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BLOG: LNG keynote with Rich Coleman and Peter Coleman

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by JOC Digital Media

Rich Coleman, the deputy premier of British Columbia and minister of natural gas development, and Peter Coleman, the CEO and managing director of Woodside Energy were the opening keynote speakers at the 2015 LNG Conference, held in downtown Vancouver. Peter Coleman began by saying he sees LNG as not competing with renewables but being complimentary to them. He added the conversation had changed since last year as the price of oil has tumbled in the interim.
BLOG: LNG keynote with Rich Coleman and Peter Coleman

"The longer we're in this low price cycle, the less choices we have," Coleman said, adding that it is important to maintain momentum and "maintain the brand of Canada."

He stressed the importance of keeping Canada top of mind as a place to invest in LNG. There's no "magic formula" to moving forward, Coleman said, and everyone will need to contribute to maintain LNG momentum.

"The types of buyers for these projects will buy by brand," he said, so it is important to decide what is fundamentally critical to execute upon in order to get that business. We don't have time or the margins to spend on things on projects that aren't critical," Coleman said.

From the Australian perspective (where Peter Coleman is from), he said his industry found that projects don't move cohesively ahead until everyone is ready.

"And while we're getting our house in order, the rest of the world is watching and forming opinions," he said.

So in Canada it is important to think about how the industry wants to be portrayed on the world stage, Coleman said.

Rich Coleman asked how Canada compares to other nations in the speed at which the industry is ramping up, and Peter Coleman said that the Australian government believed in the long term potential of LNG, which had community and taxation implications.

"It's not easy, but is it worth it?" Coleman said, and added he thought it was worth it, given the amount of wealth going back into the community and the expertise being exported at a global level.

Peter Coleman also said for all the complexity of the oil and gas business, "at heart it's a relationship business."

Canada has topographical challenges though, he said. Australian LNG is mostly offshore. But Canada's advantage is that it already has an established resource base.

"You can almost bank on Canadian resources for the long term," Coleman said. The resource base is deep enough and accessibility is a given.

Rich Coleman said it was only a few years ago that B.C. had only an estimated 15 years of gas for customers, before the government decided to look into further exploration. Peter Coleman said one of the things that pushed the Australian industry forward was not using long-term contracts. Coleman added that "gas has to earn its place in a low carbon world. It's not just going to happen because we think it's a good idea." The competition is not just other gas, its other sources of energy, he said.

Rich Coleman asked about labour, which he said has been a challenge for British Columbia. Peter Coleman said there's a direct labour cost in Canada, which influences how many modularized pieces will be brought in. It also drives the cost of infrastructure, and competitive advantage is in access, he said.

"Actually building it is the easy part," but getting the prerequisites in place is often the real challenge, Coleman said.

Coleman also said the move to LNG in Australia was rapid and as a result labour had to be imported, which was a real challenge. He likened the situation to Fort McMurray's labour challenges at its productivity peak.

"The cost is not in the plant, it's in establishing the site and establishing the infrastructure. Getting enough people there, housing them and feeding them," he said. Coleman added the industry has also been afforded a moment to pause thanks to lower prices, giving government time to work through the process and maximize productivity.

"The labour structure needs to be one that's sustainable for B.C. long term," Coleman said. Developing a proper labour pool and sustainable labour practices would be his "first priority," he added.

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