Interview with Graham Hill, Senior Vice President, Hydrocarbons at WorleyParsons and speaker at Downstream Asia 2013.

Are you seeing greater refining activity in the Middle East and what impact will this have on Asia’s oil refining sector? What can Asian oil refineries do to stay competitive?

• There are a number of new refining developments occurring in Middle East (eg: Takreer, Saudi Aramco, Oman Oil, Qatar Petroleum, Kuwait Oil Company, etc)
• Most of these refined products are destined for the Middle East and Europe
• Asian refineries are concentrating on volume, and quality of products, but also integrated petrochemical production to service South East and East Asia and Australasia
• Asian refineries are also providing reliability, delivery certainty and product quality, to remain competitive

Around seven LNG projects are being built in Australia to feed Asian demand but labour shortages and high costs have either slowed down progress of the projects or dampened possibilities of new LNG projects. What is your view of Australia’s long-term potential as an LNG supplier, and what impact will shale gas development in the US have on Australia’s ambitions?

• Australia has already committed to these projects (QCLNG, GLNG, APLNG, INPEX, Gorgon, Wheatstone), and most are bound to reach maturity and export in the period 2015-2017
• There are a number of new projects which are adapting to these changing cost circumstances to remain viable: eg Woodside Browse, Woodside Sunrise and Chevron Wheatstone Train III, Arrow Energy
• It is widely believed that the USA export may not reach a critical mass to affect Asian markets for LNG (reference Peter Coleman’s recent speech at APPEA) – only 3 projects have been sanctioned so far in USA
• The Western Canadian LNG Export projects may a) face similar cost and environmental pressures to Australia and b) may face project schedule issues, which would allow Australian LNG Projects to go ahead and establish firm customer bases in Asia

WorleyParsons has a significant presence in China. What is your outlook for the development of shale gas in China and what are some of the challenges, and environmental concerns, that need to be resolved?

• Shale Gas faces a number of well documented challenges in China:
  • Increasing environmental awareness
  • Lack of clear production sharing legislation
  • Diversified and challenging topography
  • Lack of water disposal options
  • Remote community/societal issues
  • Land ownership bureaucracy
  • Pipeline infrastructure to take product to far-away markets (“coastal China demand”)
  • Emerging legislation on what is Shale Gas, and therefore which Chinese legislation applies
    

• Having recorded all that, there is no doubt that the volume of Shale Gas reserves in China is huge, and this could represent the answer to China’s insatiable energy demands over the next 20 years
• Therefore China may wish to consider working with its international production sharing partners (Shell, Total, Chevron, ConocoPhillips, BP, etc) to share the load in bringing these considerable resources to market in a meaningful time frame (next 5-7 years)

With the emergence of commercially viable feedstock as an alternative fuel, what are the potential challenges for hydrocarbons facilities and engineering?

• The industry needs to adapt to new methods of working, to create a viable commercial answer to the lower margins available in Unconventional Gas Developments
• WorleyParsons has developed an entirely new development delivery methodology to allow us to compete in these industries and bring value to our customers

How can petrochemical facilities and technologies accommodate flexibility?

• Petrochemical industries are built on reliable sources of quality feedstock and preferably close to abundant market demand
• Changes are taking place through unconventional gas developments in USA, whereby cheap and reliable feedstocks are available to feed petrochemical facilities which are also close to consumer markets and outlets for finished products (fibres, engineering plastics, consumer plastics, packaging, etc)