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16/5/2018 — Oil and Gas
Journal’s chalk and cheese view on gas
By Ross Louthean

The British website Offshore Support Journal has highlighted the contrasting political status of Australia and New Zealand in offshore support operations for gas exploration and developments.

Reporter Paul Gunton said that in Australia and the talk turns to the country’s LNG extraction work and its knock-on benefits to a diverse fleet of support vessels.

“The contrast with New Zealand is stark, where the Coalition Government has decided not to issue any more offshore exploration licences,” he said.

The website said Australia was the world’s second-largest LNG exporter after Qatar and could move into first place once two new LNG extraction projects come on stream. Inpex’s Ichthys project will start production in June and Shell’s Prelude follows toward the end of the year.

LNG’s significance was recognised and accepted in Australia. MMA Offshore marketing manager Florence Allenspach said two other schemes were in the pipeline – Chevron’s Gorgon expansion and Woodside Energy’s Scarborough development.

All the developments were seen as a fillip for the offshore support vessel providers.

The website said that turning the focus away from LNG, reveals a less optimistic mood. Australia’s offshore support sector “is awash with restructuring, renegotiations and consolidations,” Ms Allenspach told OSJ.

“Many operators are still heavily geared, so we anticipate this to continue into the near future,” she added.

Offshore Australia founder and managing director Henk Merbis echoed her concerns. “The tide is still going out,” he said. “The industry is picking up on hype only.”

Contracting and pricing “are very difficult as the big boys know the smaller guys are merely surviving and will take any work at any price to boost utilisation rates.”

Merbis spoke of vessels being brought out of cold stacking speculatively, prompting others to do the same; ‘speculating on the speculation’, he termed it. Operators are in financial difficulties and one has ‘handed vessels back’, he said.

“The big unknown factor is how patient banks will be with vessel valuations,” he warned.

A lot of developments need to happen to produce a sustainable new market boost he said, but “the surviving operators are ready; it is just a matter of when”.

The webside said that in not issuing any new offshore permits, NZ Prime Minister Jacinda Ardern claimed her move was “an important step to address climate change and create a clean, green and sustainable future for New Zealand.”

All 22 existing offshore exploration permits will continue – some of them extend until 2030 – and Ms Ardern spoke of “a just transition to a clean energy future.”

New Zealand’s opposition National party described the decision as “economic vandalism that makes no environmental sense.”

Energy and resources spokesman Jonathan Young said it was “devoid of any rationale”. It will mean fewer jobs and will not affect climate change, he said.

“Gas is used throughout New Zealand to ensure security of electricity supply to every home in NZ. Our current reserves will last less than 10 years (and) when they run out we will simply have to burn coal instead, which means twice the emissions,” Young added.

Source: osjonline.com

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