A big fish’s evolution begins in Darwin

WITH an ancestry dating back to 1941, the International Petroleum Exploration Corporation (INPEX) has been involved with some of the most significant global oil and gas projects of the last 71 years.
INPEX is Japan’s largest oil and gas company, with more than 70 projects in 27 countries. As a Government-owned business, its main purpose is to supply energy to Japan.
Japan recovered from World War II to develop into the third-largest economy on the planet, despite having few natural resources. As a result, it relies heavily on imports.
Since listing on the Tokyo Stock Exchange, INPEX has become a largely privatised corporation.
In 2006, INPEX merged with Teikoku Oil to form a joint holding company known as INPEX Holdings.
The importance of the company and the resource it controls is highlighted by the fact that the Japanese Government maintains an 18 per cent ‘golden share’ in the organisation. In fact, INPEX is the only company in Japan in which the Government has such an interest.
Under Japanese law, the share cannot be transferred and is essentially in place to prevent a hostile takeover. ‘Nuclear’ is a word that many Japanese people are uncomfortable with and, following the 2011 Fukushima nuclear crisis, the Government stepped up its quest for alternative energy sources.
INPEX general manager for joint ventures and external affairs Bill Townsend said energy security was a major issue for INPEX and the Japanese Government.
“The strategic nature of the company is highlighted by events like the Fukushima nuclear disaster following the earthquake and tsunami in Japan,” Mr Townsend said.
“INPEX places a significant role in returning energy to Japan and meeting the long-term requirements of the country.
“The company itself is undergoing quite a dramatic transformation: at the moment we produce around 435,000 barrels of oil equivalent per day and our aim is to roughly double that in the next 10 years.
“To do that, the Ichthys project in Australia is really the crown jewel that delivers on taking us on that journey.”Ichthys: The crown jewel As part of the ambitious plan to double its production, INPEX is making the transformation from a non-operating project investor to an operator.
In partnership with Total of France, INPEX is the operator of the $34 billion Ichthys development, which is one the largest LNG projects in the world. “Ichthys is the first time that the company has really stepped out to become the operator of a major project of this scale,” Mr Townsend said.
The Ichthys field is 820km southwest of Darwin and represents the largest discovery of hydrocarbon liquids in Australia in 40 years.
At peak production, the project is expected to produce 8.4 million tonnes of LNG and 1.6mt of LPG per annum, along with 100,000 barrels of condensate per day.
Despite the field being offshore WA, INPEX made the decision to pipe the LNG east to Darwin.
Despite preliminary talks regarding basing an LNG processing plant in WA, the Northern Territory was chosen as it provided the easiest solution. Under the terms of the retention lease, INPEX is obliged to develop the resource as quickly as possible.
“The Northern Territory Government actually invited us to build our project in Darwin,” Mr Townsend said.
“At around 2008, when we were looking at the development, the Northern Territory location was the only one that was available. “It was the only place where [we] could build at that time.
“We had the full support of the Northern Territory Government. They came to us and Darwin offered a lot of things that were not available elsewhere, including a working port, capital city, existing LNG plant, rail linkage [and] 120,000 population.
“The Northern Territory was an attractive location, once you got over the fact that we would have to build a longer pipeline.”
Gas from the Ichthys field will be sent to a central processing facility (CPF) and then piped 889km to an LNG processing plant at Blaydin Point in Darwin. With a storage capacity of 1.2 million barrels, the CPF will be the largest semi-submersible platform ever built and will be permanently moored.
At 42-inches thick, the offshore pipeline will be one of the largest subsea conduits in the world and its construction will require more than 750,000t of steel.
Mr Townsend highlighted the fact that INPEX was utilising knowledge from around the world for the project. “The CPF has been built with our joint venture partner Total and we have been using their expertise on engineering and contractors.
“Our offshore contracting was done by Amec of London and the hull work was done by Aker Solutions in Norway, so these are well known companies that are relied upon worldwide in the oil and gas industry to do this type of work.
“The CPF semi-sub is going to be produced in Korea by Samsung Industries, who have extensive experience in buildings these platforms. “It may be largest in the world but it isn’t anything new, [although] the quantities are larger.
“It does present challenges: it will be the largest semi-sub in the world when it’s built and it’s also the first time there will be a semi-sub in Australia. “Furthermore, we are working closely with the Offshore Petroleum Safety and Environmental Management Authority.
We’ve done an initial engagement with them and understand their concerns, and will try to address them. “On the one hand it is a challenge, but it’s within our capacity to deliver,” Mr Townsend said.
The transformation
INPEX has a three-stage development plan to achieve its long-term goals. The first is to continue the enhancement of exploration and production activities.
“We continue to look for opportunities to grow our exploration portfolio and our production,” Mr Townshend said.
“The second major operating project is the Abadi project in Indonesia, which is also an LNG project.
“We are also investors in a number of other projects such as the Prelude floating LNG project in Australia. “We are [a non-operator] in the Kashagan [field] in Kazakhstan, which is the largest oil development in the world at the moment.”
The second aspect of the development strategy is for INPEX to strengthen its domestic gas supply chain in Japan. “We are building a new receiving terminal for LNG at Naoetsu and that will have an associated gas pipeline which will service the domestic requirements in Japan,” Mr Townshend said.
“The third part of our growth plan is to reinforce renewable energy initiatives. “INPEX is looking at unconventional opportunities, geothermal power generation, CO2 [carbon dioxide] recycling technology, and research and development in those areas,” Mr Townshend said.
Community benefits
In Australia, INPEX has entered into an industry participation plan with both the Northern Territory and Federal Governments that commits the company to creating full, fair and reasonable
opportunities for local businesses to work on the project.
INPEX will work with the Industry Capability Network (ICN) in the Northern Territory and all employment packages will be advertised through the ICN Project Gateway website.
“Project Gateway enables local companies to have awareness of whatwork is coming up and to partner with other companies on work,” Mr Townsend said.
He added that the maintenance program contracts were worth hundreds of millions of dollars per year and would support the local industry in the long term. “Phase One is a two-train development and we have room for four more trains.
“The first train development will have a 40-year life, so the opportunities are really multi-generational from an employment standpoint for local businesses.”
INPEX has also invested in upskilling the local workforce by donating $3 million towards the construction of the Larrakia Trade Training Centre.
The company donated a further $3 million to the Charles Darwin University for its North Australian Centre for Oil and Gas, which is aimed at developing a local skill base for the oil and gas industry. Mr Townsend said he believed that the sector had evolved to incorporate greater public involvement in projects.
He also said the industry discussion had changed from a focus on technical issues and shifted more towards the social issues that were often widely publicised.
“In the past these concerns were taken for granted, but are now coming to the fore[front].
“In Australia this is partly because development has moved from being offshore to onshore in areas such as Queensland [with the CSG development]. “It is something we hear about globally
as well, and there is a broader recognition by all companies that the community is a valid stakeholder on all projects and that we need to bring them along for the journey, and we do that by being open and transparent and listening, which is a skill we are developing and value more highly than in the past.”

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