Hon Mark McGowan opens AOG 2020

Hon Mark McGowan, Premier of Western Australia; Minister for Public Sector Management; State Development, Jobs and Trade; Federal-State Relations, took to the stage of the opening morning for AOG 2020.

Read the full opening address below.

It’s a pleasure to be here once again for the Australian Oil and Gas Exhibition and Conference and I’m pleased to see in these interesting times so many people and so much life and activity in the centre here today. Congratulations to all of you in coming and participating, being part, of this important event.

It’s important we continue to create confidence and opportunity and show that we continue to be a strong and vibrant place to do business and to invest and this event is part of that for the past 40 years.

I want to make sure that that continues.

Western Australia is the preeminent jurisdiction for LNG in Australia. Australia is the world’s largest LNG exporter in 2019, surpassing Qatar. In fact, if Western Australia was a country, it would be the world’s second largest LNG exporter after Qatar.

In 2015-16 – I’m sure it’s grown – the industry employed 12,000 West Australians directly, which is three times what it did in 2005. That’s incredible direct employment for tradespeople, engineers, scientists, executives and the like. Indirectly, tens and tens of thousands more West Australians are employed across the wider industry and economy.

It develops wealth and activity. It supports industrial activity, and our electricity generation throughout the southern part of the State through our domestic gas reservation policy. It plays – LNG plays – an essential role globally in assisting in transitioning from higher carbon emitting fuels like coal.

Western Australia is the leading jurisdiction for LNG in the country. Our question – or our priorities – are how do we take Western Australia to the next level? How do we continue to develop Perth to be the next Doha, the next Houston or the next Aberdeen? And how do we make Perth the pre-eminent hub for LNG in the southern hemisphere?

Two years ago, I addressed this conference where I announced our LNG Jobs Taskforce. That is a collaboration between Government, industry and unions to maximise the workforce and economic benefits from Western Australia’s LNG industry.

Our vision is to establish Western Australia as a recognised global leader in an LNG innovation, supporting services across Australia and internationally, generating local jobs and business opportunities for Western Australians.

The taskforce works collaboratively to undertake substantial transformational change and establish Western Australia as an LNG hub servicing Australia and the broader region. Its members include Woodside, Chevron, Shell, Santos, Inpex alongside APPEA and Industry Link WA, alongside the Western Australian government with myself as the chair.

The idea behind it all is there is mutual gain if we work together. All the participants realise there is a level of success possible that would be out of reach if we only focussed on our own short-term successes.

That if we collaborate with the greater good, to reach a long-term goal of being a true LNG hub servicing Australia and the region then we can all be winners: The companies, the workers, the SMEs that service the industry.

All West Australians can reap the benefits.

Can I say it has been heartening and refreshing to see so many companies and disparate groups who would normally be competitors or adversaries be so collaborative and collegiate around the table at the taskforce meetings.

It gives me hope that we will realise some real wins for Western Australia.

We have a unique opportunity here for complementary industries to locate in Western Australia to develop, diversify and support the construction, operation, maintenance and decommissioning phases of the project life cycle in LNG. This means more work for local SMEs, more high paying, high-quality Western Australian jobs.

There’s five opportunities that we see in front of us:

1. The local supply contracts that will be worth $8 billion annually, especially with the ACCC decision on coordinated shutdowns,
2. The regional supply opportunities generated if Western Australia and Perth is the LNG hub for the southern hemisphere,
3. Establishing WA as the centre of excellence in remote technologies that are used across the industries,
4. Using the LNG industry to drive upskilling for other ocean-based industries such as ship building and repairing, and
5. Leveraging the cheap and reliable gas that comes from reservation to create new jobs and industries.

Each of these areas is an essential pillar in our strategy to make Perth a genuine global LNG hub.

Despite only being in operation for two years, this coordinated and collaborative approach of the LNG jobs taskforce is paying dividends.

We’re already seeing points on the board, which is encouraging.

Perhaps the highest profile so far is the Future Energy Exports Cooperative Research Centre, or FEnEx CRC for short. The FEnEx CRC is a collaboration between industry, government universities for cutting edge industry-led research, education and training to sustain Western Australia’s position as a leading LNG exporter, whilst also positioning us to become the leading global hydrogen exporter as the markets and technology change over the coming decade.

Eighteen organisations supported the successful stage 1 bid, pledging $34 million, and $45 million in non-staff in-kind including $3 million from Chevron Australia as well as the State Government. That will fund a very exciting part of the CRC: the LNG Futures Facility. My government was proud to contribute $10 million plus land in the Kwinana industrial precinct, to help establish that integral component of the FEnEx CRC.

The LNG Futures Facility will be a world-first microscale LNG facility that can test technologies at an affordable scale.

After all, as you all know, LNG projects are large, costly and need to be planned so far out. It limits the ability to test and experiment new ideas. To conduct that kind of practical research and development in an environment that doesn’t risk billions of dollars of investment. LNG companies, contractors, service providers and small to medium size enterprises will be able to test and refine new processes in a live plant environment that’s expected to have the capacity to produce 10 tonnes of LNG per day.

Stage 2 is the bid or call for funding to really get this project off the ground. We’re looking for $40 million which I think is eminently reasonable when considering something as essential as the future competitiveness and longevity of our nation’s energy export industry. We believe we put up a worthy bid. We trust the Commonwealth will feel the same way.

Beyond the FEnEx CRC, other initiatives are taking shape. Late last year, I announced that Chevron, Woodside and the University of Western Australia would be collaborating on a new research laboratory, the Centre of Long Subsea Tiebacks. Subsea tiebacks for those of you who are not familiar, are the connection between a new oil or gas discovery and existing production facilities. This technology is crucial in making sure untapped discoveries can be made commercially viable – essential for keeping WA well-supplied with gas.

This centre jointly funded by Chevron and Woodside by roughly $600,00 per annum will generate world leading research and technology for the industry right here in Western Australia. It is a fantastic initiative and great news for jobs in WA, and is a great demonstration of the benefits hat come through collaboration.

Another one which I love is the LNG Operator Skills Framework which is an industry-lead initiative to standardise the training of LNG workers in WA, so their qualifications are recognised by all LNG or mining companies. Once finalised – hopefully shortly – the new training models will ensure everyone who completes the course will have skills and knowledge that will be recognised industry-wide.

Right now, workers often have to retrain when they start a new company. This is going to reduce duplication and waste corroborators, while giving workers the benefit of transferrable qualifications.

Andrew McConville, CEO of APPEA, said this is going to attract the best and brightest from around Australia and the world who want to have the strongest starts to their careers right here in WA.

All of these initiatives – three of them – show the benefits of collaboration when it comes to innovation, research and seizing opportunities. They’re the kind of things we had in mind when we started the taskforce in 2017, but as I address you here today that I’m talking to so many people representing small and medium size enterprise that supply the major companies. It’s your expertise and professionalism that makes our industry world class.

There are around 200 exhibitors at this conference showing off what West Australians can do. We want local SMEs to go from strength to strength and build capability to hire more West Australians to expand and export their expertise. Obviously so much of that is dependent upon being able to keep employment, and to land that next contract. We want to make that as easy as possible for local SMEs. Give local SMEs the best chance with the opportunity for them to plan and prepare, to be proactive and put their best foot forward.

So, it gives me pleasure to announce that this year at AOG 2020, as a result of the work through the LNG Jobs Taskforce, Chevron, Woodside, Shell and Santos will be publishing forward work plans – a two-year look-ahead at the work they expect to attract in the future. This will give SMEs a look inside the major companies’ books for what work will be coming up. The plans include scope, types, indicative contracts, work start dates and tender dates and focal points of contact. It will allow for better planning of contracting activity, more transparency in the market, essentially for small and medium enterprises it gives them the time and certainty to view up to tender for the contracts – to put that best foot forward.

This is a model that is similar to one that has shown success in the oil and gas industry in the North Sea.

By giving this insight into the pipeline of work that’s coming to Western Australia we want to:

• Assist the development of a more transparent approach to tendering,
• Encourage major companies and suppliers in developing a more sustainable and competitive local supply chain that can improve project delivery time and cost,
• And improve relationships between major companies and the local supply chain.

The government is happy to play a central role, receiving and publishing these forward work plans. At this conference there will be briefing sessions presented by Woodside, Chevron, Shell, and Santos to present these on these plans.

This year will be a pilot year for publishing forward work plans. If it is successful, we anticipate forward work plans will be released annually at AOG, establishing a common platform and continuous sharing and encouraging broader adoption across the Australian oil and gas sector. This is the kind of initiative that can only be achieved when you have a collaborative framework like the LNG jobs taskforce, but more importantly a collaborative mindset amongst the participants.

Forward work plans essentially involve the disclosure of information from companies that would usually keep it very close to their chest.

This is a system that, thanks to the involvement of government, most of them have the confidence to turn their cards face-up at the same time.

This can only happen with trust and a mindset of collaboration – collaboration for the common good of Western Australia.

It’s an exciting time – an interesting time – for the industry in Western Australia. Global demand for LNG has been growing. Australia is now the world’s largest exporter of LNG of which Western Australia is easily the largest contributor.

We have big projects on the horizon: Scarborough, Browse and others, which bring with them huge tranches of new work and security of domestic supply.

Whilst the current market conditions are challenging – between current spot prices and new projects coming online – ultimately this process may be in the long term in the interests of the industry if it encourages to make nations to make the switch from coal to LNG. There are opportunities to be seized here: To grow the industry, to put WA in the centre of it, and create local jobs especially if we keep collaborating, for the common good.

And with that it gives me great pleasure to declare the 2020 Australasian Oil and Gas Exhibition and Conference officially open.

Thanks very much.

AOG 2020 is free to attend and is open 11-13 March. Don’t miss the chance to discover opportunity through operator engagement, hear from leading thinkers, and source the latest technologies.