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Interview

Ken Fitzpatrick – Chairman, National Energy Resources Australia (NERA)

Untitled

NERA Chairman Ken Fitzpatrick reviews the key objectives of the government-funded initiative as a key component of its Industry Innovation and Competitiveness Agenda, and how the initiative can help ensure future success and productivity throughout the resource extraction industries of Australia.

What market demands in particular incited the formation of National Energy Resources Australia (NERA)?

The Australian government recognized that Australia needed to reform its economy. Over the past 25 years, while Australia has been growing year on year, our competitiveness within the OECD has been slipping, particularly in business collaboration with universities and research institutions. Collaboration in general has been diminishing over the years. The Australian government identified six different sectors as significant contributors to the Australian economy, and as areas in which the country could make improvements in productivity and competitiveness: Food and Agriculture; Mining Equipment and Technical Services; Advanced Manufacturing; Pharmaceutical and Medical Technology; Cybersecurity; and Oil, Gas and Energy Resources.

What are the key objectives of NERA?

NERA includes the oil, gas, coal-seam gas, uranium, coal and related service industries, and our objective is to improve the competitiveness, productivity, and innovation in these industries. To do this, we want to improve five areas: industry-led research; industry led work-skills; grow the supply chain both domestically and globally; reduce the regulatory burden in Australia; and finally, improve collaboration within the sectors.

This last component, collaboration, is integral to improving productivity and competitiveness in the oil and gas industry, and how can Australia can become best in class in operations and maintenance in the LNG industry. Australia is going to be a world leader in LNG exports by 2020, with 10 LNG plants and 21 trains in three different geographic locations. There is a real opportunity for Australian suppliers, maintainers, and engineers to become best in class in operations and maintenance, and then be able to export these skills overseas. The growth center is focusing on creating connections  and leveraging regional best practices. We want to build on existing relationships with operators, universities, research organizations and the CSIRO to foster innovation, and industry led applied research.

What outcomes does NERA hope to achieve by connecting industry players to promote collaboration and innovation?

Connecting with operating companies, universities, training providers, suppliers and regulators is paramount to our mission so that we can bring everyone together to talk about pressing issues in the industry. Oftentimes a challenge is that not everyone is able to attend a symposium or a forum at one point in time, so our efforts are to network across the sector to connect the stakeholders to help promote collaboration and innovation.

We also hope to promote industry-led research. Australia has great research capabilities, and we hope to harness these capabilities to be used towards more applied research. By partnering with industry leaders and universities, we will be able to research pertinent information related to industry challenges. Some themes that have come out of our stakeholder engagement meetings include: high costs of activities (exploration, construction commissioning; operations and maintenance; decommissioning); water management; carbon management as well as concerns related to social license to operate. Naturally these are challenges that the industry will face in the future, but by addressing these issues with foresight, we may be able to develop better solutions to meet these demands, which will reduce costs in future and make our industry more competitive and productive.

Do you partner with other industry associations?

Our objective is to complement the work with industry associations such as the Minerals Council of Australia, NSW Mining Association, Queensland Resource Council and the Australian Petroleum Production & Exploration Association (APPEA).

What are some concrete measures being taken to address these issues?

Firstly, regarding social license to operate, there is a real challenge in Australia to convince, and develop saliency in the hearts and minds of those in the community. Coal, for example, is heavily regulated through the environmental process. Uranium is also heavily restricted, yet despite Australia having 30 percent of global resources there are only three mines operational. For oil and gas, both onshore and offshore approvals are difficult to obtain. Across the board, there is an integral element of establishing community trust of resource extraction and processing. We see an increased need for social, environmental, and economic research into the consequence of these activities. Collaborations with the CSIRO, universities and other research organizations have been facilitated to build up this data, which is very important for the future of onshore developments throughout Australia and access to permits in the future.

Secondly, regarding work skills, we need to better understand the workforce for the future taking into consideration the increase of robotics, automation and remote operations.

Finally, we also want to reduce regulatory burden on the sector. In Australia, there is a lot of flat time seeking regulatory approvals, and we want to but streamline the approval process but have the same level of regulatory diligence. There is a need to balance the regulators’ social license to regulate with the operators’ social license to operate. Communities expect the regulators to be strong, and at the same time they expect operators to implement with the industry best practices. At the moment, there is a high level of distrust of the industry within the community. We believe that if we promote trusted research into social, economic and environmental areas of our industries activities then we can help the community come to believe in the industry.

What developments do you believe are enacting positive change for the future of the industry?

Predictive analytics is a very exciting new advancement throughout the industry. Many companies are able to take data from their respective databases, utilize new algorithms to build insights to optimize their plants operations. Rio Tinto and BHP, for instance, are conducting data analytics for their rotating machinery to improve operability and run times. We also hear of exemplary cases in process engineering, where data is synthesized and interpreted to prevent shutdowns and enhance productivity. There are several novel applications for predictive analytics, and it has the potential to greatly improve the productivity and competitiveness of the industry as a whole.

What could be done to strengthen the relationship between the industry and Australian research centers as well as fostering translational research?

We are looking into opportunities of translational research, addressing localized problems, and facilitating the collaboration of universities, suppliers, and operators to work together and identify potential joint-industry programs. Following the research, we may find that we have new, innovative solutions in which we have additional programs to commercialize these efforts. We believe there is a natural owner for intellectual property and we want to be able to license IP so it can be commercialized and introduced throughout the industry as widely as possible.

What has been the overall reception of NERA, and what are the future prospects for the initiative?

The reception of NERA throughout the industry has been very positive. Operators see it as an opportunity for collaboration with not only each other, but also with the service sector. The universities see it as an opportunity to gain a better understanding of the industry challenges and problems, so that they can determine the areas research they should focus in. Training providers wish to understand the future industry demands so that they can anticipate future requirements.

One of the things we identified in our stakeholder engagement sessions was that there is a good relationship between industry and researchers at the big company level, but we need to build the relationship at the small company and supplier level. We want to get the suppliers and the small companies to better understand what universities can offer through translational research. The most proactive companies utilize challenging times, such as now, to change their practices and improve their partnerships and embark on new initiatives.

Currently at NERA, our key priority is to network with industry stakeholders to identify good projects so that we can make a difference. Once projects are established, the next challenge is commercialization. Commercializing innovation is the challenge, and an area we want to improve in Australia.

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