Productivity opportunities in Australia's natural gas industry and their importance to our competitive position in the global LNG market

Abstract

Natural gas has moved from a regional to a global commodity, with LNG enabling natural gas users to source supply from a wider range of sources. Australian natural gas is expected to play a large role in this emerging, global market with significant investment in LNG processing and shipping facilities either in place, under construction or planned for development. The focus of Australian natural gas producers has appropriately been on production, to both meet domestic demand as well as provide feedstock for our planned LNG capacity. Going forward, however, we believe this needs to shift to a stronger focus on total cost of production, particularly in our natural gas supply sources and especially if potential supply emerges in markets traditionally seen as net energy importers. A case in point is the United States – linking contracts partially to Henry Hub pricing and the recent granting of an export license to the Cameron LNG project in Louisiana continue to demonstrate the emerging threat US based LNG supply could have to Australia’s natural gas industry. This study proposes to identify any gap between Australian operations and best practise natural gas production markets overseas, how this has trended over time and potential drivers, controllable and structural/uncontrollable. This will provide insight into opportunities to improve productivity in upstream operations as well as establish a case for continuous improvement in natural gas operations.