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Interview

John Griffiths – CEO, Gas Energy, Australia

John Griffiths - Gas Energy

The CEO of Gas Energy, John Griffiths depicts how gaseous fuels can positively affect the current state of the industry and ways in which the organization is addressing the current hurdles preventing widespread usage of these gasses. Furthermore, he also elaborates on the implications of Australia’s export ambitions on the downstream gaseous fuel industry, while offering his insights on how the domestic market should respond moving forward.

It seems there’s been a lot of consolidation among industry associations since we last met your predecessor in 2010, who at the time was leading LPG Australia. Now representing the full spectrum of downstream gaseous fuels as one collective body, how is Gas Energy better suited to serve its members and advance the interests of the industry?

The LPG Australia association started up around 1958. In 2012, the association had an extraordinary general meeting that agreed it would bring on board the natural gas fuels as well—LNG and CNG—which had been previously covered by the Natural Gas Vehicles Association. But, this organization had struggled somewhat with funding and achieving critical mass, so integration between the two associations was more or less a given considering our shared interests and agendas. Despite differing industrial and consumer applications, when it comes to environmental controls and policy developments, LPG, CNG, and LNG are all impacted in a similar fashion.

What would you say are the most pervasive challenges across your member companies today?

As far as stationary energy goes, there’s widespread concern that the current policy environment favors renewables, rather than looking at emissions performance. Our view is that these policies should be looking at greenhouse gas performance in a technology neutral sense by considering the use of cleaner resources such as gas, as opposed to omitting fossil fuels entirely and only considering renewables. Studies have shown that LNG can constitute significantly improved emissions performance, as utilization is not limited by intermittent resources such as solar or wind.

With regards to the transport segment, LPG is actually a very well established industry in Australia. The gas is widely used as a transport fuel in pedestrian and commercial vehicles. This trend dates back all the way to the Gulf War in the early 1970s, when petrol prices were quite high and Australia was developing its own oil and gas resources in the Bass Strait. LPG was largely produced as a byproduct when exploiting those particular resources—thus becoming a common alternative to highly priced petrol and effectively jumpstarting the autogas industry. Whilst LPG cars are still coming onto the road, the industry is definitely not as prominent as it once was, and that’s primarily due to a shift in consumer demand within the domestic automotive market. To this end, we’re actually working with the Victorian Government and the Victorian Automobile Chamber of Commerce in establishing some form of manufacturing facility that will carry out LPG conversions for imported vehicles in hopes of facilitating more demand in this area.

Within the same context, LNG and CNG as transport fuels are more recent developments, and have yet to reach any material levels of penetration—especially given the relatively low price of diesel and lack of existing infrastructure. That being said, however, a recent research report released by the University of New South Wales (UNSW), in conjunction with the Commonwealth Scientific Industrial Research Organization (CSIRO) and Geoscience Australia, determined that heavy vehicle transport is an area poised to benefit the most from utilizing gaseous fuels.

How is the association helping to address these challenges?

We’re currently working with industry stakeholders in advancing what we refer to as our 2030 vision for natural gas fuels. Under this vision, the primary mission is to implement greater usage of gaseous fuels in the community and maximize on all the benefits they have to offer. A key component of this initiative is a 10-point action plan that details specifically targeted objectives that will create a cleaner, and cheaper Australian fuel future. Action steps span anywhere from building awareness of the benefits of Australian natural gas to potential purchasers and the Australian community to introducing appropriate tax settings during the development cycle to conducting collaborative training workshops among government and industry stakeholders.

Essentially, we’re focusing our directives on the growth and widespread usage of the fuels—particularly in more remote areas that are off grid where the fuels have a lot to offer. On the stationary side, we’re working with government on reforming various policies that encourage gas access via certain mediums such as pipelines, which can be quite costly and uneconomical. Looking towards the future, we’re pushing for a scenario where gaseous fuels can be combined with renewable technologies in areas that are off grid.

To what degree do the organization’s goals align with the mandate of the recently inducted Minister of Resources, Energy, and Northern Australia Josh Frydenberg?
A primary focus is reducing the cost of energy—Australia used to be very competitive with respect to energy supply. We’ve seen a loss in competitive advance due in part to renewable energy targets—requiring the use of more high-cost energy. It’s also in large part due to regulatory failures, or more specifically, the “gold plating” of infrastructure investments where contractors are guaranteed a rate of return just for undertaking a particular project regardless of cost inputs—which further drives up prices. To this end, in line with the government’s climate change objectives, we see gaseous fuels as a pivotal component in driving off grid solutions and alleviating cost pressures—especially given the nation’s history with respect to technology leadership and innovation.

What downstream impact has the nation’s influx of capital-intensive LNG projects had on your member companies?

Our members are mainly concerned with a readily available and consistent supply of natural gas, but more importantly, accessing this commodity at affordable price levels. Some have talked about implementing a domestic reservation policy for gas production, but this is not an avenue we have advocated for. We’re more focused on increasing utilization of natural gas in the industry, which can significantly benefit the community, while also enabling our export ambitions. It’s often those larger scale, capital-intensive projects that encourage supply to come on-stream.  Obviously, the cost of the gas is an issue, but it’s important to keep in mind that there are many other externalities at play here—many of which extend beyond our borders. For instance, the US is looking to bring substantial supplies of LNG into the Asia Pacific market, which would invariably affect wholesale prices globally and domestically in Australia. The other fact to bear in mind is that the industry boasts an extremely competitive operating landscape with both state-owned and privatized interests always at play—an aspect that will always influence tip the playing fields in one way or another.

Can you please share the mandate that you set for yourself when initially assuming the position of CEO back in August 2015?

Our main objective is to promote the growth and development of the downstream gaseous fuels industry, which principally covers CNG, LPG, and LNG. We represent companies that not only use these gases, but also supply them including Elgas, BOC, Wesfarmers Kleenheat Gas, and Origin Energy. But, overall we boast a diverse membership base that spans companies with even upstream interests to smaller companies that provide services to the industry such as conversion, construction, transport, and even consultancy. Our efforts also focus on demonstrating the benefits of these fuels, both in terms of environmental implications regarding reduced greenhouse gas and tailpipe emission, and enhanced supply security which ensures that Australia is self-sufficient with all these fuels. Aside from LPG, we’re already a major exporter of natural gas, more specifically LNG and well poised to overtake Qatar as the world’s largest in a few years’ time.

There are also benefits as far as job creation is concerned. As these products are used in Australia, there are more jobs associated with processing and distributing, as opposed to solely importing finished products—namely petrol and diesel—from Singapore.

Overall, the country has had quite a history of using gas. Australia one of the first countries to have natural gas powered bus fleets in major cities—now with one of the most established networks of LPG service stations in the world.

For you personally, compared to other resources, how would you value the importance of gas within Australia’s energy mix moving forward?

It’d have to be valued quite highly, particularly in the sense that gas seamlessly pairs up with renewables as we move towards a greener energy future. Exhibiting much more flexibility than coal, gas will be a prime component in maintaining a consistent supply of energy, especially in the presence of intermittent renewable sources such as wind or solar. The benefits of gas our self-evident—energy security and job creation, among others. It is now a matter of having these realizations come to light—which we at Gas Energy will very much focus on in the coming years.

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