Bernadette Cullinane – Asia Pacific Energy Lead, Accenture, Australia
With a particular focus on assisting oil and gas companies to improve performance, Accenture has committed itself to the Australian market, lending its services and expertise in areas such as supply chain and maintenance transformation, operational strategy, and technological implementation. Accenture’s Asia Pacific Energy Lead, Ms. Bernadette Cullinane, gives an overview of Australia’s shift from construction to production phases in its market, as well as Accenture’s key expertise in providing strategic digital solutions for clients.
As the Australian LNG market is currently shifting from construction to production phases, what in particular is unique about this occurrence in Australia compared to other regions?
Australia is truly special in regards to its transition, as it occurred at such a speed and at an unprecedented order of magnitude and scale. LNG industry investment in Australia in the last eight years is as high as $200 billion USD. In this very narrow timeframe, major oil and gas companies have made tremendous investments, not just in terms of dollars, but also in terms of the technologies that have been brought to the region. Many of these companies have embarked upon initiatives that are state of the art and contemporary, several of which are the first of their kind in the world. These complex and challenging innovations have sought to take advantage of the unique nature of Australian hydrocarbon assets.
Western Australia is focused mainly on conventional oil and gas resources, while the east of the country has extended itself more into unconventional sources of production. LNG production is now found on both sides of the country. Regardless of conventional or unconventional production, significant technology is imbedded within these projects to access and produce these hydrocarbons. In the case of Chevron’s Gorgon project, they have established production facilities on a Class-A nature reserve, with an expected production to last several decades. For example, Gorgon operates the largest geo-sequestration project in the world. Shell’s Prelude FLNG facility, is again a world’s first; a massive floating facility with a complex and integrated operation.
Each of these projects are mega-projects, and when considering that there are currently seven projects of this scale underway in Australia, one can begin to comprehend the unprecedented impact of the industry on the region. In other regions, this scale of development would have occurred over the course of several decades, but here we have witnessed this incredible growth in the span of seven or eight years. Due to this, however, there are many opportunities and challenges ahead, and operators, service companies, regulators, as well as the government must collaborate and work together.
In 2015, Accenture released the report “Ready or not?” analyzing whether the industry was prepared to transition to the operational phase. What have been the main areas in which the local industry has most effectively prepared for this transition?
The research highlighted the efforts made by Australian operators and service providers to prepare for this market transition. Those in the industry have anticipated the transition to operations for some time now and the necessary shift in focus to the maintenance and operations phase. Companies, primarily service providers, have restructured themselves, and have invested in development and / or acquisition of skills and expertise required to support operations.
This includes mechanical and electrical capabilities, as well as the skills required to operate and support such complex assets, which are unlike any assets around the world and require a very high level of skill. Service companies have anticipated this, and have undergone strategic mergers and acquisitions, divestitures, as well as their own investment processes in technologies and systems, further enhancing and training their workforce. We see this as a strong response from those in the industry to increase the capabilities of the workforce to better address the challenges that come along with a shift in the market dynamic.
In contrast, there are some other areas where the industry is not as ready as it could be. We have identified some of these aspects, including adjustments within the regulatory framework, as well as the industrial relations framework, both of which pose barriers to allowing Australia to globally competitive. While there have been some improvements being made there are still many areas that should be modified, particularly during this time of market transition. Since we conducted this research in 2015, the market environment now poses even more challenges given the slowdown of global economic growth and the oversupply of LNG.
This is the first case of significant oversupply of LNG in many decades since the inception of producing the energy source approximately 50 years ago. This oversupply has placed additional stress on sellers, as there is a necessity to find sources of absorption for this oversupply. We must anticipate that this oversupply will be present for the coming five to ten years, and as a result of this, the dynamics of the market have shifted from the producer or seller maintaining the upper hand, to the power being transitioned to buyers. This could result in changes in the buyers’ market as to how LNG is traded, as well as the nature of the contracts involved.
Noting some of this room for improvement you have reported, notably with regard to the lack of coordination between operators and service providers with regulators, how has the situation evolved since the release of the report?
Since the release of the report, we have found that operators, service providers, as well as the government are all very willing to discuss collaboration efforts, and discuss market challenges in an open dialogue. In one example of improvements, the Australian Competition and Consumer Commission (ACCC) has granted Queensland operators certain guidelines by which they can share their maintenance schedules. This is an example of the good support provided by the regulator, recognizing the importance of fostering collaboration to maintain a thriving market. This goes beyond simply a cost perspective, but also includes a managerial and safety perspective as well. The recently launched National Energy Resources Australia (NERA) has also proved to be prominent in advancing collaborative efforts, and taking into consideration the objectives and goals of all stakeholders to promote the growth of the oil and gas industry in Australia.
Accenture has taken an active role in facilitating collaboration efforts throughout the industry, assisting with the identification of opportunities for shared infrastructure or shared services. We have spearheaded an energy industry collaboration group, with participation of approximately 40 operators and service companies. In addition to this, we have clusters of initiatives, where in each group, we have a series of companies working together on themes including work-skills, standardization, as well as the collaboration and sharing of infrastructure and services. From our research, we have found that over 90 percent of all innovation comes from service providers, and it is great to see operators opening up to these opportunities, and developing them to help the local industry become more competitive. Despite all of the great examples of proactive collaboration taking place, there is still more that must be done in terms of positioning Australia to be globally competitive.
To what extent is the current market dynamic disrupting, and forcing adaptation in project operation and asset management?
The market is placing increasing pressure on the system for innovation and collaboration. Here on the west coast in particular, and on the east coast as well, the main focus is now on getting assets up and running, and achieving production targets. This will be the focus for the coming few years. Companies recognize that investment going forward will not be in greenfield, but rather in brownfield projects, and as a result of this, there will be more opportunities for commercial exchanges between companies, allowing them to optimize how the disposition of their gas, and how they will produce LNG.
What is Accenture’s current scope of work in the oil and gas sector in the Australia?
Our work is continuously changes and responds to both the marketplace and the needs of our clients and we help them find solutions to run their operations more efficiently, economically and predictably. With Accenture’s industry capabilities and depth in digital technology, we believe this is a focus in particular where we can assist the companies with which we have a working partnership.
Predictive analytics is a key service that we provide, and a great example in this regard is our partnership with Woodside. Through the data and digital capabilities of Accenture, we are able to analyze how to operate operators’ assets more reliably, and thereby achieve better production performance. We are also able to offer predictive analysis of factors that may disrupt a plant, allowing for companies to take proactive, precautionary action. All of this is exceedingly valuable, as the most important thing for all facilities within the oil and gas industry is that they are effectively up and running.
We are also making progress in the interaction of man and machine, particularly connecting technologies together. Asia may be leading the pack in undertaking these initiatives, and we have had many clients throughout Australia who are exploring and integrating these industrial internet technologies. We aspire to integrate information from a large number of operational systems, and bring everything together in a succinct way so that decisions may be made in the most efficient manner possible. This can be done, for example through drone surveillance and video analytics integrated into standard operations of the oil and gas industry.
Our digital efforts are our key projects in Australia, however, beyond this, we are also involved in the transformation of the industry in a number of different ways. This includes consultation on strategic work to be retained by companies themselves versus that work which can be more efficiently done outside of the company through service providers. Our goal is to assist in establishing and achieving a more competitive LNG market in the region, and there are several ways in which companies can rethink how they work.
To what extent do you see Australian activities contributing to strengthening the expertise of Accenture all over the world?
Cross-industry digital platforms allow for both the ability to tap into new technology, as well as the ability to do business in a different way. In some ways, our predictive analytics extend beyond our efforts in the oil and gas industry, and also lend themselves to other industries as well. For example, our digital platforms allow for companies to interact in novel ways with their marine transportation providers in order to optimize transportation to remote assets. We can we extend this technology to other sectors such as agriculture. In each industry throughout Australia in which Accenture is involved, we are working to establish such digital platforms which can be leveraged to capitalize upon shared knowledge, instantaneously offering more cost effective operations.
The LNG market is a global one, and there are several other budding markets throughout the world actively developing their regional industries. In this capacity, much of the knowledge and expertise that we have honed here in Australia, we are now able to export throughout our company to provided added value to our other regional markets as well. Whereas now in Australia we are focusing more intently on operations and maintenance, in the US Gulf Coast, for example, the region is just beginning to export some of its first cargos, creating opportunities for us to provide our Australian experience and expertise. This is just one example of the trigger events throughout the evolution of the global LNG business that have allowed for us to take our expertise gained in Australia and apply it in various other regions around the world.