LNG technology reaches critical mass with Asia-Pacific projects

Liquid Natural Gas came to the fore in 2010, with massive investments made in developing Australasian gas fields and Asian supply pipelines, and a surge in interest from the major oil companies. John Richards, CEO of oil and gas resourcing and consultancy firm Mentor IMC Group, explains what’s happening in the Asia-Pacific gas fields and how the staffing demands of these projects are being met.

A decade ago it was rare to hear industry professionals talking about Liquid natural gas (LNG) projects, now they are taking a crucial role in energy strategy. Rising oil costs have made otherwise marginal projects more viable and a push for energy security has galvanised LNG investment.  

In 2010 the technology reached critical mass. At the end of the year almost all of the major oil and gas companies were actively developing LNG projects, and the resource stands to play a crucial role in meeting East Asia’s and Australasia’s ever-increasing appetite for energy.

These projects require a vast amount of energy-sector project specialists, which work on a number of different continents during the different project management, design, construction, commissioning, start-up, operations and maintenance stages. At times Mentor can be responsible for the planning, resourcing and deployment of its specialist personnel to multiple countries, with a wide variety of skill sets, for a single development.

Australia is leading the world in terms of LNG investment, with a number of the largest projects coming on-line over a short time span: the Chevron Gorgon LNG project which is in detailed execution phase, the Queensland Curtis LNG Project, a coal-seam gas-to-LNG venture, currently in development and the significant INPEX LNG project.

The developments in Australia have been buoyed by gas contracts from Asian economies seeking to ensure long-term energy security. For example, China Petrochemical has recently entered into a contract to buy 4.3m metric tons of LNG a year for two decades from the Queensland Curtis LNG Project.

The current situation in the Middle East – and the resultant increase in oil prices – has also strengthened the argument for LNG, because countries like Australia lack the kind of sovereign risk so clearly demonstrated over the last few months. Politically Australia remains relatively benign and the government has demonstrated its support of both LNG projects and a series of major mineral developments.  However, this comes with a caveat, the long lead times involved in these projects mean that the events of the last six months serve to underline arguments in favour investment in LNG, rather than lead to their inception.

The size of these projects is a big challenge, both in terms of staffing demands and construction. The Chevron Gorgon project is two or three times the size of anything the industry has seen before. It includes the construction of a 15 million tonne per annum LNG plant on Barrow Island, tapping a resource which contains about 40 trillion cubic feet LNG – enough to power a city of 1 million people for 800 years.

South Korea is already recognised as the hub for construction in the international oil industry and is playing a pivotal role in LNG developments. As with offshore oil projects, its shipyards remain the only facilities in the world capable of producing floating and fixed platforms of a sufficient size as well as very large LNG modules.

The scale of the country’s operation is phenomenal. The three main shipyards employ over 60,000 personnel and in the morning you can see hundreds of workers line up in grey uniforms to complete their daily exercise programme.

Its construction sites include Hyundai Heavy Industries (HHI) in Ulsan, and Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering on Geoje Island, all of which have been host to a variety of ship building and oil and gas projects. HHI, the world’s biggest shipyard, expects orders to reach $26.6 billion this year, its highest since 2008, and the company’s stock has doubled over the last year alone.

The growth in interest in LNG projects, and South Korea’s role in the construction phase, has helped fuel a surge in demand for specialist energy personnel in region. In response we opened an office in Seoul, in October 2010.

Mentor IMC is also an exclusive resourcing partner for one of the joint venture companies involved in the Chevron Gorgon project, in South Korea and Indonesia, and we’ve been involved in providing comprehensive teams capable of planning, managing, engineering, constructing and commissioning during the difference phases of the project.

Foreign nationals are crucial to LNG projects, which often span several different countries. While local staff play an important role, it is essential that multi-national oil and gas companies can bring in specialist personnel from around the world.

Mentor’s new branch has allowed us to bring foreign nationals into the country in a manner fully compliant with South Korean employment legislation, more easily assisting international clients who have project interests in the country. The office also serves as a link to our other international branches, in Europe, America, Asia and Australia, meaning we can offer a fully-integrated worldwide service.

It’s crucial that any resourcing partner working on these projects is able to understand and manage the various phases of development, from sourcing personnel to planning when and how they are going to be used, and dealing with the logistical demands.

As part of this service we brief family members on the work and social aspects of living in the country, manage all of the medical requirements, housing, self sponsoring work permits, and travel arrangements both at the start of a placement and while the employee is on the ground. Payroll and tax are also crucial elements for international projects.  

Moving forward, we continue to watch LNG interests with a keen eye. For example, oil and gas companies are exploring the possibility of Floating LNG facilities complete with onboard processing and export facilities. These ships would have the capacity to store around 100,000 cubic metres of LNG whilst awaiting export tankers for offloading. While none have been commissioned yet, this is an interesting development and one we believe will be crucial to the industry’s development.  

LNG has come of age at a time when energy security is at the forefront of governmental concerns. It’s cleaner, safer and there are vast resources yet to be tapped. As a player in the oil and gas sector Mentor keen to be there assisting your company with these new developments.