DIGGING & DRILLING Magazine - Issue 28 April-June, 2021

AUSTRALIA • CHINA • INDIA • JAPAN • NEW ZEALAND • ASIA PACIFIC

D&D APR-JUN 2020 • ISSUE 28

AUSTRALASIA

AUSTRALASIA’S QUARTERLY OIL , GAS & MINING MAGAZINE

SCARBOROUGH GETS A GREEN LIGHT THE EVOLUTION OF A LIQUID LNG MARKET FINAL GOVERNMENT APPROVALS FOR CORE LITHIUM NEW DIRECTION FOR INDUSTRY SET AT AOG 2020

Editor’s Letter We have always tried to show an optimistic view of the energy and resources sectors in D&D Australasia magazine, but the COVID-19 pandemic has made this extremely difficult for us to achieve during this unprecedented current climate.

LEN FRETWELL Publisher / Managing Editor Digging & Drilling Australasia Magazine

The Gold share price is up and growing but this does not outweigh the continuing fall in commodities prices, especially with oil. Commenting on the historic fall in US crude oil prices to below zero a barrel in April 2020, Peter Kiernan, Lead Analyst, Energy, at The Economist Intelligence Unit (The EIU) said: “The plunge of WTI oil prices into negative territory, temporarily, was largely driven by technical factors with traders selling off positions ahead of the expiry of the May contract on Tuesday. Still, the unprecedented level of the fall, to as low as around -$40, also reflects the exceedingly bearish sentiment about the state of the oil market’s fundamentals.

Prices will show some normality once the WTI front month contract rolls over into June, as it is trading at above $20. Brent is trading above $20 as well. However, price pressure will continue in the coming months as storage rapidly builds up and the global economic outlook remains decidedly weak, weighing down on oil demand. It will take some time for the impact of the Opec+ deal, to cut 10 million b/d from supply from May 1, to take effect, but this in itself will not be enough soak up the huge surplus that the market is currently experiencing given the level of demand contraction seen so far this year.”

World Oil has reported that the latest collapse in oil prices has put in play a lucrative trade to store crude at sea, reviving memories of the 2008-09 recession when millions of barrels were kept on the world’s oceans. Brent crude in May 2021 is now trading at about $14 a barrel more than it is in May of this year. That constitutes a premium of $28 million over a year for a standard supertanker cargo holding 2 million barrels. A trader can profit from floating storage by selling cargoes in the future, provided the premium they will fetch for it would exceed the cost of hiring a tanker. Several of the world’s largest trading houses said the trade is now profitable.

The QRC’s recent survey of Queensland’s resources companies taken during the COVID-19 outbreak has found that more than half of the sector plans to maintain or increase its workforce.

The resources industry is committed to putting people first, following strict adherence to the advice of health authorities across all operations.

Rio Tinto has reported that less than six months after launch in China, they sold their 1 millionth tonne of iron ore via portside trading, using their new WeChat app. Customers can use their new app to order smaller parcel sizes of iron ore, tailored to meet their needs. This helps make all their iron ore products more easily accessible to steel mills in China, their largest market.

NERA will be providing $20,000 to up to ten Australian-based businesses (for a total of up to $200,000 in funding) who can offer solutions, services or knowledge that can help manage and mitigate the challenges we face as a result of the COVID-19 outbreak. Successful applicants will demonstrate they can rapidly adapt and/or develop solutions to the challenges associated with the current pandemic. Click below for further information When the Corona Virus finally exhausts itself, (and it will) and the danger is over, let’s do something good for our country.

Let’s spend our holidays at home, eat in local restaurants, buy local products, buy local meats and veggies and support all local businesses. These businesses are really doing it tough and are going to find it very difficult to get back on their feet and survive without our help.

Best regards

Len F retwell Len Fretwell Publisher/Managing Editor

www.diggingdrilling.com

@DigandDrill

WHAT’S IN THIS ISSUE »

IN THIS ISSUE 3

EDITOR’S LETTER

6

AOG 2020

10

NEWS IN BRIEF: OIL, GAS & MINING NEWS HIGHLIGHTS FOR THE QUARTER

12

THE NEW REVOLUTION IN CCTV

14

SCARBOROUGH GETS GREEN LIGHT

26

FINAL GOVERNMENT APPROVALS FOR CORE LITHIUM

30

TOTAL ANNOUNCES A SECOND OIL DISCOVERY IN BLOCK 58

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LEN FRETWELL LENA KOZAK, STEPHEN DAWSON ANDREW SPENCE EMMANUEL SOLOMON

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Disclaimer: Reasonable care is taken to ensure that Digging & Drilling magazine articles and other information are up-to-date and accurate as possible, as at the time of publication, but no responsibility can be taken for any errors or omissions contained herein. The opinions expressed are those of the authors and do not necessarily reflect the views of Digging & Drilling Magazine. The publisher, editors, contributors and related parties shall have no responsibility for any action or omission by any other contributor, consultant, editor or related party.

Moments

MOMENTS IN PICS »

AOG 2020

7 DIGGING & DRILLING MAGAZINE | APRIL - JUNE 2020

NEW DIRECTION FOR INDUSTRY SET AT AOG 2020 Initial figures have revealed a successful 2020 Australasian Oil and Gas Exhibition and Conference, held shortly before gatherings were stopped in WA due to the spread of COVID-19, with more than 2000 people attending conference sessions.

• • •

More than 2000 people attended conference sessions at the Australasian Oil and Gas Exhibition and Conference, Sold-out networking functions, almost 300 exhibitors, over 140 speakers and 28 operator briefings demonstrated confidence in industry, Planning for the 2021 event underway, which could signal the emergence of the industry from the global COVID-19 pandemic.

Event Director Bill O’Hare thanked everyone who attended for abiding by stringent hand sanitising protocols, avoiding handshakes, and staying away if they were unwell which ensured a safe and successful event.

“AOG is a wonderful environment for the whole industry to converge, learn about new projects and the local opportunities that are available,” Mr O’Hare said.

The timing of the event meant industry was able to meet and discuss the impact of not just COVID-19 but other changes in the external environment and collaborate on strategies to

manage the year ahead. Final audited exhibition visitor numbers are yet to be confirmed, but anecdotally the event was well attended.

The opening address by Premier Mark McGowan set the future direction for the industry in WA with a strong pivot towards innovation, supporting suppliers at the small-to-medium enterprise end of the market, and building Western Australia’s reputation as the LNG hub for the southern hemisphere.

“It’s important we continue to create confidence and opportunity to show that we continue to be a strong and vibrant place to do business and to invest and this event has been part of that for the past 40 years,” Mr McGowan said in his opening address.

Other highlights included the inaugural Operator Briefing Sessions to present Forward Work Plans – part of the WA Government’s LNG Jobs Taskforce vision which provide a two-year look-ahead for planned works. The highly popular sessions are expected to feature again at

the 2021 event. The sessions gave attendees (AOG) is the biggest oil and gas event in Austhe opportunity to engage directly with the four tralia, and a vehicle for collaboration. The free major operators – Woodside Energy, Chevron exhibition and conference brings together the entire supply chain for a three-day showcase of Australia, Shell Australia and Santos. local and international technology and services, “We are facing an unprecedented global chal- with extensive networking opportunities. lenge as an industry, and as individuals. I look forward to working collaboratively with leaders AOG 2021 is scheduled to take place on 10-12 in the coming months as we prepare to emerge March 2021 at the Perth Convention and Exhifrom COVID-19 with renewed focus and deter- bition Centre. mination,” Mr O’Hare said.

Running from 11 - 13 March 2020 at the Perth Convention and Exhibition Centre, the annual Australasian Oil & Gas Exhibition & Conference

For more information about AOG 2021, go to aogexpo.com.au.

APRIL - JUNE 2020 DIGGING & DRILLING MAGAZINE 9

NEWS IN BRIEF »

OIL, GAS & MINING NEWS HIGHLIGHTS FOR THE QUARTER

VIRGIN AUSTRALIA ENTERS VOLUNTARY ADMINISTRATION

99 DAYS FOR $99 - SPECIAL DEAL TO HELP FIFO WORKERS

Virgin Australia has entered voluntary administration but says it will continue to operate its scheduled international and domestic flights.

Perth Airport has moved to offer even more support for Western Australia’s vital resources sector, making it easier and cheaper for FIFO workers to park at the airport for long shifts.

The decision comes after the airline, reported to have about $5 billion in debt, sought financial assistance from a number of parties, including State and Federal Governments, to help it through the COVID-19 crisis. The Federal Government said today it remained committed to two commercially viable airlines operating domestically across Australia and would ensure the ACCC strongly enforced competition laws, so airlines were able to compete effectively as the industry rebuilds.

“In light of Virgin Australia’s announcement today, the Government has appointed Mr Nicholas Moore, former Macquarie Group CEO, to lead our engagement with the administrator. The Government’s preference continues to be for a market-led solution,” Minister for Infrastructure, Transport and Regional Development Michael McCormack said.

The group’s Board of Directors has appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as voluntary administrators of the company and several of its subsidiaries.

RIO TINTO INCREASES COVID-19 SCREENING MEASURES AT PERTH AIRPORT Rio Tinto has introduced further measures to help combat the spread of COVID-19 in Western Australia following the start of rapid screening trials at Perth Airport.

Alongside screening controls at airports including questionnaires and temperature screening, a range of other controls have already been introduced across Rio Tinto operations in the Pilbara region to help minimise transmission risk. This includes social distancing on planes, buses, camps and in light-vehicles, reduced people on site via a roster change and stronger controls on access to sites.

Rio Tinto is now increasing screening measures by introducing a trial of COVID-19 rapid screening at Perth Airport and at the company’s nearby Operations Centre.

This will form part of an enhanced five-layer screening process designed to keep the community and the company’s workforce safe.

Perth Airport CEO Kevin Brown said the airport is also willing to do its bit to assist FIFO workers who have had their rosters changed. “We understand that FIFO workers are concerned about the coronavirus and the need to maintain social distancing on their trips to and from Perth Airport,” Mr Brown said. “We also know that many FIFO workers are now facing longer periods away from home and may not normally want to park at the airport for such extended periods. “We’ve responded by introducing a heavily discounted parking price for our long-term car parks. “FIFO workers will now be able to park for up to 99 days in all of our open long term car parks and pay no more than $99. “This new offer aims to helps workers who prefer not to have to take a taxi, rideshare or public transport to the airport for their flight. “And with social distancing now a priority for everyone, this will allow workers to drive themselves out and then have their car close by when they return. ”The new rate of $99 for stays of up to 99 days is valid in Long Term B, Long Term H and the General Aviation car parks to assist those workers on longer swings. Previously, the cost of a two week stay in Long Term H was $215 and a four-week stay was $369. This new offer represents a saving of $116 and $270 respectively. Bookings can only be made online and must be booked at least two (2) hours in advance. Drive up fees remain unchanged. Special offer is not valid within the Short Term or Fast Track car parks.

MINES SAFETY LEVY TO BE REDUCED The McGowan Government is reducing the Mines Safety Levy by 20 per cent from July 1, 2020 to provide relief to mining companies.

The decision comes after the airline, reported to have about $5 billion in debt, sought financial assistance from a number of parties, including State and Federal Governments, to help it through the COVID-19 crisis. The Federal Government said today it remained committed to two commercially viable airlines operating domestically across Australia and would ensure the ACCC strongly enforced competition laws, so airlines were able to compete effectively as the industry rebuilds. “In light of Virgin Australia’s announcement today, the Government has appointed Mr Nicholas Moore, former Macquarie Group CEO, to lead our engagement with the administrator. The Government’s preference continues to be for a market-led solution,” Minister for Infrastructure, Transport and Regional Development Michael McCormack said. The group’s Board of Directors has appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as voluntary administrators of the company and several of its subsidiaries.

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The need for a proactive solution in the global energy and resources sector to effectively utilize funds/assets and supplies in order to improve operations for better conditions are ever being researched and studied. The significance of video-based data has become an important part of this initiative due to its inherent capabilities and real-time characteristics.

In terms of surveillance video, there are thousands of cameras in the industry which are mainly viewed by human eyes thus consuming a lot of manpower. There is no doubt that it is impossible to monitor and record all videos, resulting in low efficiency in resources deployed. Therefore, how can you make use of the video data which is of great magnitude for the application scenarios in the oil, gas and mining industries?

To address this concern, Ai group has combined artificial intelligence and deep machine learning algorithms to develop AIVI (Artificial Intelligence Visual Investigator). AIVI can be combined with existing CCTV infrastructure, where its Ai algorithms will examine data feeds and deliver extraordinary analysis, with great accuracy and profound precision, in providing real time alerts for immediate action.

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Scarborough gets a green light Woodside has achieved an important regulatory milestone for its Scarborough gas development offshore Western Australia.

The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) has advised of its acceptance of the Scarborough Offshore Project Proposal (OPP), following its assessment of the potential environmental impacts over the life of the project. This follows a year’s assessment, including an eight-week public comment process.

Woodside CEO Peter Coleman said NOPSEMA’s acceptance of the OPP was a significant step forward for the proposed development of the Scarborough gas resource, which is now being progressed on a revised schedule due to the current uncertain global investment environment. “Although we are now facing challenging market conditions due to the impact of COVID-19 and volatile oil prices.

Pluto LNG Plant, Karratha

Woodside Donaldson LNG carrier, Pluto LNG

The OPP is the primary Commonwealth environmental assessment document for the Scarborough project in Commonwealth waters and forms the basis for future activity-specific Environment Plans, which must also be assessed and approved by NOPSEMA. Future activities include the drilling of the gas wells, installation of the floating production unit and installation of the pipeline.

Scarborough is a world-class resource which we plan to develop at a globally competitive cost through our proposed Burrup Hub. “Woodside is continuing work to ensure we have all the necessary regulatory approvals and commercial agreements in place to ensure a final investment decision can be taken for Scarborough in 2021,” he said.

Castoron Pipelay Vessel Pluto LNG Plant, onshore gas plant employees

Pluto LNG Plant, onshore gas plant

The Scarborough pipeline is proposed to tie in onshore at the Burrup Peninsula. Woodside’s preferred concept for Scarborough, is to tie into a brownfield expansion of the Pluto LNG facility. Installation of these pipelines will require pipelay activities along each of the pipeline routes.

The offshore pipeline route for Scarborough to Pluto will also require some dredging for pipelay activities along the shallower, nearshore sections of the route.

Extensive baseline studies are underway along the proposed pipeline routes to understand the marine environment and how activities can be best managed

to ensure minimal effects on marine habitat in the area.

Monitoring data and research associated with the Pluto LNG foundation project dredging program in Mermaid Sound off the Pilbara coast, will also help inform impact assessment and management planning.

The Scarborough field contains an estimated contingent resource (2C) dry gas volume of 11.1 Tcf (100%; 8.2 Tcf Woodside share, calculated using deterministic and probabilistic methods). The field is held 73.5% by Woodside and 26.5% by BHP.*

Scarborough to Pluto expansion

*Equity alignment agreement as disclosed on 26 February 2020 is subject to regulatory approvals Images source; Woodside Energy Ltd.

APRIL - JUNE 2020 DIGGING & DRILLING MAGAZINE 15

Your Journey.

Our Mission.

An Eye On Expansion - Townsville

Hevilift Australia continues to cement itself as the FIFO provider of choice in Queensland with the recent award of three new contracts supporting the mining industry and in this article we take a look at Hevilift’s new operating base in Townsville and the startup of those new contracts.

Townsville Airport In recent years Townsville has experienced a downturn in mining employment however recent months have seen an increase in employment figures with several mine sites recruiting from the local area and as such the demand for FIFO flights from Townsville has increased. Hevilift worked closely with Townsville Airport in the latter part of 2019 and into early 2020 as it secured these new contracts to ensure that the infrastructure and support services met customer requirements.

These facilities included a permanent Hevilift staff office and a dedicated Aircraft Stand on the airports operating apron. To ensure that safe and efficient services were provided to assist in delivering on time departures Hevilift selected Aus Flight Handling as the Handling Agent for its Townsville operations with Aus Flight Handling conducting passenger check ins and aircraft loading services following a period of training delivered by Hevilift’s own in house training department for the 68 seat ATR72 and 48 seat ATR42 that had been selected by the new customers.

Townsville Airport is a modern well-equipped facility with easy parking and a passenger friendly experience which works extremely well in delivering the needs of companies requiring FIFO services.

Hevilift’s Newest Customers Byrnecut Australia - Byrnecut support the Capricorn Mine near Mount Gordon (previously known as “Gunpowder”) which is located to the West of Townsville just North of

Mount Isa. Their staff had previously utilised a mixture of Regular Public Transport (RPT) flights from various locations combined with busses to the mine site, however they were keen to provide a more robust and efficient method of transportation to Mount Gordon and therefore selected Hevilift and its 68 seat ATR72-500 to conduct services between Townsville and Mount Gordon via Cairns to provide the new enhanced transportation service.

Chinova Resources - Chinova’s operation is well established with its Osborne mine located approximately 200kms Southeast of Mount Isa. Chinova selected the 68 seat ATR72-500 having previously used an older generation aircraft with the service running twice weekly direct to the mine site.

We asked Hevilift’s CEO Ashley Roy why he thought Hevilift were gaining such a large share of the Queensland FIFO market. “I believe it comes down to three key points. Firstly, we are unique in that we only operate FIFO Charter flights rather than trying to combine this specialist type of operation with Regular Public Transport (RPT) flights as the two are extremely difficult to combine within one aviation organisation. We often see our competitors having to favour the delivery of RPT services at the expense of FIFO Charter flights when technical delays are experienced which invariably leads to service delivery issues and the passengers experiencing a lower level of service than they deserve.

Secondly, our choice of the ATR as our aircraft of choice for the FIFO market means its class leading abilities in the FIFO market meet our customers’ needs in this challenging sector. Lastly, but by no means least, our absolute focus on customer safety and quality of service means our customers trust us to deliver their services for the long term.

BHP Operations Services (OS) – OS selected the Hevilift ATR42-320 to conduct a trial service between Townsville and its Moranbah Airport to serve those members of staff living in or travelling to the Townsville area. Hevilift were recently awarded a three-year extension to its contract with BHP for services between Brisbane and Moranbah and this new service further extends the relationship between the two companies.

We’re delighted to have commenced operations out of Townsville and with new aircraft joining our fleet in the coming months we look forward to delivering FIFO services to our customers for many years to come.”

P +61 7 3621 8300 E commercial@hevilift.com www.hevilift.com

The Hon Angus Taylor MP

Minister for Energy and Emissions Reduction

Support for hydrogen projects in South Australia, Victoria and Western Australia The Morrison Government continues to support the development of a local hydrogen sector that is expected to play an increasingly important role as a future energy storage technology.

Through the Australian Renewable Energy Agency (ARENA), the Australian Government has announced grant funding support for two feasibility studies including: •

•

$1.28 million in funding to Australian Gas Networks (AGN), part of Australian Gas Infrastructure Group (AGIG), to establish the Australian Hydrogen Centre which will investigate blending hydrogen into existing natural gas pipelines in South Australia and Victoria; and $995,000 in funding to Yara Pilbara Fertilisers Pty Ltd (Yara) to support a feasibility study for the production of renewable hydrogen and ammonia for fertiliser production in Western Australia’s Pilbara mining region.

Announced at AGN’s Australian Hydrogen Centre at the Tonsley Innovation District in Adelaide, Minister for Energy and Emissions Reduction Angus Taylor said the Government is taking practical steps to establish Australia as a world leader in hydrogen.

“This support builds on the over $500 million that the Coalition Government has committed since 2015 to developing a clean and innovative hydrogen sector in Australia, including the $300 million Advancing Hydrogen Fund,” said Mr Taylor.

The AGN studies, with a total funding of $4.15 million, will examine blending 10 per cent hydrogen into gas infrastructure and investigate the costs and benefits of converting state gas networks to take 100 per cent hydrogen.

The Australian Hydrogen Centre will also be supported by the South Australian and Victorian Governments, as well as AusNet Services, ENGIE and Neoen.

The $3.7 million Yara project will investigate the feasibility of producing renewable hydrogen by using on-site solar PV energy to power an electrolysis plant. The renewable hydrogen will be blended with natural gas-derived hydrogen and used to produce ammonia with a lower carbon footprint. This can then be exported by Yara whose Pilbara facility produces five per cent of the world’s ammonia.

These projects will support the priority work areas of the National Hydrogen Strategy, released last November. In particular, the Strategy identified using hydrogen in Australia’s gas networks as a key area of early demand.

Building up domestic demand for hydrogen will be an essential foundation to establishing a thriving hydrogen export market. With potential significant emissions reductions benefits, a hydrogen sector could also generate around 8000 jobs and $11 billion a year in GDP by 2050.

18 DIGGING & DRILLING MAGAZINE | APRIL - JUNE 2020

Mrs Gina Rinehart and the Rinehart Medical Foundation leads industry COVID-19 funding for the Flying Doctor The Royal Flying Doctor Service (RFDS) stands ready to serve Western Australia during the COVID19 pandemic and is building the 25% surge capacity expected to be required for the coming months.

RFDS has received a $6 million donation from Mrs Gina Rinehart and the Rinehart Medical Foundation to boost its inherent capability to respond to the emergency and primary health care needs of rural and remote Australians. The generous donation towards additional critical care equipment and telehealth technology comes at a time when the life-saving service is needing to build its ‘surge capacity’ to respond to the COVID-19 pandemic.

RFDS Central Operations Chief Executive, Tony Vaughan ASM, says the impact of Mrs Rinehart’s and the Rinehart Medical Foundation’s generous - and immediate - financial support will be far reaching. “We are incredibly grateful for the critical support from Mrs Rinehart which will assist us towards bolstering our service for the surge capacity we will need to respond across the regions.”

Mrs Rinehart’s support continues her family’s long association with the Flying Doctor. As a child she would help her mother, Hope Hancock, to raise funds for the

Service in Western Australia, holding many functions at her home, as well as advocating and contributing to others who did so too.

“I well recall, as many of you present would be well familiar with, the making of hundreds of sandwiches just prior to each of these events,” Mrs Rinehart said at the unveiling of the S. Kidman & Co Jet Sponsorship of RFDS Central Operations in December 2017.

BHP provided a $2 million donation which has joined an industry funding commitment to the aeromedical charity and has leveraged funding from corporate peers for the essential regional service.

Fortescue Metals Group, Chevron, RFDS long-term corporate partners Rio Tinto and CBH Group, and Chamber of Minerals and Energy member companies have pledged further funding towards the estimated $15 million surge costs needed by the Flying Doctor for the next six months.

The RFDS has launched an appeal to support its COVID-19 funding effort.

The Response Ready for WA Appeal will enable the immediate bolstering of frontline people – doctors, nurses and pilots. Funds will also be invested in aircraft and Personal Protective Equipment (PPE) to serve regional communities across Western Australia, as well as provide the tools, equipment and consumable supplies for on-the-ground emergency response into the long term and shore up the ongoing sustainability of the aeromedical charity.

To find out more www.rfdswa.com.au

Minerals Council of Australia, Australian Workers Union and the CFMEU Mining and Energy Division

Joint Statement on COVID-19 The Australian Workers Union (AWU), the CFMEU Mining and Energy Division and the Minerals Council of Australia (MCA) represent companies and workers in one of the fundamental sectors of the Australian economy.

Health and safety is the number one commitment of everyone in the Australian mining industry.

The resources sector employs more than 1 million Australians and is responsible for more than 58 per cent of Australia’s export income. Mining also makes a major socioeconomic contribution to Australian communities through partnerships and local services.

The COVID-19 pandemic represents the most significant disruption to daily life since the Second World War. The measures currently being undertaken to attempt to control the spread of the pandemic are unprecedented, and no aspect of Australian social life or the economy will remain unaffected. This is as true for the mining industry as any other part of our economy.

Yet the continuation of productive activity in the mining industry is vitally important.

Australia needs the income and economic activity generated by the sector to fund initiatives for the benefit of all Australians.

There are many regional, local and remote communities which rely on mining both directly and indirectly whose sustainability would be threatened if governments took decisions which would drastically reduce economic activity. In the context of this national crisis, employers and unions must work together to help limit the spread of COVID-19 whilst maintaining the highest possible degree of economic activity.

The safety and well-being of mine workers and the communities they live and work in are paramount.

It is also appropriate considering the unprecedented challenge posed by COVID-19 that we all recognise the profound contribution currently being made by the many thousands of health workers throughout Australia. Measures to address the COVID-19 pandemic must be based on an acceptance that the safety and well-being of the Australian community is the highest priority. Within this framework, the safety and well-being of the resources sector workforce is nonnegotiable, despite the myriad practical challenges now and ahead.

The AWU, CFMMEU and the MCA are united in their determination to implement strict COVID-19 health and safety protocols to keep people in work and sites operating where it is safe to do so.

Existing models of employment such as fly in, fly out (FIFO) and drive in, drive out (DIDO) should be maintained, provided

the safety and well-being of mine workers and local communities is not compromised.

The AWU, CFMMEU and MCA have agreed that a range of COVID-19 protocols will be implemented dealing with the following matters: • • •

• •

strict measures to minimise the risk of workers being exposed to COVID-19 in mining workplaces strict processes for encouraging self-isolation by workers comprehensive systems to manage any positive COVID-19 tests for workers at a mine site or who have been at a mine site. These will only involve quarantine at mine sites in exceptional circumstances appropriate travel and accommodation conditions for FIFO and DIDO workers education and communication with workers and local communities.

The AWU, CFMMEU and MCA have agreed to monitor the adequacy and effectiveness of these measures through regular and ongoing discussions at State Mine Safety Advisory Councils.

The MCA and resources unions also agreed to work together to minimise any long-term job losses in the industry as a result of COVID-19 and noted that employers are meeting medical costs associated with COVID-19 testing for workers.

The adoption of these policies will ensure that when Australia emerges from the COVID-19 pandemic, a strong mining sector and a safe and healthy workforce will ensure Australia’s speedy economic recovery is delivered for the benefit of all Australians.

In these tough times, the sector remains focused on operating safely as an essential industry which supports workers, families, local communities and Australia. That is why the AWU, CFMMEU and MCA are united in their determination to ensure the sector can continue to be a critical part of the Australian economy.

As the overseas experience demonstrates, the health sector workforce will also face enormous challenges in the coming weeks and months and the dangers and burden of confronting COVID-19 will fall disproportionately on the shoulders of nurses, doctors and other health workers.

In dealing with our own challenges, we should recognise and support the contribution of Australia’s health workers and others in the community who are in the frontline of dealing with the pandemic.

20 DIGGING & DRILLING MAGAZINE | APRIL - JUNE 2020

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Because with MechBro you don’t just get a capable individual, you get the strength of our entire team! MechBro’s team of mechanics and fitters are committed to the economic success of our customers. And so, before joining us, must demonstrate they possess the passion, skills and attitude required to satisfy our customers. Accordingly, we believe this set of values will help to ensure the mutual economic success of all parties.

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Whether it be a civil or mining project, every person on our team knows that to keep plant operating means productivity. We work hard and use our heads! As a collective, our team of highly skilled mechanics diagnose, repair and maintain a wide variety of plant and equipment, dozers, excavators, graders, scrapers, profilers, dump trucks, bobcats, heavy haulage road transport, etc.

Our team has the experience, qualifications and equipment to work on all aspects of these machines including engine rebuilds, hydraulics, track and frame, electrics and air conditioning and on all brands, including, but not limited to; CAT, Hitachi, Komatsu, Terex, O&K, Volvo, Bell, Vermeer, Cummins.

As a team of mechanics, fitters, servicemen and fabricators we keep machines going, as well as being involved in site mobilization where we establish containerized workshops complete with domes and commission machinery ready for operation. Upon project completion we demobilize workshops and plant and are often the last to leave site.

Throughout a project we are able to manage all parts ordering and delivery, including urgent hot shots. Our tilt tray can pick up and deliver parts and 20’ containers up to 8.5T.

REFRIGERENT TRADING AUTHORISATION

WHERE WE’VE WORKED

MACHINERY AND VEHICLE HIRE

MechBro has the capability and authorisation to repair your air conditioning units.

During the last 18 months we’ve worked at many major mine sites owned by BHPB, RIO, FMG, Sandfire Resources and more recently Onslow Quarry. Our people understand the rigorous requirements of working on these sites and act accordingly.

Mechbro can provide a variety of machinery and vehicles to suit your needs. MechBro currently have 6 mine specified service vehicles supported by a tilt tray truck capable of loading and unloading 20’ sea containers and moving items of plant up to 8 Tonne.

SAFETY FIRST

Having established MechBro Pty Ltd on May 9th 2011, with 2 mechanics we have experienced rapid growth and now have a great team of mechanics and service men. In 2012 we also acquired a light vehicle w ork shop in Joondalup.

Within the next 12 months we will be establishing a heavy duty workshop where we can service, repair and store larger equipment.

Our aim is to conduct our business using systems and practices which will ensure that our workforce and the community are protected from injury and harm. Safety and productivity go hand in hand with our people working as problem solvers to get the job done.

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We have the equipment and the facilities to service your machinery and vehicles. We will also invest in our business and tailor to your requirements.

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Mobile: 0438005655

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Mining to help dig economy out of COVID-19 hole South Australia’s mining sector is well placed to play a crucial role in helping the state’s economy off the floor at the conclusion of the COVID-19 crisis.

According to figures from the South Australian Chamber of Mining

In 2019, the state produced about $4.5 billion worth of minerals,

and Energy, royalties paid to the state government are projected

led by copper, which accounted for about 50 per cent of the

to reach $325 million for the 19/20 financial year, up from $299

value, followed by gold and iron ore. South Australia is also a

million the previous financial year and $207 million in 2015/16.

major producer of uranium, hosting four of the six approved

Jobs in the sector have also grown to reach 27,200 direct and

uranium mines in Australia, which generated more than $500

non-direct employees this year and have been boosted in recent

million in revenue last year. PwC partner Andrew Forman said

times by more than 1000 direct construction and production jobs

the rise in royalties in recent years was a result of increases in

at Oz Minerals’ new Carrapateena copper/gold mine 160km

both production and sale prices. “What we’ve seen in the last

north of Port Augusta.

few years in South Australia is both of those things – increases in production and also steady increase in commodity prices, which have pulled back a little bit recently but by and large we’re still in a pretty reasonable position and that position has improved,” he said.

“The Australian dollar has declined pretty significantly over the course of this calendar year already and pretty much all commodity prices are in US dollars and once you convert that to Australian dollars it does represent a pretty significant cushion to prices received by Australian producers of mineral commodities.

“Whilst commodity prices have come down a little in recent months from a reasonably good level, I suspect that has largely been cushioned by the decrease in the Australian dollar over the same period.” Forman said although the mining gains of the past few

While global commodity prices, which are calculated in US dollars,

years could not be classified as a boom, the degree of caution

have dipped in recent months, this has been largely offset locally

around investments showed the memories of the tough times

by a slump in the value of the Australian dollar to some of the

following the last mining boom were still fresh in the minds of

lowest levels in almost two decades. A global survey of 2400

many in the industry.

explorers, developers and other mining-related companies was released in February and listed South Australia as the 6th most

He said although times are uncertain now there is still potential

attractive jurisdiction in the world for mining investment, up from

for further growth in this mining cycle. “I would have said that

24th in 2018. The Fraser Institute Survey of Mining Companies

we are still moving in a positive direction towards a peak and in

2019 ranking for South Australia was the first time the state had

my experience, we are not at a position where we are seeing

been recognised in the top 10 since 2015, when it was ranked

irrational or over exuberant investments. “This build up feels like

10th of 109 jurisdictions. In the 2019 survey, Western Australia

it has been a bit more rational and structured than where we got

was ranked No. 1 ahead of Finland and Nevada.

to in the 2006 to 2010 period when commodity prices reached high levels and we invested in some projects we shouldn’t have

In November 2019 PwC released its annual overview of

as an industry. “The hope or the plan is that mining companies,

Australia’s 50 biggest mid-tier mining companies, Aussie Mine

like all companies will have to bunker down a little bit during this

2019. The report into the largest ASX mining companies with

period because we are in a period of lower confidence and we are

a market capitalisation of less than $5 billion at 30 June 2019

in a period where prices will come off a little bit but we certainly

found revenues of the publicly listed companies increased by 28

hope that is only temporary and at some point in the future we’ll

per cent on 2018 and their combined market capitalisation had

move back to the position we were in a few months ago, which

reached their highest level since 2011. While market caps have

is a position where the industry is poised for significant growth

reduced in the past couple of months as stock markets around the

including within South Australia.”

world suffer through the coronavirus crisis, the pandemic is yet to significantly slow production at South Australia’s major mines.

The South Australian government launched its Copper Strategy in

22 DIGGING & DRILLING MAGAZINE | APRIL - JUNE 2020

February 2016, which aims to triple the state’s copper production

financially to the economic stimulus packages provided by the

to 1 million tonnes per year within two decades. The state

Marshall Government to businesses and workers affected by the

government announced recently it would defer costs linked to

restrictions,” she said. “This revenue stream is critically important

exploration and licence fees for the minerals and petroleum

for the state during the crisis and will remain so throughout

sectors to alleviate the impact on industry of coronavirus

recovery and beyond. “With a proven track record of adaptability

containment measures. In addition, there is a 12-month waiver

and resilience in difficult times, the resources sector is dynamic

of committed expenditure for all mineral exploration licence

and innovative, it embraces change and it leads the way. It will

holders. The state has also recently completed the Gawler Craton

be key to South Australia’s economic recovery.”

Airborne Survey, which captured approximately 1,800,000 line kilometres of data over an area of about 324,000sq km - the size of Norway - and is the largest survey of its kind to be done in Australia and possibly the world. The survey aims to help explorers discover new deposits in the region, which is already home to large-scale copper/gold mines Olympic Dam, Prominent Hill and Carrapateena.

BHP also announced in November 2018 it had made a huge copper/gold discovery at Oak Dam West, 65km south of its Olympic Dam operation. Forman said the government’s focus on copper was justified but significant new projects would need to commence if it was to go anywhere near achieving its copper target. “We have some very large copper deposits being mined at present and we have a large state by area and there’s a lot

BHP, which operates the state’s largest mine Olympic Dam, is

of prospectivity in relation to copper,” he said.

employing an additional 1500 people across Australia for the next six months to help it maintain production through the pandemic.

“By virtue of those facts it is a strategy that makes a lot of sense,

The company charters more than 40 flights from Adelaide Airport

but I think we would need to discover and develop new deposits

every week to transport thousands of its workers to Roxby

in order to be trending towards that sort of target. “Generally,

Downs near Olympic Dam. Late last month it adopted new

we are underweight, and the opportunities are good, so we are

body temperature screening procedures at Adelaide Airport to

well positioned for some large new mining projects. ”The South

screen its passengers before boarding. Under the new protocols,

Australian Chamber of Mining and Energy has been the industry’s

passengers recording 38C or above on a thermal camera will be

peak body in the state for the past 40 years.

asked to take a secondary test using a thermometer. Anyone still recording an elevated temperature will not be permitted to board

SACOME CEO Rebecca Knol said the resources sector now

the flight until they obtain a medical certificate saying they are fit to

contributed 50 per cent of the state’s exports and its workforce

fly. In a statement to the ASX last week, Oz Minerals announced

was “growing at pace”. She said the recent high ranking in the

it had so far not experienced any production impacts as a result

Fraser Institute Survey had allowed the state’s mining industry to

of the virus at its two South Australian mines, Prominent Hill and

start the decade on a high note. “This result will provide positive

Carrapateena. The company is also increasing its ore stockpiles

momentum for the South Australian resources sector, which is

to safeguard production against any worsening of conditions.

already the engine room of the South Australian economy and

Oz Minerals chief executive Andre Cole said with more than

drives innovation and employment for the state. “In addition, the

85 per cent of the Australian sites’ workforce based in South

resources sector is expected to provide $325million in royalties to

Australia, the state’s border closure would have limited impact

the State Government in the coming year – cash to contribute to

on the continued operation of Carrapateena and Prominent Hill.

the building of roads, schools and hospitals.” As many industries struggle through COVID-19, mining in South Australia has so

In its statement the company also said the A$ copper price had

far proven resilient.

proved resilient against a deteriorating US$ spot price, and with the vast majority of the core Australian operations’ cost base

Ms Knol said the resources sector had been defined as an

being A$ sourced, the lower A$ has provided an effective hedge

essential service and was taking steps to protect workers and

against US$ based revenues. It said demand for copper intensive

communities from the spread of COVID-19 by implementing

items such as air conditioners and cars has begun to improve in

measures such as health monitoring, regular cleaning, physical

China recently, whilst the broader market has also been impacted

distancing, travel limits and shift changes. “Our sector is

by the temporary reduction in copper concentrate supply from

continuing to generate revenue for the state thereby contributing

major producing countries in South America and Africa.

Writer: Andrew Spence. Images: Underground at Oz Minerals' Prominent Hill mine in South Australia.

TOTAL CHARTERS ITS FIRST LNG-POWERED VERY LARGE CRUDE CARRIERS Total signed a pioneering agreement to charter its first two LNG-powered VLCCs (Very Large Crude Carrier). The two vessels, which can carry about 300,000 tons of crude oil each, will be delivered in 2022 and will join the time-chartered fleet of Total. These VLCCs will be chartered from Malaysian shipowner AET. The vessels have been designed with LNG propulsion to benefit from reduced Greenhouse Gas emissions and with the latest technologies to further lower their consumption.

“LNG is the best and immediately available solution to reduce the environmental footprint of shipping,” highlights Luc Gillet, Senior Vice-President Shipping at Total. “The use of LNG to fuel our chartered vessels is the illustration of our determination to reduce the carbon footprint of our activities. With this decision, we reaffirm our positive contribution to a sustainable shipping industry and our commitment to extend the use of LNG as a clean marine fuel.”

Mr Gillet said: “Total is committed to safely deliver energy while reducing its impact on the natural environment and we continuously explore all elements of our business, including our supply chain partners, to ensure minimum emissions. We seek partners who share this commitment and I am pleased that AET continues to innovate and take a leadership approach to operating in the cleanest way possible. We’ve partnered with AET for many years and today’s signing is the next logical step in our continuing relationship”.

LNG as a marine fuel, the best and immediately available solution to reduce the environmental footprint of maritime transport A true technological breakthrough in the service of environmental protection, LNG is now the best available and technologically proven solution to significantly reduce the environmental footprint of maritime transport. Compared to ships currently powered by fuel oil, its use results in a reduction of: • • • •

99% of sulphur oxide emissions; 99% of fine particles emissions; Up to 85% of nitrogen oxide emissions; About 20% of greenhouse gases emissions.

AET, a leading energy logistics provider, announced an agreement with Chartering and Shipping Services SA, (a wholly owned subsidiary of Total SA) for the time charter of two LNG dual-fuel VLCCs. The two newbuilds are scheduled to be delivered to AET from Q1 2022.

Making the announcement, Mr Yee Yang Chien, Chairman of AET and President/Group CEO of MISC Berhad said: “AET is MISC Group’s wholly owned petroleum shipping subsidiary and today’s agreement cements its global position as a world class energy logistics provider. We subscribe to a robust sustainability agenda which reaches into all corners of our business and includes a commitment to protect the natural environment alongside a strong focus on maintaining business stability and continuity.

The supply of LNG for these two LNG-powered VLCCs will be provided by Total Marine Fuels Global Solutions, Total’s dedicated business unit in charge of worldwide bunkering activities.

Today’s agreement with Total takes us a step further in delivering on that agenda. As a Group, we took early and bold decisions to invest in LNG dual-fuel vessels and I am pleased to see the industry responding so positively to our strategy. I am delighted we have made this agreement with Total and I’d like to thank them for their confidence in AET”.

The two newbuilds will be powered by LNG and will be amongst the most environmentally friendly VLCCs in the market. When in service, they will emit around 20% less CO2 greenhouse gases than conventional vessels; 85% less NOx and 99% less SOx. In addition, 99% fewer fine particles will be released. Immediately, these vessels comply with IMO Tier III levels, IMO 2020 sulphur cap and represent a significant step towards the IMO’s ambition to reduce carbon emissions by 50% by 2050 from a 2008 baseline.

Capt. Rajalingam Subramaniam, President & CEO, AET, said: “AET is investing to build efficiency in our partners’ energy logistics activities and this includes assisting them to meet their environmental targets. This collaboration is a further example of our commitment towards Environmental, Social and Corporate Governance as well as the UN Sustainable Development Goals. We were among the industry leaders in building and operating LNG-powered Aframax vessels and dynamic positioning shuttle tankers and these two new ships will be our first LNG dual-fuel VLCCs. We continue to innovate and pioneer new technologies to ensure we achieve, or exceed, the IMO’s GHG strategy obligations including meeting our own internal aspiration of reaching IMO’s 2030 carbon reduction goals by 2025. These new vessels

clearly demonstrate our philosophy that commercial viability coupled with environmental sustainability is possible; and shows how AET continues to “move energy to build a better world”.

I would like to thank Total for partnering in this innovative environmental solution and for furthering our relationship in many segments of our business. Total has joined a select group of energy majors who have shown significant leadership in reducing the carbon footprint of safe and environmentally friendly energy transportation.”

AET currently operates two LNG dual-fuel Aframax vessels and two LNG dual-fuel Dynamic Positioning Shuttle Tankers within its global fleet.

Total, 2nd Largest Private Global LNG Player Total is the second-largest private global LNG player, with an overall portfolio of around 50 Mt/y by 2025 and a worldwide market share of 10%. With over 34 Mt of LNG managed in 2019, the Group has solid and diversified positions across the LNG value chain. Through its stakes in liquefaction plants located in Qatar, Nigeria, Russia, Norway, Oman, Egypt, the United Arab Emirates, the United States, Australia or Angola, the Group sells LNG in all markets.

APRIL - JUNE 2020 DIGGING & DRILLING MAGAZINE 25

FINAL GOVERNMENT APPROVALS FOR CORE LITHIUM TO MOVE ON FIRST LITHIUM PRODUCTION IN THE NT Advanced Australian lithium developer, Core Lithium (ASX: CXO), has received approval of its Mine Management Plan from the Northern Territory Government, marking the achievement of the final major authorisation milestone to build the Territory’s first lithium mine and production facility.

Core’s Finniss Lithium Project, located within an hour by road to Darwin Port, is well placed to become Australia’s next lithium producer and the country’s first outside Western Australia.

Core Lithium’s Managing Director, Stephen Biggins, said “The Finniss Lithium Project will create more than 200 direct full-time jobs in the Northern Territory, additional employment in South Australia and has the potential to inject more than half a billion dollars into the local economy during its first three years of operation. And Core’s recent investment into the Project is looking to expand that to over 1 billion dollars.

“Following extensive consultation with local environmental, community and business stakeholders, we’re incredibly pleased to be another step closer to starting a project that will deliver significant prosperity to northern Australia. “Core would like to thank the Northern Territory Government for its engagement during the MMP approval process and, with continued support, the Finniss Project opens the door for the Territory to be a key supplier of high-quality lithium for batteries to power the growing global electric vehicle market. The Territory has the opportunity to play a crucial role in supporting the world’s response to reducing emissions and managing climate change risk.

to kick-start our economic recovery, including creating local jobs for Territorians.”

Core’s Finniss Lithium Project is now the only new, fully permitted lithium project in Australia, is one of the few Australian lithium projects that is not substantially foreign-owned or controlled, and Core wants to have the Project construction-ready in 2020. First production is expected approximately a year after project construction starts and Core is planning to export 175,000tpa of high-quality lithium concentrate, with contracts for 40% of this offtake already in place and further sales agreements currently being negotiated. The Finniss Project has arguably the best-supporting logistics chain to markets in Asia of any Australian lithium project. It’s located within 25km of power stations, gas, rail and one hour by sealed road to workforce accommodated in Darwin and importantly close to Darwin Port - Australia’s nearest port to Asia.

Mr Biggins said the enterprise is in line with Australia’s broader federal priorities on sourcing critical minerals – particularly in the viable production of more renewable energy. “The Australian Government has identified the importance of critical minerals and in cementing the country’s role as the number one lithium producer in the world. “Core looks forward to working closely with the newly established Critical Minerals Facilitation Office to support the independent, Australian-owned and timely development of the country’s next lithium project to meet global demands. “From providing the critical element to powering electric vehicles and balancing our renewable energy generation to shoring up our own local supply of this essential metal, Core Lithium is a part of this vision.

“All of the conditions presented to us are manageable, and as we look to complete financing, we can now start to speak with our Northern Territory suppliers and contract partners to progress Finniss towards production.”

Minister for Primary Industry and Resources, Paul Kirby, said the Territory Labor Government knows that local jobs and economic recovery have never been more important. “The resources sector is going to play a huge “Core’s focus now turns to present a strong update to the Feasibility Study by the middle of this year, which we’re role in our recovery from the COVID-19 crisis, and the milestone achieved by the Finniss Lithium Project is very confident will potentially double or possibly triple the life good news for Territorians. “We will get through this cri- of the Finniss Lithium Project and dramatically increase project economics,” Mr Biggins concluded. sis, and the Territory Labor Government is working hard

Ministers highlight industry role in COVID-19 challenges Federal, State and Territory resources ministers have acknowledged the critical role the oil and gas industry is playing in responding to the COVID-19 pandemic – in terms of protecting the health of its workforce and host communities, and maintaining essential energy supplies to all Australians.

In a Ministerial digital roundtable, ministers reaffirmed the need to maintain a coordinated, national approach to manage the impacts of COVID-19 in the resources sector, and commended industry for taking a decisive and proactive stance in this crisis.

This has included dramatic reductions in the number of workers travelling to and from worksites, and the publication of a National COVID-19 Response Protocol.

In a communique, resources ministers said the resources sector “remains essential in providing jobs, economic support, important commodities and energy supply to Australians.”

APPEA Chief Executive Andrew McConville thanked all ministers, who have maintained close contact with the industry in a collaborative approach to meeting the impacts of the crisis.

“The oil and gas industry is treating the operational challenges posed by COVID-19 very seriously, and we are committed to doing everything we can to continue to power Australian homes, businesses, hospitals, schools and other industries,” Mr McConville said.

“We are dedicated to working with the state and federal governments – as well as key industry stakeholders – to ensure security of energy supply and to maintain the industry as a key engine of economic stability.”

During this meeting, ministers also agreed on: •

The need to maintain onshore and offshore exploration to the greatest degree possible during and post COVID-19.

• Taking all reasonable steps in line with expert medical opinion to keep the sector open for business, including to minimise disruptions to workforce mobility and supply chain.

• The domestic and international supply of energy is a priority.

Mr McConville said the industry would continue to work collaboratively with all levels of government to achieve these priorities – and ensure the industry played its part in supporting economic recovery.

“The economic contribution of Australia’s oil and gas industry is vital as other parts of the economy are severely constrained by the impacts of COVID-19,” Mr McConville said.

APRIL - JUNE 2020 DIGGING & DRILLING MAGAZINE 27

FEATURE ARTICLE»

The evolution of a liquid LNG market: from then, to now… and to the future

Amidst the rapidly evolving global energy transition, the LNG sector is balancing the competing forces of large-scale capital investment and shifting expectations from customers.

A new Deloitte paper – Patterns and predictions: the evolution of a liquid LNG market, launched at the APPEA 2019 conference and exhibition in Brisbane – poses the question: Will the LNG market evolve in the same way as crude oil, or will it take a different path?

sector indicates that LNG has entered the early stages of commoditisation. “Last year, the secondary market for LNG grew to approximately 10.5% of physical production. By 2025 we expect the LNG secondary market will have grown exponentially, likely reaching parity with the physical market,” she said. “ By 2030, if the LNG market behaves similarly to Brent and WTI, we forecast that the volume transacted on the secondary market will be greater than five times the size of the physical market.

Bernadette Cullinane, Deloitte Australia National Oil, Gas & Chemicals Leader and Deloitte Global LNG Leader, said: “Huge, long-term infrastructure investment is a hallmark of the sector, and balancing this against rapidly changing commercial and contracting trends is an ongo- “The secondary market and new ways of trading LNG will become mechanisms for price discovery, and LNG ing challenge. pricing will become more transparent.”

“Average contract durations shortened from 20 years in 2008 to as low as seven years in 2017. However, buyer The paper looks at the next expected stages of market appetite for long-term contracts appears to be returning, evolution, including: with average contract durations lengthening to 13 years Diversification: new business models will emerge more recently, consistent with anticipated LNG supply • that enable developers to diversify and reduce risk shortfalls ahead. “ Market participants have also diverDifferentiation: risk management capabilities and sified, and new digital platforms have emerged. These • commercial services will become key differentiators trends have amplified the complexity of LNG trade which for companies is de-linking from its crude oil heritage and displaying Pricing basis: new price indices will emerge as the the hallmarks of becoming a global commodity in its own • de-linking from crude oil pricing evolves right.

• Portfolios: portfolio players, trading houses and other institutions will provide services to help LNG play“There is growing consensus that the global LNG market ers manage volume requirements and exposure to is becoming more liquid, but it is unclear how this trancommodity price swings sition will unfold.”

• Breaking bulk: the rapid growth of small-scale LNG will enable access to a broader range of end-uses The evolution of the oil market in the 1970s and 80s proand markets, including shipping, road transport and vides an interesting historical proxy for LNG, but what remote power generation path will LNG ultimately take?

• Platforms: new digital marketplace platforms that provide dynamic, real time trading capabilities and To answer this critical question, the Deloitte report exincreased price transparency will become more plores three distinct stages of market evolution: common • Where have we come from? looks to the past and • Unlocking value: commercial optimisation will become a source of competitive advantage, enabling other markets to uncover the patterns and signposts LNG players to unlock increased value. in the development of global, liquid energy commodities • Where are we now? focuses on the status of the Cullinane said the historical patterns of crude oil commoditisation are a relevant lens to apply to LNG to help LNG market today and current trends • Where are we going? predicts what’s in store for predict what the future for the sector might hold.

LNG as it matures to become globally traded com“The world’s energy transition to a lower-carbon future modity. will drive LNG demand. This transition will provide comCullinane said that a comparison of the evolutionary pelling long-term demand signals to support continued milestones of the Brent and WTI markets to the LNG market evolution,” she said.

28 DIGGING & DRILLING MAGAZINE | APRIL - JUNE 2020

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TOTAL ANNOUNCES A SECOND OIL DISCOVERY IN BLOCK 58 Total and Apache Corporation have made a second significant discovery with the Sapakara West-1 well on Block 58 offshore Suriname. It follows the previous discovery at Maka Central-1.

Preliminary fluid samples and test results indicate at least

sults are once again very encouraging and confirm our explo-

79 meters (259 feet) of net oil and gas condensate pay in

ration strategy in this region,” said Kevin McLachlan, Senior

two intervals. The shallower Campanian interval contains 13

Vice President Exploration at Total.

meters (43 feet) of net gas condensate and 30 meters (98

The Sapakara West-1 exploration well was drilled by Apache

feet) of net oil pay, with API oil gravities between 35 and 40

as operator with 50% working interest and with Total as the

degrees. The deeper Santonian interval contains 36 meters

JV partner with 50% working interest. The next exploration

(118 feet) of net oil-bearing reservoir with API oil gravities

well will be drilled on the Kwaskwasi prospect, with a fourth

between 40 and 45 degrees.

exploration well to be planned back-to-back on the Keskesi prospect. Total will become operator of the Block after the drilling of the 4th well.

•

Sapakara West-1 well provides further confirmation of geologic model with 79 meters (259 feet) of net oil and gas condensate pay.

•

The third and fourth exploration well locations in Block 58 have been identified.

The well was drilled using the Noble Sam Croft with Apache as operator holding a 50% working interest and Total holding a 50% working interest.

On April 2, 2020, Total S.A and Apache Corporation announced a significant oil discovery at the Sapakara West-1 well drilled offshore Suriname on Block 58. This follows the January 2020 announcement of a discovery at the Maka Central-1 well. The next two exploration wells on Block 58 will be at the Kwaskwasi and Keskesi locations.

Block 58 comprises 1.4 million acres and offers significant potential beyond the discoveries at Sapakara West and Maka Central. Apache has identified at least seven distinct play types and more than 50 prospects within the thermally mature play fairway. Upon completion of operations at Sapakara West-1, the Sam Croft will move to the third prospect in Block The well was drilled by a water depth of about 1,000 meters and encountered 79 meters net pay of high-quality light oil and gas condensate, in multiple stacked and good quality reservoirs in Upper Cretaceous Campanian and Santonian formations. Further testing will be carried out to appraise the resources and productivity of the reservoir.

“We are very pleased to announce this second discovery, following from the discovery of oil at Maka Central-1. The re-

30 DIGGING & DRILLING MAGAZINE | APRIL - JUNE 2020

58, Kwaskwasi, which is located approximately 10 kilometers (6 miles) northwest of Sapakara West-1. The fourth exploration target is Keskesi, which will be drilled approximately 20 kilometers (12 miles) southeast of Sapakara West-1.

Both exploration wells will test oil-prone upper Cretaceous targets in the Campanian and Santonian intervals in reservoirs that appear to be independent from the Maka and Sapakara discoveries.

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