Before entering the world of politics, Paul Henderson worked as a marine fitter in the shipyards of South Hampton, as an underground fitter at the zinc mines of Tasmania and as an IT consultant for the Northern Territory Government. Now, as Member for Wanguri and the Chief Minister of the Northern Territory, Mr Henderson has an interest in developing the existing and proposed pipeline and petroleum projects in the Territory.
“Naturally pipelines are vital to the economic development of the Territory. The resource sector is a key economic sector in the Territory and pipelines connect remote reserves to markets.
“Across the Territory and across our northern waters there are vast distances between resources and the location where they can be marketed, consumed for some gainful purpose, or processed into a form suited to export markets. Pipelines connect those points and are in themselves a significant part of the resource sector and resource investments that pump billions of dollars into our economy,” says Mr Henderson.
“The pipeline industry is a progressive and innovative bunch of people and I don’t see that changing. In the Territory and indeed across the remote areas of Australia there exists a frontier mentality of getting the job done, of finding solutions to new problems and new ways of dealing with old problems. So for the most part I see innovation being driven by the industry itself and existing institutions.
“However, we do have an excellent initiative in the Territory with the proposed Petroleum Institute at the Charles Darwin University. The institute will target both training and research, and I expect to see some innovation arising out of that institute as it gets underway and sinks its teeth into some real world issues.
“I also think that the way the Northern Territory Government facilitates major projects is something of an innovation in itself and that this process will evolve with each new major project that brings along its own set of new challenges,” says Mr Henderson.
Pipelines transforming the economy
Big projects inject significant capital into local economy and it is no different in the Territory, as Mr Henderson notes “Inpex and Total’s Ichthys LNG Development will transform the Territory economy for decades to come.”
Inpex’s proposed development of the Ichthys Gas Field, located offshore northwest Australia, includes offshore processing facilities and condensate storage, and an 885 km pipeline from the field to the onshore processing facility at Blaydin Point on the Middle Arm Peninsula, Darwin.
Reserves for the project stand at 12.8 Tcf of gas and 527 MMbbl of condensate, and the project is initially expected to produce 8.4MMt/a of LNG, 1.6 MMt/a of LPG and 100,000 bbl/d of condensate.
Mr Henderson highlights that it is not just Inpex and joint venture partner Total who are set to benefit from the development of these resources, as the project promises direct employment for more than 2,000 people during construction and approximately 300 jobs during operation.
“The project provides a platform for substantial further indirect employment and the development of industries associated with gas. Local business activity would benefit significantly and we expect the project to boost business capability and the level of skills in our workforce,” says Mr Henderson.
Another project promising to fuel the expansion of the Territory’s economy is the Sunrise Joint Venture’s development of the Greater Sunrise gas and condensate fields in the Timor Sea. Mr Henderson says that the joint venture recently submitted its floating LNG (FLNG) development plan to the Territory’s regulatory authorities for approval. The FLNG development would produce approximately 4 MMt/a of LNG for export.
In addition, GDF Suez and Santos’ 2 MMt/a Bonaparte FLNG Project, which is based on the Petrel, Tern and Frigate gas fields, is in the pre-front-end engineering and design stage with potential first production targeted for the first quarter of 2018.
“On top of this, our region has several other FLNG developments proposed across the breadth of the Timor Sea, including Shell’s Prelude FLNG Project,” says Mr Henderson.
Mr Henderson says he is also keen to see the expansion of ConocoPhillips’ Darwin LNG Plant, which currently processes 3.24 MMt/a of gas from the offshore Bayu-Undan Gas Field, delivered to shore via a 500 km pipeline.
“Darwin LNG and the offshore facilities provided an enormous boom to the Territory economy during its three-year construction period and lifted a significant part of our local construction, fabrication and service sector to a new plane of capability and skills achievement,” says Mr Henderson.
“During operation, the plant and offshore facilities have generated a growing number of direct and indirect jobs. ConocoPhillips and Darwin LNG currently directly employ 160 people in Darwin. During periodic shutdowns for maintenance the number of people at the Darwin LNG and Bayu-Undan facilities increases to many times this number. For example, in April and May this year, the facilities had a major shutdown for maintenance covering a 35-day period, representing nearly 500,000 man hours of activity. During this time there were 600 people working onshore and
750 people offshore.”
While much of the Territory’s petroleum resources are developed for the export market, the Chief Minister is keen to pursue the offshore oil and gas industry to secure domestic energy needs, particularly in the development of Darwin and Palmerston.
He is proud of the Blacktip Gas Project, which included the construction of the 280 km Bonaparte Gas Pipeline, and the 1,629km Amadeus to Darwin Gas Pipeline, which is currently feeding the Territory’s power needs.
Making the Territory a destination of choice for petroleum projects
Receiving the necessary government approvals to develop petroleum resources is a significant stage in the development of proposed project, requiring significant investment of resources. Mr Henderson says that the Territory Government attracts investment from proponents of big projects by providing certainty in regulatory procedure.
“Provided that projects meet the rigorous environmental and other legal processes in place, we work hard to make sure projects are assisted to come to fruition,” says Mr Henderson.
For Mr Henderson, the commitment to assisting proponents successfully deliver projects has been evident throughout his Government’s three and a half year relationship with Ichthys’ operator Inpex.
Initially Inpex planned to construct processing facilities for the project on the Maret Islands in the Kimberley, Western Australia. The Maret Islands proposal incuded a shorter pipeline of 190 km in length. However in 2008 Inpex selected Blaydin Point, Darwin, as the location for its LNG processing facility, with Inpex President Naoki Kuroda saying “Environmental, economic and engineering studies have demonstrated the viability of locating an LNG plant at Blaydin Point and have lent weight to this decision.”
Mr Henderson recalls “Initially the key attraction of Darwin was the security on land tenure and certainty in relation to approval processes. As the project’s Darwin option gained definition, we became the preferred site for onshore facilities and the project moved into front-end engineering and design.
“My Government worked hard to convince Inpex that Darwin was the right site for an LNG plant for a whole range of reasons, not the least of which is the attractiveness of Darwin to the work force.
“This is a major capital city, with all that a capital city brings, as opposed to an isolated fly-in fly-out destination where workers cannot bring their families,” he says.
Early in the engagement between the Northern Territory Government and Inpex a Project Facilitation Agreement was signed to guide engagement and show commitment. Later, as the project gained definition, certain undertakings were required to provide security for the large investment and to bring the project to a final investment decision, including a binding project development agreement, which was supported by special project legislation.
“The framework that we have for major projects, including our task force approach, provides an efficient unified approach for facilitating major projects toward investment decisions and through construction,” says Mr Henderson.
Creating a skilled workforce
Under the Government’s jobs framework, funding for skills training is allocated according to the needs of the economy, and in the case of the Ichthys project, Mr Henderson says that the Territory Government is working closely with Inpex on identifying skills needs and opportunities for training to meet those needs.
He outlines a number of government-supported skills programs currently available in the Territory including:
- Pre-employment programs to provide training for potential apprentices and to increase opportunities for unemployed people to gain skills for employment;
- Upskilling and reskilling programs for existing workers;
- Training programs delivered specifically for Indigenous Territorians; and,
- A wide range of courses offered through Charles Darwin University, the major public provider of training in the Northern Territory.
Mr Henderson also pointed out that support for employing apprentices and trainees is also available, including the provision of funding for off-the-job training delivery for many qualifications. Training under these programs can be tailored to suit the needs of industry.
“Our Department of Business and Employment has funded a project to examine the current and predicted workforce planning and development needs across the oil and gas industry sector, which will be completed by October 2010.
“That Department is currently managing a project to engage, train and skill 60 Indigenous Australian job-seekers within the Darwin and Katherine regions to compete for entry-level employment within the resources sector across the Northern Territory,” Mr Henderson says.
He also notes that the Northern Territory regularly conducts interstate and international recruitment campaigns focusing on skilled workers required to service the resources and other sectors, including the workforce needs in the construction phase of large projects.
Negotiating landholder issues
In relation to proposed pipeline developments, the Government works closely with proponents to address a range of identified issues, including land access. Mr Henderson says that in some cases, designated taskforces are established to co-ordinate activity across Government and work with proponents to identify issues which may affect the project and to find workable solutions.
“The Energy Pipeline Act makes it clear that the onus is on the proponent of the pipeline to secure agreement with those parties who have an interest in the land including owners, occupiers, licensees, Native Title claimants, Native Title holders or the relevant Native Title representative body. The type of interest in the land being sought by the pipeline proponent may be an easement, license, lease or freehold,” Mr Henderson says.
Mr Henderson notes that the Government is not typically involved in these negotiations as they are commercial arrangements, but in some instances the Government can, and has, assisted in bringing parties together and provided technical advice where appropriate.
Looking to the future
Mr Henderson is optimistic about the future of petroleum developments in the Territory, saying “Darwin is naturally in a great location adjacent to the vast gas resources of the Timor Sea. That, combined with the attractive assets of a deep-water harbour, large population and support industry base, capital city services and amenities, modern infrastructure, defined approvals processes and a supportive Government, puts the Territory in a winning position to grow our gas industry.
“We have set aside land at Middle Arm for industrial development and on that site we can provide certainty of land tenure. We can provide certainty of process to the range of regulatory approvals required for major projects and we have a task force approach to major project facilitation in which we work with proponents to achieve mutually beneficial results.
“I think you will find that the proponents that have worked with us in this major projects approach are quite satisfied about their engagement with this Government. At the end of the day, however, it’s about industry, viable investment opportunities, and projects that are acceptable to community standards.”