Woodside keen to follow Qld LNG producers’ maintenance coordination lead

PERTH (miningweekly.com) – Australian oil and gas producer Woodside would look at greater cooperation between liquefied natural gas (LNG) operators in Western Australia and the Northern Territory, after the Australian Competition and Consumer Commission (ACCC) this week authorised LNG operators on the east coast to coordinate maintenance schedules.

The ACCC has allowed the Australia Pacific LNG,  Gladstone LNG and Queensland Curtis LNG operators to discuss their maintenance schedules, maintenance providers and maintenance techniques to increase efficiency in the sector.

“Coordinating the maintenance undertaken at these facilities will increase the efficiency of these events and reduce the likelihood of major disruptions to domestic gas markets, which could occur if multiple maintenance events at the applicants’ facilities overlap,” ACCC chairperson Rod Sims said.

Sims noted that the LNG producers’ facilities convert natural gas into LNG for export, adding that each LNG facility was connected to gas wells in the Surat and Bowen basins of Queensland.

However, gas is also purchased in nearby wholesale markets.

When the applicants’ LNG facilities were offline, the operators could redirect their gas to these wholesale markets for sale. As the LNG facilities use large quantities of gas, this could have significant effects upon the market price when their facilities were offline.

Sims said that wholesale gas traders raised concerns that coordination between the LNG facilities would allow them to trade advantageously in gas markets, because each LNG producer would know when maintenance was going to occur.

To address this, the ACCC had imposed a condition of authorisation requiring the LNG producers to publicly disclose maintenance schedule information that they share with each other. The condition had been formulated in consultation with the LNG producers and market participants.

“These LNG producers can create significant volatility in domestic gas markets when they go offline for maintenance. This condition allows all market participants to know when maintenance is going to occur and to make sure that they aren’t exposed to unnecessary risk,” Sims said.

The ACCC authorisation would last for a period of five years.

Woodside COO Mike Utsler said on the sidelines of the eighteenth LNG conference, in Perth, that the company had been working with the east coast LNG producers behind the scenes with the intent of following their lead if a successful outcome was achieved with the ACCC.

“We would look to propose to the ACCC to do the same in the Northern Territory and Western Australia because it's an issue for all of Australia,” Utsler said.

He noted that the pressure would be on effectively managing the maintenance resources to cost-efficiently deliver on the work scopes of all the operators, as nearly all maintenance was done during April to October, or what was classed the winter season.

“This will mean that we will all have to give and take a little. I might want mine in April and have to settle for July, but at the end of the day the efficiency for industry is a win-win opportunity,” Utsler said.