At the helm of Santos’s activities in Western Australia and the Northern Territory since 2009, and given the added responsibility of the company’s Asia business a year ago, Mr Anderson manages the commercial and finance aspects, business development, exploration, development and operated assets in all three regions.
Mr Anderson joined Santos in 1996 as Corporate Counsel for the former Queensland Northern Territory Business Unit.
He has over 25 years’ experience in the oil and gas industry – including 10 years working as a solicitor with Freehills.
He sits down with Gas Today to offer his insight into Asia Pacific’s mushrooming market, the concomitant effects for the Australian gas industry and his outlook for the future – particularly in the Australian LNG sector.
What Asia Pacific’s demand for gas means for Australia
Mr Anderson says Asia’s demand for natural gas is projected to grow at more than double the rate of the rest of the world combined – driven mostly by China.
“Why? Urbanisation continues to drive demand, particularly in China, but there’s also a shift to lower emitting, cleaner burning hydrocarbons. Air quality, particulate levels and smog are becoming an increasingly important issue in the region,”? says Mr Anderson.
“As for China, it will have a major part to play in this growth story. Its gas consumption is forecast to grow at a compound rate of 9 per cent per annum to 2030, while its gas imports are forecast to increase at a compound rate of 15 per cent per annum through to 2030, which indicates that Chinese indigenous production will not be able to keep pace with demand growth,”? he adds.
What does this mean for Australia?
Exponential growth and great opportunities for the local LNG sector according to Mr Anderson, with China projected to become the world’s second largest LNG buyer by as early as 2017.
“In fact, we expect to see LNG’s share of total Asian gas supply grow from 35 per cent to more than 50 per cent by 2030. This demand offers a terrific opportunity for Australian gas. It’s going to drive the next wave of LNG development in this country but that doesn’tmean we are guaranteed to catch that wave,”? Mr Anderson says on a cautionary note.
Collaboration is key
According to Mr Anderson, Australian gas companies need to better collaborate and better manage the issue of costs – particularly with competition now coming from North America and East Africa.
“As we have said publicly for a few years now: capitalising on this opportunity will require good collaboration, and I mean more than just the operational side of things like sharing of helicopters, supply vessels and rigs.
“What we need to see is big “˜C’ collaboration – for example, companies aggregating gas and processing it through facilities operated by others. We think that can generate more “˜win-win’ opportunities for all involved.”?
Mr Anderson says Santos would be willing to send its gas through another operator’s plant if this would result in a more economic outcome for all parties involved.
“To my mind, collaboration and brownfield development are key to catching that next LNG wave in Australia, and we’re working closely with our partners to give ourselves the best chance of being on that wave.”?
Future opportunities for the local gas industry
Mr Anderson says demand for gas in Asia is likely to remain strong, with projected growth of over three per cent from now through to 2030, and he sees this as a major driver for exploration and development opportunities in the region.
Tapping into this demand is the ExxonMobil-operated PNG LNG Project, which began production in April this year.
The $US19 billion project, in which Santos is a major shareholder, involved the development of gas production and processing facilities in the Hela, Southern Highlands and Western provinces of Papua New Guinea, over 700 km of pipelines and a two-train LNG processing and loading facility with a capacity of 6.9 million tonnes per annum located near Port Moresby.
The first LNG cargo, bound for Japan, left PNG in May 2014, with the project to deliver 30 years of gas supply to customers in China, Japan and Taiwan.
In addition to a number of exploration opportunities currently underway near the PNG LNG Project, Mr Anderson says other exciting prospects lie ahead for the company and on a broader scale, the local gas industry.
“I am also pretty excited about our recent move into some exploration acreage in offshore east Malaysia, in which a drilling program is now underway.”?
Closer to home
Mr Anderson says a major growth opportunity for local gas companies lies in northern Australia.
The region is broadly defined as north of the Tropic of Capricorn – spanning an area of approximately three million square km across Western Australia, Northern Territory and Queensland.
In this region, Santos is well-placed in the Browse Basin, particularly following the Crown and Lasseter discoveries, as well as in the Bonaparte Basin where the Barossa appraisal program is underway, and in the Petrel and Tern fields.
“You know, it’s funny – the first major offshore discovery in WA was at Scott Reef in 1971, before the North-West Shelf. Yet, we have not had a molecule of production out of the Browse, despite the major gas discoveries since Scott Reef, including our own,”? says Mr Anderson.
“But its time is coming. Obviously, the Ichthys and Prelude developments are underway but I am confident there will be more to follow over the next three to five years. The Bonaparte Basin is, of course, an established hydrocarbon province with the success of Bayu-Undan. But there’s a lot more potential there too, and, as in the Browse, Santos is in the thick of it,”? he adds.
He sees the WA and NT areas as a key plank to Santos’s growth plans moving forward, with that part of its portfolio delivering around a third of the company’s earnings and productions.
“Santos is the third biggest producer of domestic gas in WA, through our John Brookes, Spar and Reindeer gas fields in the Carnarvon Basin. We also have a good liquids business in the region and our interest in Bayu-Undan/Darwin LNG is a big contributor and continues to perform strongly.”?
Also falling into Mr Anderson’s area of responsibility is the Great Australian Bight permit that Santos picked up in the 2013 acreage release.
He says he’s looking forward to the outcome of the 3D seismic program this summer.
“We are the only Australian company in this frontier basin, with some international heavyweights sharing nearby acreage.”?
Whether it is by responding to Asia Pacific – and specifically China’s – growing demand for LNG or tapping into exploration opportunities present both locally and across shores, Mr Anderson’s optimistic outlook for the future of the local gas industry is a telling indicator of its bright future.