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Skills shortage may hit LNG output

The Australian: Skills shortage may hit LNG output

Nigel Wilson, Energy writer
Wednesday April 09, 2008

AUSTRALIA’S skills shortage is likely to thwart the country’s ambition to become the world’s third-largest LNG producer by the end of next decade.

The Australian Petroleum Production and Exploration Association said this week that the nation would quadruple LNG exports by 2020 to around 60 million tonnes a year, putting Australia behind only Qatar and Nigeria as an LNG supplier.

Australia now exports about 11 million tonnes of LNG a year from the North West Shelf and a further 3 million tonnes from Darwin.

Japan is by far the major market, followed by China and Korea.

The Shelf project is building a fifth LNG processing train with more than 4 million tonnes annual capacity, which is expected to begin commissioning by the end of the year.

The train will take NW Shelf capacity to 16.3 million tonnes a year.

Woodside, the North West Shelf operator, is known to be concerned that optimistic forecasts will drive up construction costs for Australian LNG projects and could threaten some projects’ viability.

Chief executive Don Voelte has committed Woodside to developing a new LNG production train every two years.

Woodside’s commitment covers the $12 billion Pluto-1 project now well under way on the Burrup, Pluto-2 and a substantial project based on the Browse Basin in partnership with its existing North West Shelf joint venturers. Each could have multiple LNG processing trains.

All Woodside’s projects are scheduled to begin shipping between 2010 and 2015 on current timetables.

Japan’s biggest oil exploration group, Inpex, is planning to bring its Ichthys project into operation by 2013. It is designed to produce up to 8 million tonnes of LNG a year.

Chevron is working towards front-end engineering and design for Gorgon by the end of next year with an initial annual target of 15 million tonnes.

Chevron has also announced a 5 million tonnes a year, stand-alone LNG development for the Wheatstone reservoir off the WA coast.

Royal Dutch Shell global gas chief Linda Cook said this week that the company was considering a floating LNG project for its Prelude gas discovery near Ichthys — which had the advantage of not putting pressure on Australia’s construction workforce.

BHP Billiton Petroleum chief Michael Yeager said on Monday that an LNG project, based on the Scarborough reservoir deep in the Indian Ocean, was still in the mix.

There are four LNG projects based on coal seam methane proposed for Gladstone.

Santos acting chief executive David Knox said yesterday that while he was aware of the skills issue, he believed Santos’s Gladstone LNG project was uniquely placed, because it could tap an experienced LNG workforce.

While LNG project proponents say there is huge demand from north Asia for LNG produced in Australia, they are concerned that skills and labour shortages could damage Australia’s record of delivering on promised shipping dates.

This issue is not so much a shortage of construction and fabrication skills as a shortage of intellectual skills to design commercially efficient processes, garner funding and secure government approvals for projects.

Government sources said yesterday that Woodside’s program alone was likely to mean that a project team of several hundred skilled workers would move from one project to another during the next decade, with most unlikely to move to a rival project or employer.,25197,23508929-643,00.html and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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