First cab off the LNG show-and-tell rank was the $US34 billion Japanese-led Ichthys development with management proudly announcing it had officially passed the half-way construction mark with first gas scheduled for into Japan by the end of 2016.
Then came a curious tour of a Korean shipyard by executives of Shell keen to show that work was well underway on the giant barge scheduled to be parked atop the Prelude gasfield.
The Shell tour group included senior managers from Woodside Petroleum who wanted to see the Prelude barge as a pointer to what they might do at their Browse project.
Back in Australia, Chevron was busy telling friends that the Gorgon project had reached the 80% completion mark and the Wheatstone project was at 15%.
On the other side of the country Santos was doing much the same thing, showing a group of visiting financial analysts around its 80% complete Gladstone LNG project.
Before looking in detail at GLNG, arguably the most interesting of the new LNG projects thanks to its use of CSG as the raw material, it is worth standing back to consider the big picture of what is happening in the Australian gas business.
Until recently, LNG in Australia meant three projects, the North West Shelf, Bayu-Undan and Pluto.
Within a matter of months, if you lump ExxonMobil’s PNG project into the mix, the Australasian LNG industry will have effectively doubled in size with PNG LNG having just started production, Gorgon, GLNG and Australia Pacific LNG (APLNG) all close to the 80% completion mark, Ichthys at the half-way mark, Wheatstone at 15%, Prelude on a Korean slipway, Browse being planned and more coal-seam projects to follow (perhaps).
At some point LNG seems likely to overtake iron ore as Australia’s major export earner meaning that the country will cease to be best known for its mining industry and become a country best known for its petroleum industry – in other words, a petro-state.
Whether that’s a good thing or a bad thing is an interesting debating point but the simple fact is that Australia’s proximity to Asia, its small population and its substantial gas reserves makes it a perfect partner for supplying the world’s preferred low-polluting fuel, gas.
Reaching its full LNG potential will not be easy for Australia, or for anyone employed in the industry, because the status of petro-state, when lumped atop a world-class mining industry, will come at the price of a currency more likely to rise than fall.
It might be Slugcatcher’s imagination but the refusal of the Australian dollar to fall and its recent rise back above US94c (with some tipsters suggesting parity with the U.S. dollar is back on the cards) could be a result of the LNG construction boom heading towards an inbound cash boom as revenue from gas sales hits company balance sheets, and tax payments hit government coffers.
The joys of boundless cash flow, which is precisely what Woodside is getting from its Pluto project, await everyone with a project heading for the finish line – especially Santos, the perennial bridesmaid of Australian oil and gas.
Long captive to its Cooper Basin birthright Santos is well on the way to be a triple-headed LNG player with its small stake in Bayu-Undan the starting point, PNG LNG a second step up the production ladder and GLNG the icing on the cake.
Analysts invited to tour GLNG came away impressed with some casting off their doubts about the development and its use of coal-seam gas to give the development, and Santos, a big tick of approval.
Citibank was one of the more fulsome in its praise, telling clients that Santos might have been deliberately conservative in its production and profit projections with GLNG potentially able to “outperform” over the longer term.
JP Morgan said its biggest surprise was the advanced development of the Fairview gasfield, which will be one of the sources of coal-seam methane. According to the investment bank’s report, Fairview was so well advanced that it had “the appearance of a party waiting for its guests”
The key point of the GLNG site visit, and the advanced stage of development reached at other projects, is a reminder that several Australian LNG projects are about to take the next big step forward with production (and cash flow) superseding construction costs and completion risk.
LNG talk is close to becoming LNG action.