G'day Mate
Pontem's Australian Adventure in Energy, Hydrogen, Mining and more
After a very steep three month learning curve back in Australia, Pontem Australia Pty Ltd is an officially registered Australian company. This felt like a momentous occasion for me personally and all of a sudden things have become a lot more real! A quick recap on what I have learned over the past quarter:
Doing business development as a new company is hard! But also very interesting and fun to talk to interesting and well-connected people.
The environmental pressures on the energy industry in Australia are just as harsh as in the UK, which makes traditional energy work harder to find, but also presents MASSIVE opportunities to be part of the transition to cleaner energy solutions.
Bars and restaurants in Perth are still quiet Monday to Wednesday… but it is getting better!
Finding a Home
While working from home is great at times, I have always been someone who likes to get out and about and interact with other people to keep myself sane (I did enough time in isolation during my months of lockdown in the UK!). So, to stay nimble and allow for growth, we have taken a co-working space in the WeWork offices in the Perth CBD.
The Yank is in Town
In December, Tommy made a pre-Christmas dash (30 hr plane ride) from Texas to help kick things off. We had many productive talks with energy companies around Perth and managed to get a day out with some old colleagues at the Australia v Pakistan cricket test match. Luckily, Tommy is big baseball fan, so he understood the concept of sitting in the sun all day watching not much happen.
Tommy also made the trip up north to the world famous Navy Pier Dive in Exmouth, northern Western Australia. This is a remarkable site and emphasizes the possibilities when industry is developed whilst prioritizing the protection of the local environment.
WA Market Insights
Getting off the plane at Perth airport to see the $6 billion Barossa gas project on-hold due to an environmental lawsuit was a scary proposition when trying to grow a business in the energy sector. However, this incident has seemed to raise awareness in the public on the requirement of natural gas as a transitional fuel source.
Why is gas so important?
Australia’s nearest trading partners in South East Asia are planning to add significant coal powered plants to their energy network over the next decade1. With the majority of Australian LNG exports feeding the Asian market, Australian gas is a cleaner solution sitting right on their door step. Coal is a significantly more Greenhouse Gas (GHG) intensive fuel, whilst simultaneously emitting greater quantities of pollutants such as sulfur dioxide, nitrate oxides and particulate matter which have significant detrimental effects on air quality and biological health.
Natural gas produces 50% less CO2 and methane (a 34x higher stronger GHG than CO2) emissions than coal (source IEA2).
Natural gas processing produces valuable byproducts such as hydrogen which can be used as a zero-emission fuel when combusted.
Approximately 460,000 deaths have been attributed to coal emissions in the US up to 2009 (source Henneman et al. 20233).
Burning coal for energy remains the largest GHG polluting source of all commercial energy sources4.
Where is the gas market going?
Despite the environmental pressures surrounding all fossil fuel production in recent times, there is also a recognition that not all fossil fuels are equal in terms of environmental impact. The federal court has since ruled in favor of the Barossa pipeline project and development of the project can recommence. Following this incident, the Australian government is moving to break a worsening industry approvals logjam with a review of new offshore gas project regulations5.
In addition to the significant LNG demands globally, there is increasing demand pressures on Australia’s domestic gas. For those unfamiliar with the Australian market, state governments often dictate that gas producers must allocate a certain amount of gas production for domestic use. This has significant advantages for local industry in security and supply, but can also have economic impacts on the price paid for “dom-gas” vs lucrative LNG exports.
The ever expanding energy intensive minerals and mining industries in Western Australia are predicted to create local gas shortages if more supply is not added before 2026, and gas supply issues on the east coast of Australia are already creating cost pressures on local industry and residential consumers.
“the [WA gas] market recently hit record highs and there are forecasts of a shortage of supplies from as early as 2026.” – Source ABC.net.au6
The increase in demand for natural gas in Australia presents opportunities for smaller onshore gas producers to enter the market. US onshore services provider Liberty Energy has recently entered a partnership with Australian gas producer Tamboran Energy to exploit tight shale resources and increase supply to the Australian market. The industry is watching this move with a keen eye.
“The supply of stimulation equipment to the Beetaloo Basin is Liberty’s first outside of North America and we look forward to working with them for many years to come.” - Joel Riddle, Tamboran CEO
Beyond Methane
Western Australia’s vast abundance of coast line, empty land, sunny skies and offshore winds make it an ideal location for renewable energy sources, in particular, hydrogen production and export. Green hydrogen is seen as a potential zero GHG emission transportable fuel that can power heavy industry where the battery requirements would be cumbersome.
Australia’s first commercial-scale green hydrogen production facility is set to commence production in Northam, Western Australia, in Q4 of 20247. This facility will utilize Australia’s infamous UV rays to power an electrolysis process separating hydrogen from water molecules and feeding local transportation industries.
Questions are being asked about the future of hydrogen export and an “LNG 2.0” style boom for Australia. Will this materialize? Only time will tell, however we are excited to see where this goes.
Black Gold
As ever, since initial crude oil production boomed in the early 1900’s, the demand for oil in Australia remains strong. Long trucking distances and large remote industry requires a steady supply of diesel and Australia currently imports ~40% of its crude oil requirements from overseas sources8. Local E&Ps, and others, are looking at the potential of Australia’s onshore oil basins to close the import gap and supply in-demand Asian markets.
Now that Liberty has come down under, is it time for Pontem to leverage our US onshore expertise to unearth a new chapter in Australian oil production? Stay tuned…
Beyond Energy
Australia’s resource production extends far beyond the energy market. It has an abundant contingency of valuable metals which are in growing demand globally. Western Australia alone produces over 35% of the worlds iron ore and over 50% of the worlds lithium; a key metal required in battery production to drive the energy transition.
Pontem’s core knowledge base in process engineering and data analytics positions us well to support these industries in finding optimizations to their existing processes. Our recent partnership with leading process engineering data analytics platform Seeq is a significant step towards diversifying the application of our skills to the mining and minerals sector. We are currently engaging with local producers to assist their production goals.
Optimizing Industrial Assets with Seeq for Advanced Analytics and AI
2024 is Underway…
With so many diverse projects in the pipeline in Western Australia requiring process engineering and data analytics support, we have definitely made the right call in deciding to establish an office in the region. The future looks bright and sunny, just like Australia…
https://ieefa.org/articles/ieefa-coal-lock-southeast-asia-presents-challenge-asian-development-banks-coal-retirement
https://www.iea.org/reports/the-role-of-gas-in-todays-energy-transitions
https://www.science.org/doi/10.1126/science.adf4915
https://ourworldindata.org/emissions-by-fuel
https://www.afr.com/politics/federal/offshore-gas-probe-to-tackle-project-logjam-fears-20230530-p5dch0
https://www.abc.net.au/news/2024-01-22/wa-domestic-gas-policy-waitsia-mineral-resources/103370494
https://www.energymagazine.com.au/australias-first-commercial-scale-green-hydrogen-project-commencement-date-set/
https://www.ga.gov.au/digital-publication/aecr2023/oil