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Interview

Kym Bills – CEO, Western Australian Energy Research Alliance (WA:ERA), Australia

With a mission to foster collaboration and resourcing for petroleum and geosequestration related research, the Western Australian Energy Research Alliance (WA:ERA) provides innovative, safe and sustainable solutions for regional partners. CEO, Kym Bills, lays out the alliance’s focus on capability building, research and education, and how these elements are critical in the coming years for regional growth in the energy sector.

Established well over a decade ago, what were the underlying aspirations behind the establishment of WA:ERA?

WA:ERA is an un-incorporated joint venture, with partners including the Commonwealth Scientific and Industrial Research Organization (CSIRO), Curtin University, and The University of Western Australia. It was set up in 2003 and, at the time, Woodside was the major regional gas player, serving as a catalyst for our initiative. Woodside in particular wanted a much more integrated, research-oriented engagement to address local challenges, such as issues related to the North West Shelf gas development. This was one of the leading drivers for the creation of our alliance, where the industry partner client would have a leading role in deciding the research engagements to harness the capabilities that we have and working with researchers to deliver.

Our alliance evolved following the joining of Chevron in 2005, as well as the State Government funding new researchers, including PhDs and post-docs in efforts to build capability to provide better solutions to help industry such as Woodside and Chevron to invest and grow. These were the local drivers, addressing local challenges. We acknowledge the reality that expertise exists around the world, but we honed in on regional focal points, including metocean conditions and seabed conditions, which pose unique challenges such as to erect platforms in a stable manner.

What makes WA:ERA unique among other research-based institutions across the nation, in both academia and industry?

WA:ERA has always had an industry focus, to address problems that industry has in a collaborative way. Whereas we sometimes have novel ideas to share with industry leaders, a large proportion of the work that we do is responding to the challenges of the industry. We have done this in a collaborative way since 2003, and at the moment, the agenda of the Australian federal Government deems that these efforts are incredibly important.

The federal Government has recently launched an innovation and science agenda, after reviewing OECD and other data concluding that Australia is particularly good at initial research, but lagging in focusing on industry priorities, and commercializing research. WA:ERA has been very engaged in this regard, addressing industry priorities, and we have been doing so for years, which truly sets us apart from other, comparable associations. There has been a gap in this regard in Australia for quite some time, but we have been a pioneer in this sector since 2003.

As CEO of WA:ERA, what is at the top of your agenda for the alliance?

We now have Shell in the alliance as an industry research partner, resulting in our three main partners consisting of Shell, Woodside, and Chevron. Our priorities primarily involve responding to their needs, and Shell in particular brings its own unique research possibilities, considering its projects with floating LNG (FLNG) and projects all over Australia, including Queensland, Western Australia, as well as initiatives in the north.

With these three companies serving as a priority for our alliance, it is notable that they are working more together collaboratively and we are keen to encourage and respond to this. With low oil and gas prices, and the subsequent challenges throughout the market, we are absolutely responsive to these initiatives, and part of this is looking at how pre-competitive areas can be grown, so that our three partners and we can engage in a less constrained manner. Typically, in the past, we have worked on a more one-on-one basis, working with the issues of one partnering company at a time. Oftentimes, these issues would be something such as corrosion issues or flow assurance, which are actually quite similar to other companies across the board, but due to intellectual property issues and other concerns, we have not been able to share advice and best-practices as much as we would like. This is currently changing now.

Recently, National Energy Resources Australia (NERA), an industry-led, Federal government-funded initiative, was established to support the Australian oil and gas and energy resources sector. There was a national tender for the headquarters, which WA:ERA ultimately won, and NERA is now located in Western Australia co-located with WA:ERA. NERA shares an interest with a number of our key priorities, including engagement with small and medium enterprises, and we hope to continually expand our engagement. Of course our three industry partners will remain central to our priorities, but we will also seek to expand beyond them as they have encouraged us to do to engage with other leading offshore players, as well as SMEs.

How have your partnerships with industry flagships such as Woodside, Chevron, and Shell helped the alliance’s development, and can we anticipate seeing partnerships extend to other industry players as well?

These industry partners are truly interested in partnerships that are world-class, so in this regard, we must remain locally convenient as well as maintaining the highest standards. As we are locally based, we have greater opportunities to get research related work, and this sets a particular benchmark to ensure that we perform at the appropriate level to be dealing with such esteemed industry players. They have been funding professorial chairs and research positions, building capability here, partly as being good citizens, and partly in light of self-interest, as they can then utilize this research capability when they need it. This has been beneficial to us, for them, and for the industry overall as well.

Regarding new partners, we would like to reach out to players such as ConocoPhillips and INPEX who maintain a large presence in Perth. We currently have engagements with these actors, and we would like to deepen these relationships if we can.

Thirteen years following the establishment of your alliance, how large is the organization now, and how many employees do you have?

WA:ERA still remains a small, coordinating secretariat body, with many oil and gas researchers affiliated with us through our joint venture partners. CSIRO is Australia’s national research body, which maintains a capacity of approximately 5,000 people across many disciplines, and The University of Western Australia and Curtin University are both large and complex billion dollar enterprises as well. It is difficult to truly quantify just how large our alliance is because it depends on the boundaries of the particular research problem and associated education.

One initiative that we have here is the National Resource Sciences Precinct, for which I am also head of the secretariat. The NRSP comprises the same three partners – CSIRO, Curtin and UWA – but the focus is on building capabilities into the future for both the minerals side, as well as in the oil and gas sector. Roughly, there are about 400 researchers associated within these two areas, and there are substantial associated capital investments made by all three partners as well, perhaps of the order of AUD 700 million (USD 514 million).

In what areas of the industry has the alliance demonstrated the greatest amount of impact?

Our impact can be divided by upstream and midstream industries. In upstream, it begins with the seismic work, so there are a major capabilities among all three of our partners, and of course all of the major industry players maintain formidable capabilities in-house. What we are talking about then is particular niche areas where we can add value, for instance with 4D seismic expertise, and other innovations related to exploration.

Another area includes offshore facilities and structures, which includes the challenges associated with the North West shelf and the unique Western Australian seabeds. The Center for Offshore Foundation Systems at The University of Western Australia has particular expertise in that area, and also in respect to pipelines and reviewing stability under the ocean and at the surface. Facility structure is an issue of high importance, and one component of concern has been corrosion, as well as other structural risks that can occur due to our particular ocean temperatures and cyclones in this region of the world.

Gas process engineering has been another key area of work where there have been significant investments by our industry partners. In this sector, we understand that even slight improvement differences can result in markedly different cost points.

In a time of particular downturn in the energy sector, what is the value of maintaining investments in research and fostering collaboration with organizations, such as WA:ERA?

In an ideal world, investment into research is conducted counter-cyclically, as downturns eventually turn up again. When financial resources are difficult to come by, this can be a challenge. There is still an incredible opportunity that comes along with encouraging more collaboration, and sharing the cost of the research that each of the partners need to make. This expands the pre-competitive area that can be contemplated. If research must be done, then it is ideal to share the costs and benefits, and we are trying to encourage this with our industry partners. We understand that there are huge pressures on industry to improve productivity and cut costs and WA:ERA wishes to assist in meeting this challenge.

What is on the horizon for the industry in Australia?

Once all 21 LNG trains are operational throughout the country, we are likely to be the largest LNG producer by 2020. In my view, the important thing for Australia is not whether we are number one, or number two or three for that matter, but rather the value that we are able to add to the economy through exports, high skilled jobs and the associated taxes to pay for government initiatives. Once the mega-project construction phase is over, there is much that can be done related to operations and maintenance over several decades.

In terms of low oil and gas prices, and what has been taking place with supply and demand, clearly this has a major impact on future investments, but this is the case throughout the world, and not unique simply to Australia. It does mean, however, that stripping down the necessary costs and collaborating, conducting the innovative research that is of interest to the industry, is now much more important. Government has increasingly supported further initiatives for innovative research, and it has been this way for several years at both the state and federal level.

Is Australia doing enough in this sector to retain its position as an industry leader?

It must be noted that we are not investing as much in particular areas as some countries and regions are, such as Singapore or Norway. Both of these nations, though, maintain formidable sovereign wealth funds which is not comparable within Australia. Neither of these countries should be just seen as competitors, but rather as collaborators. Therefore it is a question of what vision we have for these alliances and collaborations going forward.

Considering the leading cities in the industry throughout the world, such as Aberdeen, Stavanger, and Houston, Perth is prominent, but perhaps in different ways. In Perth, we are truly a diversified resource capital, meaning that if we include minerals, as well as energy, Perth is a centre of excellence and Western Australia is truly a leading region in the world. But much more can be done.

Looking forward, what are the next major initiatives for WA:ERA?

Our main priority include building upon the collaborations which we have already fostered. We would like to engage with a broader expanse of the industry, but also remain loyal and committed to our three key industry partners. Building capabilities and capacity throughout Western Australia is absolutely important, and the NERA industry growth center which is being established here will be a prominent catalyst for this. We are eager to engage and work together with this center to maximize the benefits for Australia from this industry, which we see poses strong potential for the future.

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