AUSTRALIA must embrace floating LNG technology if it is to keep a firm grasp on its international competitiveness for new energy projects, shadow resources minister Gary Gray told AREEA’s 2014 annual summit in a thoughtful and engaging address.

Speaking to more than 300 AREEA members at the Australian Resource People Summit in Perth last week, Mr Gary described FLNG projects as a ‘step change’ for Western Australia to capitalise on innovation and drive productivity.

“Technology, jobs, trades and revenue from LNG is available if we have the courage,” Mr Gray said during a joint session with shadow workplace relations minister Brendan O’Connor.

“Floating LNG is an opportunity for us – Australia’s industrial designers, scientists, operators, mechanics, petroleum engineers, clerks and marine engineers – to shine.”

Highly regarded by resource leaders for his understanding of the industry’s commercial pressures, Mr Gray went on to say it would be ‘foolish’ not to embrace FLNG when future onshore LNG projects look remote and more cost-competitive gas markets were opening up.

He noted that price was a growing issue for the world’s largest LNG buyers – Japan and Korea – and referred to a recent deal which will see Russia pipe 38 billion cubic meters of natural gas to China each year for 30 years.

“I cannot recall the last LNG project that came in on the budget that its proponent first published… and (expansions) appear increasingly unlikely as projects wrestle with costs, productivity and price-wary markets,” Mr Gray said.

“Asian agitation for a better deal on price, Russian pipeline gas into our North Asia Markets, developments in the Americas to produce more gas and move it more cheaply, capital constrains on big LNG investors, and regulatory pressure on land-based projects lead me to conclude that Australia needs to mitigate these risks by being innovative.

“What has become clear is (that) we cannot rest on our laurels and expect that our proximity to the market will be enough.”

The shadow minister used Shell’s Prelude LNG Project offshore Western Australia as an example of a ‘golden opportunity’ to increase the nation’s productivity through innovation.

“Floating LNG could be cheaper to build than conventional plants and it could get built up to a year faster than its conventional cousins,” he said.

“Cheaper to build, faster to market; FLNG obviates the need for costly and lengthy pipelines, the construction and eventual decommissioning on onshore plant and associated harbour facilities.

“And as can be seen from Prelude, it comes with far less regulatory risk, with only 13 conditions attached to that project as opposed to the thousands attached to other onshore projects.”

While floating LNG has been criticised by Western Australian Premier Colin Barnett and the union movement for its impact on job creation, Mr Gray said the vast benefits of the technology and its immediate role in developing the state’s resources were often overlooked.

“Those companies that have an LNG future need to move fast, to seize the moment, to embrace the future,” he said.

“In Western Australia, much has been made of jobs that are foregone to other countries in the relatively short five-year offshore construction phase of floating LNG. But too little is made of the investment in creating jobs and skills in the relatively long, 25-year-plus operating phase.”

Mr Gray also committed to work with the current Federal Minister for Industry, Ian MacFarlane, to deliver a regulatory environment that allows for the ‘speedy and proper approval of the next generation of FLNG projects’ – a move applauded by AREEA chief executive Steve Knott.

“The resource industry is fortunate to have had a continuity of resource ministers from both major political parties demonstrate support and understanding of industry issues, Mr Knott told the Summit delegation.

“We have long enjoyed a constructive and engaged relationship with Gary Gray, his predecessor Martin Ferguson and now Ian MacFarlane, who has resumed and expanded on his old Howard-era portfolio.

“Shadow minister Gray is a familiar face at AREEA conferences. He is well known throughout the industry for his insightful and consultative approach to resources policy, and for his commitment to encouraging growth opportunities for the industry.”

Mr Knott said AREEA looked forward to continuing its strong and healthy relationship with shadow minister Gray.