Opinion piece by Geoffrey Cann, National Director, Oil and Gas, Deloitte.
Darwin is fast becoming a world class hub for the hydrocarbon industry. What is the opportunity for engineering-oriented local business to participate in the success of the sector?
Darwin will soon be home to a sizeable investment in sophisticated new plant. The completion of the Inpex Ichthys project, the existing Darwin LNG plant, the launch of the Shell Prelude shore base operations, and the construction of the Northern Gas Pipeline herald a future of gas development, gas processing, supply operations and liquefaction. This creates plenty of scope for a variety of technically strong businesses to provide services to the sector.
There is plenty of growth potential too, as it is typically less costly to expand these facilities than to build new ones. These plants will also run for many decades, creating sustainable businesses.
To prepare to participate, service providers should be mindful of the customer’s basic motivations. The operators demand a safe operating environment that delivers high availability (97% or better), with high reliability and is economic. Service providers must meet the operators on all four of these key requirements.
Service providers must find their niche amongst the demands of the operators and concentrate their services accordingly. Services are inherently technical, and demand a high degree of engineering excellence. Here are 10 hot service areas:
- Transport – a variety of land and marine transport services will be needed, along with laydown yards, storage and lifts.
- Utilities – LNG plants feature power assets, water treatment, compressors, turbines, filtration, all of which need repair and services in live conditions.
- Emissions and waste – there will be waste processing and handling of lubricants, consumables, disposables and old parts.
- Spare parts – spares and installation services are required for turbines, fin fans, pumps, valves, pipe, insulation, gauges and compressors.
- Maintenance – all the equipment will need varying degrees of maintenance service, from valve servicing to turbine refurb.
- Labour – the workforce, including contracted staff, will need regular training, safety certifications, background checks, transportation, inductions and mobilisation.
- Turn arounds – every few years, the plants will undergo minor and major turnaround events involving hundreds of workers at a time.
- Equipment usage – the industry prefers to rent cranes, equipment, scaffolding and tools.
- Expert services – deep engineering capabilities will be needed for debottlenecking, inspection, trouble shooting, testing and commissioning.
- Sustaining projects – LNG plants spend capital each year to debottleneck facilities, add capacity, strengthen resilience, improve process reliability and solve technical problems.
There is no better growth opportunity for the engineering sector in Darwin today as the construction boom comes to an end. No other local industry shows a similar trajectory, and the projects will want to use local companies for services because it is cost effective. But getting to the table will not be easy. Service providers need to get smart on the gas industry, the needs of the sector, how it contracts, where to play and how to win a share of this opportunity.
Geoffrey Cann has twenty-seven years of management consulting experience in Canada, Australia, the United States and Asia. He has an MBA from the Ivey School of Business and is a Certified Management Consultant.
Main image: Aerial view of the Inpex Ichthys plant, May 2016. Courtesy of Geoffrey Cann.
Inset image: Geoffrey Cann, National Director, Oil and Gas, Deloitte.
Thumbnail: Stock image.