By Andrew Hobbs, Group Editor

TECHNIP chief executive Thierry Pilenko told attendees at the 18th international conference and exhibition on liquefied natural gas (LNG 18), held in Perth in April, that current cost cutting activities would be short-term.

Driven by companies’ procurement arms, Mr Pilenko said while gains could be significant, they would not be sustainable until companies changed the way they worked.

In fixing the problem, Mr Pilenko said industry ought to take a lesson from the way it had dealt with improving its safety performance over the years, collaborating and working together.

“The first step was to introduce technologies and standards, the second step was to introduce health, safety and environment management systems and the third step, that is happening now, is to actually work on the behaviours across the board,” he said.

This had happened because all parties to a project, from operators to contractors and down the supply chain, had a common driver of not wanting to hurt people or damage the environment.

“So yes, it is about technology, it is about processes, it is about integration, but if we truly want to impact cost first and foremost we need to work on behaviour and have a collaborative approach,” he said.

In his address to LNG 18, Independent Project Analysis director of exploration and production Neeraj Nandurdikar said the decline in work caused by a fall in commodities prices would contribute to difficult times for the oil and gas industry at large.

“But the reason we believe that the times are going to be difficult is because the capacity for industry to do high quality engineering work is going to continue to shrink no matter what the demand is,” he said.

This was due in part to what he called “predictably bad engineering performance,” brought on by the increasing complexity of projects slowing down their execution.

“It’s not that we don’t know how to build something – the failure actually starts when little or nothing physical is happening. It’s in the engineering, it’s in the scoping, it’s in the front end design… The information flow is the problem,” he said.

These comments come at a time when oil and gas companies are increasing their investment in digital technologies, aiming to increase productivity and reduce costs.

The 2016 Upstream Oil and Gas Digital Trends Survey released by Accenture and Microsoft has shown some evidence of that, with Accenture Asia Pacific Energy Lead Bernardette Cullinane saying the study showed few companies investing in big data and analytics felt they were doing so successfully.

“They need to ensure they have the commitment and resolve to push it forward,” she said.

Of course, Ms Cullinane is far from the only person calling for the oil and gas industry to exhibit those qualities, with Prime Minister Malcolm Turnbull saying ahead of LNG 18 that the industry was innovating, being more efficient and increasing its market share.”

“And we, like you, know that we cannot afford to be complacent in capturing future resource investment opportunities,” he said.

That will be cold comfort to Carbon Energy, which has accused the Queensland government of doing exactly that in its instigation of a ban on underground coal gasification in the state due to environmental concerns.

News of the decision came before NSW state politician Jeremy Buckingham videoed himself  lighting methane in Queensland’s Condamine River on 22 April.

Origin Energy, which has wells nearby, told media it had been monitoring these seeps since 2012 – referring media to a fact sheet which discussed possible causes for the seeps and a scientific analysis of the river completed in 2013 by Norwest Corporation.

In the meantime the video went viral, giving Mr Buckingham and interested parties in the region another platform to raise concerns about fracking and coal seam gas activity.

For its part, the Australian Petroleum Production and Exploration Association (APPEA) released its own fact sheet about historical gas seeps in the Condamine River six days later on 28 April – well after the attention of media had moved on.

It is understandable that APPEA is limited in what it can say about particular incidents and must take time to research thoroughly before making comment of any form.

But if the oil and gas industry is ever to be heard in the social media din an incident like this creates, a more proactive approach is needed, whether that be through individual companies, APPEA itself or a new third party organisation.

In other words, poor information flow has led to bad engineering performance – and a collaborative approach is needed across industry to find a solution in a low-cost environment.

Same old story.