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with Cheryl Cartwright, Chief Executive, The Australian Pipeline Industry Association

24.05.2010 / Energyboardroom

Many associations, the Australian Pipeline Industry Association (APIA) included, exist to promote the gas industry and to take the case to government. While the benefits of gas is well known within its own industry, does it remain a challenge to promote gas more broadly at the national level outside of energy circles?

It is still a challenge to advocate for gas because there is not one single gas association that lobbies for gas across the whole spectrum. Each sector advocates for their section of the gas industry, although the associations do try to work together in regard to a broader gas message. Having a single voice for gas is a challenge although we are all working reasonably well together.

We saw a lack of understanding of the value of gas demonstrated by the government in the original form the Emissions Trading Scheme (ETS). Before the government abandoned its ETS, the scheme that they proposed, the Carbon Pollution Reduction Scheme, in a pure form would automatically encourage the use of natural gas: if you put a price on carbon, then gas is cheaper than coal. But the adjusted or “corrupted” version of the trading scheme that was introduced provided a lot of assistance for liquefied natural gas (LNG) exports ahead of domestic gas use, as well as substantial assistance for the coal industry. While gas was not disadvantaged under the proposed scheme, it certainly would not have been assisted as much as in a pure scheme that encourages reduced emissions.

Nevertheless, it is true that gas is being seen as the more obvious alternative to coal-fired power. Five years ago when I started in this job I was advocating natural gas. One of my roles was to raise the profile of the association and so we included the promotion of gas as one means to boost the profile of APIA. But now the benefits of gas are more widely understood.

How is the pipeline industry keeping pace with the host of natural gas related projects coming onstream and the infrastructure demands for them?

One of the challenges of the pipeline industry is to demonstrate that keeping pace is not an issue for us. With the forward planning and expected extra demand for gas, whether for export or domestic use, governments are constantly saying that we need to plan ahead for transmission. Well, we do not. Once the producer, user, or exporter decides to move gas from one point to another, by the time the necessary facilities are constructed, the transmission infrastructure will be built. Transmission infrastructure is a much faster infrastructure to build than a power plant or LNG facility. So the pipeline industry is not faced with the challenge of how to meet demand. The pipelines will be there because the contracts will be made and transmission infrastructure will be built long before the power plant or export facility is completed.

Government consistently wants to take over planning for us. But we do not need the same forward planning as investments such as roads or electricity. What government does need to do is tell us where the production is going to be, where the facilities will be located, and the industry will build the pipeline.

How has regulatory landscape changed operations for the pipeline industry two years on from the passage of the National Gas Law?

That is exactly my point; it makes no difference. There are only two transmission pipelines in the country that are regulated. The rest are “uncovered” in the sense that they are not regulated. When the need for pipelines arises, they are built. The challenge for us is the demand for more and more information and other inputs from the industry – which is costly to provide and often unnecessary to the efficient operation of the transmission infrastructure.

Is it difficult to create and sustain value as an association having so many member companies across a wide array of business lines?

It is a challenge but we receive tremendous support from the membership. Each of the sectors has a focus of the secretariat’s activities. For the pipeline owners our role is advocacy on government policy. The way the National Gas Law was first drafted was very problematic for the transmission industry because there was confusion between distribution and transmission pipeline infrastructure. It is like trying to introduce the same regulatory environment for taxis and airplanes. They are totally different industries. We spent a lot of time lobbying our case to the point where it was worth the hard work. We lost some of the arguments but for the most part we succeeded. As mentioned, most of the transmission pipelines are not regulated.

The main issue for the operators is safety and maintenance. We bring groups together to exchange information about safety and maintenance to ensure the future of the industry. The owners and operators are equally interested because they want their pipelines to stay safe and efficient.

The construction industry is interested in networking, but also in safety and training. We organize over 20 functions per year so I am usually out of Canberra. We have functions, seminars, lunches, and dinners all around the country. They receive information from a speaker but a core component of the functions is on networking and generating business. The construction industry has organised safety training days and also an industry skills “passport” so that people can transfer their skills between the various jobs.

There was a concern that the industry is getting older and not passing on adequate information to new people coming up through the ranks. In 2006 we hosted a seminar in Canberra for young people (35 and under) involved in the industry, which was a huge success. I can still see them now, on the final day, crowding around clamoring for another seminar. There were too many of them to have just one organizing committee so we set up state-based young peoples groups and got them to take ownership and organize functions for themselves. They arrange various networking events and visits to members’ facilities for educational tours.

The young peoples group became so successful that many of our member companies wanted to sponsor their events. We reached a point where we had to incorporate their events sponsorships into the mainstream management activities of the secretariat. Just this year we began formalized mentoring events, which are linked to our other events. The young peoples group already often organized their networking, facility visits, and social events to link with other APIA events, and we will now link in mentoring events with the senior functions, with the first one coming in June.

With different areas of focus for each industry is the association fragmented in a way?

Not at all, perhaps surprisingly. There is a lot of support across the sectors. It is unusual, by international standards, to have so many sectors linked into one association. When looking at transmission representative bodies from other countries, they do not have the same diversity of businesses at the same meetings under same tent. When speaking to their representatives, they are surprised that not only do we have all the members at the same functions, but our constitution requires that no single sector has control of the board. Our system works so that just about every sector is represented on the board. Our board is all about the association and the benefits of the association to the broad cross section of the industry. It is an incredibly positive industry to be working in.

What commonalities can you extract from the core areas of interest from each sector?

The only common thing across all sectors is that they want the industry to be successful, the association to be successful, for us to keep hosting functions, to keep lobbying when we have to, to keep providing information, and keep the young people coming through the ranks.
Another major activity we are engaged in is research. This is an industry full of people who have put their own time into research for the industry. The chairman of our research committee has worked over the past year to establish the Energy Pipelines Cooperative Research Center (CRC). The CRC program is a government initiative that brings together industries and universities to do cooperative research that is partially funded by the government. For us it was already partly set up because our research committee had previously been working with three of the four universities already participating in the CRC, as well as North American and European research institutions. It was a lot of wrangling to get that formalized into a new company but it was a huge step forward.

The association has its roots as a contractors association. Does it still honor that ratio of contractor companies as the majority?

Proportionally speaking, probably not. There will always be some from the old guard who think this should only be a contractors association. But we do remind the members that the roots and backbone of the organization has been the contractors. About a decade ago, the owners were approached to help raise the status of the association and improve our lobbying influence, and they did so by providing increased funds. With deregulation and the sale of government assets, the pipeliners needed to have a lobbying group. Because Australia does not have many pipelines companies (compared to other, more populated, countries) they did not have the numbers to be their own lobbying group so increasing their involvement with the pipeline contractors was the natural outcome, thus increasing the influence of this association.

What do you consider to be some of the more exciting projects that the industry is involved in?

A really critical pipeline for us, which is short by Australian standards, is the recently built QSN pipeline that connects Queensland to southern gas markets. Coal seam gas can now be moved to the south from Queensland. It is not needed yet since there is plenty of gas in the south. But if something ever goes wrong with supply in the south, then gas can always be brought in from the north. Even though that is a small pipeline, it is really significant for the transmission market in Australia.

It was also significant in highlighting a challenge for the National Gas Law. That pipeline demonstrated that parts of the National Gas Law do not actually apply to our industry. There is supposed to be a regulatory “holiday” of 15 years for companies that build new pipeline infrastructure. But a transmission company on contract to build a brand new pipeline does not qualify for the regulatory holiday. A transmission company builds a pipeline for contracted capacity, rather than extra capacity, since it would get regulated if the pipe were built for extra capacity. Which means, even though they know there will be, eventually, an increase in demand, the company cannot afford to build that extra capacity straight away because of the regulatory risk. Almost at the moment that the new QSN pipeline was opened, they had to start looping – building extra capacity – because they had new contracts. It demonstrates an inefficiency in regulatory policy. We have talked to the government about the issue but, while they understand the issue, they are not inclined to make changes.

On the matter of Carbon Capture and Storage (CCS), the transportation challenges were ignored until APIA pointed to the problems. As other countries have used CCS technology to move carbon underground, the same technology was planned to be used here. What was not taken into account was that overseas carbon transport is not done over long distances. Most CCS systems overseas are used for reinjecting and getting the last vestiges of gas out of a well. In Australia captured carbon will need to be transported over long distances and it will be a waste product. That transportation requires technically challenging, high quality pipelines. If we built the type of pipelines that are built for overseas for the Australian distances, the costs would be prohibitive. There needs to be research to develop the type of pipe that can handle carbon. That has implications on how the carbon is captured and in what form in order to make the transportation economical. There is a lot of work to be done to make it viable.

Which sectors within the association will most need to address possible labor shortages with the oncoming resources boom?

Mainly the construction industry. But we are working with the state and federal government on skills training and the different ways to develop that. We made skills transfer more efficient by introducing a skills passport for the construction industry. The people who know how to operate a particular piece of equipment on the job will have that acknowledged in their skills passport demonstrating their knowledge.
Higher technical training is another challenge. Pipeline engineering in the high pressure industry requires very technical expertise and we are developing a post-graduate training program to address that. We will not be providing the actual training but we have set out the skills required which we expect that universities and other training providers will look at for their needs and provide courses.

What do you believe are the major achievements of APIA, now with over 40 years’ experience representing this industry?

I think it is the association’s ability to constantly develop, change, evolve, and look for new things which has enabled it to survive and thrive. Before my time the leaders of this association saw a challenge. They were able to step back, assess the challenge, and make changes to meet it. For example, 12 years ago they changed from being purely a contractors association with a few owner members. They upgraded the services provided by the association and switched to a full-time secretariat in Canberra. They knew the need was coming and they made the necessary changes.

My predecessor had a very strong focus on the regulatory side. When he left, APIA decided it needed to do something different and took the step of bringing in someone from outside, with lots of ideas, but who had never worked in the industry before. I have a politics and media background, not engineering or economics. But I have lots of ideas so they decided to go for it and that seems to have worked.
The success of this association comes from its ability to take proactive steps. As soon as the young peoples’ group started we had members pledging their support for it. If we provide the opportunity for them to be proactive, they are going to keep being proactive.

Do you have any final comments or last messages to share with our readers about the pipeline industry in Australia?

The pipeline industry in Australia is full of highly skilled and committed people who do a great job and are forward thinking. A lot of the work that they do goes unseen because the fruits of their labor are out of sight, out of mind. But that also creates a challenge to be heard when you need to be.



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