia and our trading partners.
In short, it means prosperity and opportunity.
Australia: a regional hub for gas
Australia’s gas resources and markets are undergoing significant transformation, lifted by technological advances to open up new resources.
At the same time, the gas industry is emerging as a vital element in ensuring energy security and meeting energy needs as we transition to a lower emissions economy.
With so much activity going on right across the industry, let me give you just a snapshot of where we stand.
Australia’s LNG exports are forecast to exceed $10 billion in value this financial year.
Australia has six LNG projects in various stages of construction.
In addition to the conventional west coast projects - Pluto, Gorgon and the floating Prelude LNG - we now have the development of the coal-seam gas to LNG sector in Queensland with the Gladstone, Queensland Curtis and Australia-Pacific LNG onshore projects.
Within four years, we expect to be shipping in excess of 50 million tonnes of LNG per annum.
That would make Australia the world’s second-largest LNG exporter behind Qatar.
Projects under construction have a combined capital investment in excess of $110 billion.
And they’ll create over 20,000 jobs at peak construction.
That’s especially important for regional employment.
In May this year, Shell took a Final Investment Decision on its Prelude floating-LNG project.
Prelude is on track to be the world’s first floating LNG facility - and what a facility it will be.
Around three times the length of the MCG, using five times the amount of steel in the Sydney Harbour Bridge and weighing almost six times as much as the largest aircraft carrier in the world – Prelude will be the biggest floating facility ever built.
But most importantly, Australians will be the first in the world to gain training and experience on a floating LNG operation.
In partnership with the University of Western Australia, Shell will strengthen education and research in floating LNG through its multimillion-dollar support for the Shell Chair in Offshore Foundations – Metocean Engineering.
Shell will also pioneer training for the floating-LNG facility through a consortium to be known as the Global Centre for Floating-LNG Learning & Research.
This will foster a unique mix of processing, offshore and marine skills.
Other LNG projects to potentially take final investment decisions in the next 12 months include Wheatstone, Ichthys and Browse LNG.
Some of the world's largest LNG-supply agreements underwrite these projects.
Meanwhile, there is huge potential to develop Australia’s tight and shale-gas reserves and we recently saw Beach Energy book Australia’s first contingent shale-gas reserves.
Here in Australia we are clearly very fortunate in our resource endowment and putting in place the right policy and investment frameworks allows us to make the most of this.
Policy certainty
Last year I highlighted the importance of policy certainty for bringing on investment in resource and energy developments.
Since then the Government has released draft legislation in two key policy areas - resource taxation and carbon pricing - to do just that.
The introduction of the Minerals Resource Rent Tax and the extension of the Petroleum Resource Rent Tax strike the appropriate balance between maximising and spreading the benefits from the development of our resources without being a deterrent to continued investment.
Our market based approach to pricing carbon is designed to ensure that we transition to lower emissions energy sources in the most cost-effective way.
As a cleaner-burning fuel gas is expected to play an important role in this transition.
Depending on the technologies used, natural gas emits about 55 per cent less carbon-dioxide equivalent emissions per megawatt hour than typical coal-fired generation.
It can use substantially less water, too.
Gas technologies are helping to bridge the gap between cheap but emissions-intensive coal-fired generation and renewable energy technologies.
Our energy and resource economics agency – BREE – forecasts that gas-fired generation will account for more than one third of Australia’s electricity supply within 20 years.
The greater substitution of coal-fired generation for natural gas will avoid locking in higher emissions from coal while work continues on the development of clean and renewable energy technologies that can be deployed at scale affordably in the future.
Australia’s commitment to carbon capture and storage technologies is another important part of this picture.
Potential uses for CCS in the future extend beyond coal-fired power generation.
The Gorgon LNG project is perhaps the best example.
From 2014, the Gorgon project will be the largest operating CCS project in the world.
It will store up to 120 million tonnes of carbon dioxide over the life of the project.
Gas market reform agenda
Of course, shaping the gas industry involves more than extraction and exports.
It’s about allowing the industry to grow in a way that benefits all Australians – including gas consumers.
The gas market reform agenda has made great progress.
The National Gas Law, for instance, is a framework which ensures the efficient operation of pipeline services, efficient investment and the effective regulation of gas networks.
The Australian Government worked with industry to design and implement a range of gas-market reforms.
The Gas Statement of Opportunities helps market participants and potential entrants identify investment opportunities and manage their market positions.
It provides a 10-year outlook of demand forecasts against infrastructure capabilities and a 20-year projection of gas reserves.
This outlook highlights where potential reserve shortfalls and production and transmission constraints may occur.
The information on the Gas Bulletin Board gives the market an important level of transparency.
The Short-Term Trading Market – with hubs in Sydney and Adelaide – represents a significant step forward in the way gas can be bought and sold in Australia.
It provides clear market and pricing signals to existing participants, potential entrants and consumers.
Better investment and risk-management decisions follow.
In addition, it enhances liquidity and facilitates secondary trading between shippers and users, for gas-fired power generators and for trading over interconnecting pipelines.
We are looking forward to another STTM hub starting soon in Brisbane.
Looking beyond these measures, the Energy White Paper will map out the Government’s vision for the energy sector in the longer term, out to 2030 and beyond.
It is intended that the draft white paper will be released later this year, followed by the final white paper next year.
Conclusion
In conclusion I simply say that the oil and gas industry is one of the most technologically advanced, innovative, highly-skilled – and highly paid – industries in Australia.
Your future career is taking shape in what is surely one of the most exciting times to work in the gas industry.
I believe the best years of the gas industry are yet to come.
How you benefit from all this potential, and how much prosperity you generate, is – to a large extent – up to you.
I wish you every success.