NERA Sector Competitiveness Plan 2017

Sector 

Competitiveness 

Plan 

2017

NERA’s vision is to maximise the value 

to the Australian economy by having an 

energy resources sector which is globally 

competitive, growing, sustainable, 

innovative and diverse. 

Registered office: 

Australian Resources Research Centre 

Level 3, 26 Dick Perry Avenue 

Kensington WA 6151 

ABN 24 609 540 285 

T: (08) 6555 8040 

E: contact@nera.org.au 

W: www.nera.org.au 

@NERAnetwork 

NERA – National Energy Resources Australia

Contents 

About NERA 4 

About this Document 5 

Foreword 6 

1 Executive Summary 8 

Executive Summary 10 

Introduction to this SCP 14 

Sector Themes 19 

Roadmap to the Future 32 

The Three Levers to a Strong Future 33 

Regulations 34 

Pathway to a Sustainable, Resilient, Energy Resources Sector 34 

Knowledge Priorities Action Plan 35 

Key Performance Indicators 40 

2 Global and National Challenges 48 

Global Megatrends and Implications for Australia’s Energy Resource Sector 50 

Global Megatrends 51 

An Emerging Megatrend – The Search for Energy Security 54 

An Environment of Disruption 55 

Impact of Global Megatrends on Australia 56 

Australia’s Response to Sector Trends 57 

Current State of the Energy Resources Sector 60 

Australian Oil and Gas Industry 65 

Australian Coal Industry 70 

Australian Uranium Industry 74 

Transition from Rapid Growth 77 

Sector Benchmarking 78 

Oil and Gas Industry Competitiveness Assessment 2016 80 

Coal Industry Competitiveness Assessment 2016 87 

3 Sector Challenges and Knowledge Priorities 94 

Sector Wide Challenges and Opportunities 96 

Sector Wide 97 

Sector Specific Challenges, Constraints and Opportunities 98 

Australian Oil and Gas Industry 98 

Australian Coal Industry 101 

Australian Uranium Industry 102 

Cross Sector Challenges and Opportunities 103 

How the Australian Energy Resource Sector Should Respond 104 

The Three Levers to a Strong Future 104 

Sector Knowledge Priorities 108 

Capability and Leadership 114 

Business and Operating Models, Technology and Services 128 

Regulatory Environment 144 

Glossary 149 

Definitions 149 

Stakeholder Consultation Process 149 

Acronyms 150 

Bibliography 151 

National Energy Resources Australia – Sector Competitiveness Plan 2017 

3

About NERA 

The Australian Energy Resources Growth Centre (AERGC Ltd), trading as National Energy Resources 

Australia (NERA), is an industry-led, government-funded initiative, which aims, through a national focus, to 

improve competitiveness, collaboration and productivity by focussing on reducing cost, directing research 

to industry needs, improving work skills, facilitating partnerships and reducing regulatory burden. 

NERA forms part of the Australian Government’s Industry Innovation and Competitiveness Agenda. 

It is one of six national Industry Growth Centres established to drive innovation, productivity and 

competitiveness in sectors of competitive strength and strategic priority for Australia, and to increase 

employment and opportunities for small and medium sized enterprises (SMEs). 

NERA will work to support the Australian energy resources sector to identify and deliver projects and 

activities to enhance the sector’s innovation, competitiveness and productivity. The long-term objectives 

and strategic outcomes of the sector cannot be delivered by NERA alone, and will require commitment 

from industry leaders, government, research organisations and other key stakeholders. 

NERA’s vision, mission and strategies were developed as a result of early 

stakeholder consultation to develop the proposal to establish NERA. 

Key sector themes have informed the consultation which was undertaken 

to develop the 10-year Sector Competitiveness Plan, including the 

knowledge priorities, strategic goals and focus areas for the sector. 

Vision 

To maximise the value to the Australian economy by having an energy resources sector which is globally 

competitive, growing, sustainable, innovative and diverse. 

Mission 

Through a national focus, grow collaboration and innovation to assist the energy resources sector 

manage cost structures and productivity, direct research to industry needs, deliver the future work skills 

required and promote proportionate fit for purpose regulation. 

Six Strategies 

NERA will achieve our vision though six strategies: 

1. Connect industry stakeholders to promote collaboration. 

2. Facilitate deeper engagement between industry and researchers. 

3. Support industry growth through policy and regulation. 

4. Promote industry sustainability through fostering a greater understanding of the social, 

environmental, economic and operational consequences of industry activity, and by promoting 

trusted, inclusive custodians of scientific data. 

5. Develop and support initiatives to focus on work skills of the future. 

6. Identify and facilitate growth of new opportunities for the energy and resources industry value 

chain domestically and globally. 

4 National Energy Resources Australia – Sector Competitiveness Plan 2017

About this Document 

This Sector Competitiveness Plan (SCP) will underpin the efforts of the Australian energy resources 

sector to increase the competitiveness and sustainability of the Australian oil and gas, coal and uranium 

industries. To achieve this, the SCP sets out a strategic road map over a 10-year horizon, including key 

themes, knowledge priorities, goals and initiatives. These will be addressed through industry led projects. 

This SCP considers the trends and influences impacting the entire Australian energy resources sector 

and identifies broad challenges, constraints and opportunities both at a sector-wide and industryspecific 

level. Many of the challenges and opportunities identified are common across all three 

industries of oil and gas, coal and uranium, while others are specific to one; these differences are 

highlighted in the body of the plan. 

The SCP is a foundation document for NERA. It presents the challenges and opportunities faced by 

the Australian energy resources sector and describes how NERA will assist the sector to address key 

priorities to enhance innovation, competitiveness and productivity. This document will be updated 

annually. It will necessarily evolve if it is to remain relevant over the next 10 years as goals are 

achieved, the sector’s priorities change and the opportunities to capture change and disruption both 

globally and locally continue to evolve. 

The document is presented in three major sections: 

1 

Section 1 comprises an executive summary to the 

document, highlighting the SCP’s key material and 

subjects, and the roadmap to the future which sets out 

NERA’s plan and the key performance indicators (KPIs) 

being used to measure the sector’s progress. 

2 

Section 2 discusses the global megatrends that are changing the 

face of the energy resources sector and how those trends are 

impacting Australia. It then places the Australian energy sector 

into perspective with both the background to each industry and 

the historic trends that have resulted in the current state of the 

industry, before presenting the results of sector benchmarking 

that NERA has commissioned into the oil and gas, and coal sectors. 

3 

Section 3 considers the sector wide and individual 

industry challenges and constraints, then discusses each 

of the NERA knowledge priorities and initiatives in 

detail, as well as offering some case studies that have 

helped inform the initiatives currently being developed. 


5

Foreword 

An Industry on the Move: Navigating an 

Age of Innovation and Disruption 

As this document goes to print, the Australian energy resources sector is on the move, and in 

exciting ways. 

Energy resources will continue to make a significant contribution to the economic growth of Australia for 

the foreseeable future. However, as the world’s energy balance continues to evolve the sector must adapt 

to remain competitive, productive and sustainable. 

It is well understood that the sector is nearing the conclusion of an unprecedented level of investment 

and construction. At the same time, the sector faces a perfect storm of disruptive and significant threats 

and Australia as a nation must find a path to a low emissions economy whilst also securing both energy 

reliability and affordability for all. 

In the face of this storm, it is tempting to batten down the hatches and retreat into the pursuit of 

individual solutions. Yet significant challenge can also trigger much needed change and unlock huge 

opportunities - opportunities that can only be realised to their full potential by working together to 

innovate, transfer knowledge and commercialise value. 

As an industry, we have a long and proud history of pioneering, discovery, problem solving and invention. 

Over decades, the Australian energy resources sector has delivered critical infrastructure, some of the world’s 

newest high technology production facilities and significant high quality natural resources, while reliant 

on and underpinning the development of a well-educated and highly skilled workforce. Additionally, we 

have the advantage of proximity to the Asian economies, world leading capabilities in remote operations 

and low carbon emissions technologies, a strong and growing start-up community, world class research 

facilities and knowledge and a strong tax incentive scheme for research and development. 

In recent times, faced with a volatile commodity price environment and increasing global competition, the 

focus of energy resource companies has necessarily been to significantly lower capital costs and improve 

efficiency and profitability. This focus on efficiency will ensure the sector has the fundamentals right and, 

combined with our existing strengths and advantages, provide a solid base on which to build for the future. 

The next phase of change though is far harder. Relying on incremental changes to yesterday’s practices is 

a sure recipe for stagnation and ultimately decline. For the Australian energy resources sector to remain 

globally competitive and able to rapidly adapt in an age of disruption and innovation, we will need to 

seek transformational change. 

It will take strong leadership and skilful navigation by all parties - governments, industry, the technology 

and service sector and research organisations - to find sensible and practical solutions that the 

community will accept, and to innovate to support a globally competitive and sustainable sector. 

Transformational change requires bold and insightful leadership and a willingness to find and break through 

barriers. For example, if the energy resources sector is to harness the huge efficiency benefits and competitive 

advantages to be had from the explosive growth of technologies, including advanced manufacturing 

techniques, automation, 3D manufacturing (with plant able to be printed onsite to meet immediate need), 

drones (to take over remote, offshore exploration and significantly reduce cost), and the Internet of Things 

(including cloud computing, mobile computing, embedded computing and consumer electronics), then 

we must unlock our intellectual property and move away from a reliance on closed, single sourced and 

bespoke solutions. We need to commercialise our huge investment in research and knowledge, and adopt 

open, multi-vendor approaches that deliver improved products and capabilities to a global market. 


FOREWORD 

Such changes will enable operators and miners to form new relationships with technology vendors across 

the value chain, and for the technology vendors to collaborate with each other and bundle products and 

services, for example in formal clusters to lower the risks of failing and maximise the benefits that new 

technologies can provide for all. 

This new digital environment, as well as changes to the sector’s commercial and operating models, will also 

result in the need for a very different mix of skills. The sector needs to build a comprehensive understanding 

of its future skills requirements in terms of scope, scale, skills and experience, and collaborate with 

governments and other skills development stakeholders to set out a clear plan for building that capability. 

From an energy perspective, Australia is currently facing a number of serious challenges, and urgently needs a 

clear and cohesive pathway for its transition to a low emissions future and to underpin economic development. 

To get there will require substantial, highly funded collaboration in selected areas between industry, research 

institutions and government. For example, Australia could secure a strong carbon capture and storage 

technology advantage, and there is potential to both develop and commercialise low emissions technology and 

to transfer and export that knowledge and capability globally. The research has been done and the next stage 

is demonstration and deployment. However, for this to occur it will require funding in the order of billions 

of dollars, and this will be difficult to obtain without clear priorities and concerted effort by all parties. 

A vibrant exploration industry is also critical to the ongoing supply, security, reliability and affordability of 

Australia’s energy supply. NERA’s global competitiveness benchmarking shows that in oil and gas we have 

an attractive environment for exploration, but we are at the lowest point in decades for exploration activity 

(both onshore and offshore). This low level of activity is driven by a combination of low commodity prices, 

high cost, government red tape and community opposition. A priority for immediate action is, that the 

state governments and regulators address approvals for onshore gas projects on a case by case basis, and 

not proceed with blanket moratoria. For the coal exploration sector, according to the 2015 Fraser Institute 

Survey of Mining Companies, 55 per cent of respondents in Queensland and New South Wales reported that 

regulation uncertainty had a negative impact on the states’ investment attractiveness, versus only 13 per 

cent in Western Australia. Australia must make progress in creating an attractive exploration environment 

across the whole energy resources sector and for new and existing firms. 

Achieving a stable and high-performance regulatory environment across all jurisdictions is critical. 

Regulation needs to support economic development and innovation, whilst providing for independent, 

transparent and objective oversight of industry activities and measurable environmental performance 

proportionate with risk. This will assist in securing the acceptance of Australian communities. The 

focus needs to be on risk based, transparent and outcome focussed regulation which requires strong 

demonstration of and accountability for, industry performance, whilst also encouraging innovation. 

In conclusion, the size of the prize is significant for everybody. NERA’s benchmarking to date has 

identified the potential to unlock AUD$5 billion of value in the oil and gas sector, and AUD$4.5 billion 

of value in the coal sector. We will be identifying the uranium sector’s potential to create value in 2017. 

Australia has the potential to continue to supply innovative products, capabilities and services for many 

years to come to meet both domestic and international energy resource needs, generate substantial 

revenue for the nation and grow an export orientated sector. 

This Sector Competitiveness Plan represents the collective wisdom and insights of all stakeholders across 

the Australian energy resources sector. During our extensive consultations, it became very clear to us that 

there is strong commitment and passion for achieving a competitive, innovative and sustainable sector, 

and that the sector remains vital to Australia’s economic development and low emissions future. 

NERA is committed to working with stakeholders to pursue strategic initiatives and projects that will 

assist the energy resources sector adapt to current and future challenges and disruption. 

We would like to thank you all for your support and valuable input into this roadmap for the sector’s 

future, and we look forward to working with you on this journey of change. 

Miranda Taylor 

Chief Executive Officer 

Ken Fitzpatrick 

Chair 


7


1 

EXECUTIVE 

SUMMARY 

This section provides a stand-alone summary of the Sector 

Competitiveness Plan for the Australian energy resources sector. 

It provides an executive summary, an overview of the key themes, 

the challenges and opportunities facing the Australian energy resources 

sector, and a road map to achieve a vision for innovation, improved 

productivity and sustainability and a globally competitive service and 

technology sector. The road map identifies three key business levers 

to a strong future, sets out nine knowledge priorities with initial key 

performance indicators against which the changes in the sector can be 

tracked over the coming decade. 


9

Executive 

Summary 

This Sector Competitiveness Plan (SCP) has been produced to provide 

a cohesive and comprehensive call to action for the Australian energy 

resources sector. It is the product of an extensive industry consultation 

process and review of the contemporary literature on both the sector 

and the broader global trends affecting the sector into the next 10 years. 

This SCP identifies the challenges and opportunities that the sector 

must navigate in the coming decade, based on the current landscape. 

It proposes a structured and evolving series of knowledge priorities to be 

addressed in order to build on the industry’s existing strengths, and create 

an adaptable, resilient and sustainable Australian energy resources sector. 


EXECUTIVE SUMMARY 

The value added to the Australia economy from the Australian energy resources sector, comprising the 

coal, oil and gas and uranium industries, has been and continues to be huge. Combined, the sector directly 

provides approximately 89,800 jobs with a gross value add of $42.2 billion (2015/2016). Coal and gas 

are the nation’s largest commodity exports after iron ore, providing a safe and secure energy source 

to our trading partners. The scale of the sector makes the nation largely self-sufficient in energy and 

provides the fuel needed to underpin many industries and the lifestyle of a developed nation. 

After decades of capital investment, innovation and operation, the Australian energy resources sector has 

many strengths that it can build on, including some of the world’s newest high technology production 

facilities, a well-educated and highly skilled workforce and significant high quality natural resources. 

These attributes are supported by Australia’s proximity to the Asian economies, world leading capabilities 

in remote operations and low carbon emissions technologies, a strong and growing start-up community, 

world class research facilities and knowledge and, a strong tax incentive scheme for research and 

development. With these strategic advantages, the sector has the potential to continue to supply both 

domestic and international energy resource needs for many years to come, to continue to generate 

substantial revenue for the nation and to grow an export orientated service and technology sector. 

However, the Australian energy resources sector is facing a number of individual and systemic challenges. 

How the sector reacts to them will determine whether it continues to thrive as one of the world’s 

principal sources of energy, or stagnates under the burden of current global and economic pressures. 

Internationally and domestically, society is facing increasing energy security challenges. In the international 

energy market, many developed nations are seeing the end of their domestic energy supplies and are 

looking to international sources for the energy resources they need to fuel their economies and societies. 

Domestically, Australia is struggling with changing societal and political drivers, with both short and long 

term impacts on the security and affordability of the energy needed to attract and fuel businesses. 

As set out in this SCP, the sector must react to volatile commodity prices, a rapidly evolving energy 

marketplace, changing societal energy expectations, an increasingly complex regulatory environment and 

a rapidly evolving global energy mix. Only by working together, with producers, service suppliers, research 

and educational communities all collaborating, will the sector be able to deliver its future potential. 

To unlock this potential, the sector needs to use the three levers of building contemporary business 

models, enhancing operational models and technology capabilities and improving capacity, skills 

and culture, while also addressing the regulatory environment in which the sector operates. Through 

addressing these levers, the sector will remain competitive while creating future markets and customers. 

• Building contemporary business models – involves building new markets, new customers and 

new services through the entire value chain. It requires, for example, providing turnkey solutions to 

customers rather than simply the resources used to generate energy, finding new export markets for 

our LNG operations and maintenance knowledge and expertise, and delivering clean technologies. 

It involves building new, collaborative relationships within the entire energy resources value chain, 

global partnerships to access global supply chains, and other industry sectors such as advanced 

manufacturing, defence and shipping. 

• Enhancing operational models and technology capabilities – the sector urgently needs to 

reduce process complexity and waste, to standardise operating practices and to collaborate through 

initiatives such as research/industry precincts, multi-user technical facilities and establishment of industry 

and innovation clusters (clusters can force-multiply investment, reduce risk for the participants and 

commercial contributors, and speed innovation; vendors can achieve critical mass and collaborate 

to provide scale and ease of access for export opportunities). The sector could work together to 

optimise processes through the development and adoption of disruptive technologies such as 

machine learning and diagnostics, 3D printing, advanced materials and new ways to build small 

scale, economically viable plants which require minimal capital investment to maintain production. 

There are further opportunities for the sector to share non-competitive and pre-competitive 

information such as environmental and meteorological data. 



11


• Improving capacity, skills and culture – the sector needs to find ways to maintain and build 

its skill base, both to operate its existing facilities and to prepare personnel to become ‘operators 

of the future’, with the commercial skills needed to develop new markets, customers and services. 

As the sector drives productivity and efficiency, companies are looking to optimise plants and work 

processes, and are increasingly adopting automation, digital technologies and collaborative teams. 

This requires industry to develop new capabilities, workforce skills and attributes. 

• Addressing the regulatory environment – to facilitate innovation, improve productivity and 

competitiveness and secure both future investment and a sustainable economy, Australia needs a modern, 

best in class regulatory environment. The energy resources sector needs consistency, efficiency and flexibility 

to allow innovation, whilst working within a regulatory framework that provides the community with 

transparency on, and confidence in, regulators’ decision-making processes and the industry’s performance 

and where the regulations in place are proportionate to the risks being controlled. The sector itself can 

work collaboratively on its own internal standards to ensure alignment across the sector, and cooperatively 

with governments to reform regulation to focus on high performance outcomes. Australia needs to reestablish 

its reputation as an attractive business environment and a destination for future investment. 

Moving from current operating models to those of the future will require ongoing incremental change 

together with more disruptive, transformational change. Incremental change, with the occasional adoption 

of a major technological innovation, has largely been the standard operating practice for the majority of 

business. While this approach provides a relatively low risk, predictable environment, it is only capable of 

maintaining the status quo because an incremental approach is also adopted by peers and competitors 

alike. Transformational change, while offering large potential opportunities created by changes to business 

models, operating models and culture, comes with higher risk. However, only through accepting this risk 

in a considered way, and pursuing the opportunities created through transformational change will the 

Australian energy resources sector move ahead of the competition into a sustainable and resilient future. 

Business and operating models that can adopt and deploy transformative, plug-in technology or 

combinations of disruptive technologies offered by small to medium enterprises will accelerate cost 

savings, improve efficiencies and experience improved productivity. By way of example, working directly 

with unmanned aircraft systems, continuously collecting high-definition seismic data onshore or offshore, 

delivered in real-time directly into the operator, with real-time geophysics analytics, reducing seismic 

interpretation from many months, to a few days or even hours, adjusting as new data streams into the 

business. Or, building microscale plant using remote advanced manufacturing techniques, commissioned, 

operated and maintained remotely through onshore or offshore remotely operated vehicles. 

This SCP, therefore, proposes a number of incremental and transformational changes for the energy resources 

sector. It offers a timeline to pursue the changes, and provides research-based benchmarking of the industries 

that show where the greatest opportunities can be found now and in the future. It proposes a series of Key 

Performance Indicators (KPIs) against which future change can be measured and adjustments made over time. 

It is incumbent on all parties in the Australian energy resources sector to consider these changes and 

collectively work to implement them, both collaboratively and in constructive competition. The sustainability 

of the industry depends on the actions taken in the next few years. There is a real opportunity to 

transform the industry and unlock its full potential. 


Australian Energy Resources Sector 

Oil and gas 

Coal 

Petroleum and 

coal product 

manufacturing 

Uranium 

GROSS VALUE ADD (2015/2016) 

42.2 B 

DIRECT EMPLOYMENT 

89,800 jobs 


GAS 

OIL 

LNG exported 

71 Mt 

Proven gas reserves 

Shale gas 

437 Tcf 

Coal seam gas 

235 Tcf 

Conventional gas 

227 Tcf 

Oil products imported 

$24 B 

URANIUM 

Known world resources 

30% 

Oil products exported 

$11 B 

Annual world supply 

11% 

COAL 

Coal exported 

375 Mt 

Reserves 

37 Bt 

Legend: Mt = million tonnes per annum, Tcf = trillion cubic feet, B = billion, Bt = billion tonnes 


13

Introduction 

to this SCP 

Australia is one of the world’s top producers and exporters of natural gas, 

coal and uranium. With the combined value of exports to the Australian 

economy estimated to be around $60 billion 1 the sector creates valuable 

jobs, export income and tax revenue. The anticipated sustained growth in 

energy demand presents significant opportunities for Australia. 


INTRODUCTION TO THIS SCP 

While Australia’s current role in the energy resources market is a strong one, the rapidly evolving global 

energy market, together with growing societal environmental awareness, global commitments to reduce 

carbon emissions and the increasing economic and technological viability of alternative energy sources 

require sector wide adaptation. The Australian energy resources sector represented by NERA, and 

comprising the oil and gas, coal and uranium industries, must embrace this change to secure its role in 

powering the world and contributing to a clean and sustainable future. 

As a result of the significant investment in, and development of, knowledge and technical capabilities 

and skills, the Australian energy resources sector is well-placed to compete globally and unlock new 

investment, supply chain efficiencies and export opportunities. To maximise this potential, the sector must 

improve the efficiency and competitiveness of both exploration activity and existing operating assets as a 

priority. It must rapidly adapt and transform through: 


Business 

Models 

• New markets 

• New customers (including 

providing turnkey energy solutions 

across the value chain) 

• New collaborative partnerships, across 

value and supply chains, with the 

research sector and with other industry 

sectors, to leverage scale and cross 

sector transfer of knowledge 

• Technology and capability 

Operating 

Models and 

Technology 

Capabilities 

• Radically reduce process 

complexity and waste 

• Collaborate and standardise 

• Share logistics and regional 

supply bases 

• Remove unnecessary and bespoke 

standards and conditions 

• Share environmental research 

• Optimise through automation 

• Digital technology and adoption 

of advanced manufacturing systems 

and technologies (such as 3D printing 

and new materials) 

• Develop and operate mini plants 

to enhance the ability to scale up 

and down and adapt to a more 

distributed world 

Culture, 

Capabilities 

and Skills 

• Leadership for collaboration 

• Commercial 

• Digital, automation 

• Innovation and entrepreneurial 

risk taking 

• Baseline skills studies 

• Common competency frameworks 

and future skill requirements 

To be competitive in the sector, Australia will need to be: 

• A top-ranked jurisdiction for energy resources investment; 

• A centre of innovation across the life cycle of energy resources e.g. exploration, development, 

operations and maintenance and decommissioning, and within the community of supporting 

technology companies and service providers; and 

• Positioned to capitalise on the developments in global and regional economies, and the rapidly 

changing energy mix. 


15


To achieve these strategic outcomes, the Australian energy resources sector must 

overcome the following challenges: 

• Legacy of poor productivity performance during the high capital investment phase, and the need to 

drive improved asset and labour productivity in the operations phase; 

• Tightening operating margins; 

• Addressing the social, economic and environmental impacts of energy resource extraction, production 

and use, and building community engagement with the sector and a social licence to operate; 

• Adapting to the low carbon emissions environment, clean technologies and changing global energy mix; 

• Complexity of government regulation and approvals; and 

• Developing the capabilities of Australian organisations at all levels in the value chain supporting the 

sector, and driving deeper engagement between the research sector and SMEs within the service sector. 

This SCP provides a 10-year horizon road map. It sets out the key themes and strategies, the challenges, 

constraints and opportunities and then identifies the knowledge priorities, focus areas and initiatives that 

combined can ensure the Australian oil and gas, coal and uranium industries remain globally competitive, 

innovative, sustainable and diverse. 

The SCP examines the challenges, constraints and opportunities in three ways: 

1. It considers the evolving global environment and megatrends in which the sector must operate. 

2. It examines the current state of the Australian energy resources sector, both as a whole and at the 

individual industry sector level. 

3. It provides an overview of the ‘size of the prize’ to be had for Australia from improved competitiveness, 

through a series of sector global competitiveness assessments. The assessments and benchmarking 

will provide a base for year-on-year tracking of Australia’s performance. 

Knowledge priorities and focus areas: 

This review, undertaken through extensive domestic and international literature research, together with 

data gathering and stakeholder and industry consultations, has identified a set of knowledge priorities. 

These knowledge priorities in turn identify focus areas, areas where the sector needs to focus its short 

to medium term collective efforts. 

Combined, these form a 10-year road-map for the sector, building on its strong knowledge and 

technology capabilities and skills base to ensure the Australian energy resources sector has a strong 

and growing future. 

Building the strong future envisioned in this SCP requires the collective effort of all 

stakeholders in the sector to work together for the common good. 

• Major operators of the energy resource sector’s projects, facilities and activities have a significant 

part to play to support this future. 

• The supply chain, which provides the technology, equipment and services to the operators also plays 

a major role in helping identify, develop and deliver innovative and practical solutions. 

• Universities and research organisations have a critical role in underpinning the knowledge economy. 

They explore and identify new frontiers, new technology developments, new techniques and trials, 

create new methodologies and provide independent sources of trusted data. 

• Education and skills providers need to train and equip the industry workers of today and identify and 

prepare for future Australian energy resources sector work skill demands. 

• Governments play a critical role in setting a consistent, clear, fair and objective policy environment 

and supporting robust, independent and competent regulators and regulations that provide the 

community with confidence that the industry is accountable to high standards, whilst in parallel 

giving industry the ability to innovate and adapt within a stable and supportive framework. 



In the days of the construction boom and high commodity prices, companies were able to act 

independently, without considering collaboration or building in options for third party access/usage in 

the future. Now that commodity prices have dropped significantly, and with increasing disruption in 

the energy mix, there is an imperative for companies to work together to develop mutually beneficial 

situations. This will take a change in the traditional mindset, for operators of existing assets to adopt 

more flexible operating regimes, and for regulators to support the new paradigm. 

This SCP covers all parts of the energy resources life cycle, from exploration, development and execution, 

through the long production phase and into abandonment. 

To address the role of all parts of the sector, this SCP outlines: 

• Collaboration between Operators/Miners and Supply Chain (technology and services and to 

build value chain opportunities). 

• Research and Innovation (industry led, including research sector engagement with supply chain, 

to drive greater commercialisation). 

• Workforce Skills and Education. 

• Regulatory Reform. 


APPROACH 

The SCP has been developed through a multi-step, iterative process. This process included a combination of 

desk top studies, industry and stakeholder consultations, meetings and workshops. Figure 1 below shows 

the key steps undertaken in developing the SCP. 

Figure 1: Sector Competitiveness Plan development 

Strategic 

Imperative 

NERA’s 

strategic goals 

established 

Strategic 

Engagement 

Early 

engagement 

with industry 

Research Hypotheses Prioritise Socialise 

Identify 

global and 

national 

themes 

Sector Competitiveness Plan 

knowledge priorities, strategies, projects 

Develop 

hypotheses, 

test and 

refine through 

workshops 

Identify 

priorities and 

initiatives 

Further 

testing and 

refinement 

The SCP provides an outline of priorities for the next 10 years which underpin a transformational program 

for the sector. While this SCP identifies plans for the Australian energy resources sector set against 

the challenges and opportunities in early 2017, it is an evolving document and will be updated on an 

ongoing annual basis to reflect changes in the marketplace. 


17


Figure 2 below sets out how NERA is facilitating new ways for stakeholders across the energy resources 

sector to work together to better adapt, drive innovation, access entrepreneurial investment, reduce costs 

and improve efficiency across the value chain. 

Figure 2: Ten year transformation process 

The transformation path: industry leadership and collaboration to deliver an energy 

resources sector in Australia that is innovative and adapting to a disruptive energy market 

Formulating 

Year 1-2 

Creating 

Year 3-4 

Participating 

and changing 

Year 5-8 

Leading and 

transforming 

Year 9-10 

• Forming NERA 

• Early stakeholder 

engagement 

• Initial alignment 

with vision, mission 

and strategies 

• Clear value 

proposition 

• Further stakeholder 

engagement 

on Sector 

Competitiveness Plan 

• Identify and begin to 

connect initiatives, 

organisations and 

networks 

• Identify opportunities 

for industry and 

broad cross-sector 

collaboration 

• Early industry 

collaboration 

focused on 

improving efficiency 

and performance 

• Early participation 

in pilot initiatives 

and projects 

• Growing industry 

participation and 

engagement 

• Early work on a 

national work skills 

framework 

• Beliefs and 

behaviours are 

being challenged 

• Willingness to share, 

cooperate and 

challenge thinking 

• Enhanced data 

sharing 

• Industry, innovation 

networks, 

entrepreneurs, 

researchers, value 

chain and venture 

capitalists actively 

collaborating 

• Common 

competency 

frameworks 

established 

• Wide range of 

sector stakeholders 

collaborating 

• New entrants to 

value chain with 

new capabilities 

• Mega datasets/ 

insights emerge 

– intelligently 

interrogating 

data and applying 

lessons learnt 

• Workforce skills 

supporting disruptive 

innovation and 

technology uptake 

• Innovations allowing 

the sector to adapt 

more quickly 

• Policy and regulation 

reforms supporting 

timely industry 

investment, activities 

and growth, 

whilst ensuring 

high industry 

standards e.g. 

social, environment 

and safety 

• Industry is 

optimistic and 

experiential 

• Strong leadership 

supports 

collaboration - 

accepted normal 

way of working 

• Industry able 

to harness 

entrepreneurial 

innovation and 

investment 

• SCP addressing 

mega trends 

and knowledge 

priorities resulted 

in measurable 

improvements 

to the sector’s 

competitiveness 

• Developing new 

insights and 

capabilities 

• Delivering ‘new 

to the world’ 

operating models, 

markets, products, 

technologies and 

services 

• Working innovation 

system increasing 

global demand for 

Australian value 

chain e.g. in areas 

of comparative 

advantage 



Sector Themes 

Eight key themes have been identified and adopted by NERA and supported by the Australian Government. 

These themes represent the key opportunities for achieving sector wide improvements in competitiveness 

and sustainability through greater collaboration and knowledge sharing, and provide a framework for NERA 

and the industry to categorise initiatives and projects for further development, review and prioritisation. 

These themes are: 

Theme 1: Manage cost structures and improve productivity 

Improve management of high cost activities and focus on increasing efficiency and asset 

productivity to drive value creation through innovation and collaboration. Australia’s energy 

resources sector must aspire to be best in class in all phases, from exploration through 

operations and maintenance, to closure and abandonment. 


Theme 2: Adopt predictive analytics (digital technologies) 

Improve industry operational performance through the application of digital technologies 

and a collaborative approach to the identification and resolution of operational issues. 

Through such an approach, the Australian energy resources sector can achieve global best 

practice operational performance, improve productivity and international competitiveness. 

Theme 3: Drive deeper engagement with the value chain 

Enhance collaboration amongst supply chain organisations and operators to harness 

existing capabilities and identify solutions that will improve the competitiveness of the 

sector. Through deeper engagement new ideas will be brought forward faster, allowing 

the sector to become increasingly innovative. 

Theme 4: Develop work skills of the future 

Further develop our understanding of the skills implications associated with new technology 

and innovation across the energy resources sector. Through collaboration, assist the 

education and training sector to respond effectively to these identified skill demands, 

building a workforce ready to engage with tomorrow’s technologies and challenges. 

Theme 5: Drive industry-led research 

Promote ‘industry-led’ research through stronger engagement between industry and 

research organisations. Encourage a more streamlined research funding application process 

and support universities in placing greater value on applied research, commercialisation 

and mid-tier and SME participation engagement pathways. Support the development of a 

reliable database of research related information. 

Theme 6: Improve industry sustainability (social, environmental, economic) 

Improve industry sustainability through identifying and supporting leading practices 

in stakeholder engagement, to enhance understanding of the social, environmental, 

economic and operational consequences of industry activity, and by identifying and 

supporting trusted custodians of scientific knowledge. 

Theme 7: Understanding and unlocking Australia’s future resource base 

Improve identification, appraisal and cost effective and sustainable development of 

marginal resources. Develop cost-effective and sustainable means to commercialise these 

resources to deliver significant economic, social and community benefits. 

Theme 8: Achieve proportionate, fit for purpose regulation 

Promote effective policy and regulation that supports energy resources industry activities 

and provides the Australian community with confidence and trust in industry oversight by 

promoting: evidence and outcomes based regulatory frameworks; greater harmonisation 

of regulatory requirements between states and territories, and between the states/ 

territories and the Commonwealth; acceptance of trusted international standards; 

and reduction of the regulatory burden on the energy resources sector. 


19


GLOBAL MEGATRENDS 

Globally, the energy resources sector is facing a number of megatrends. Individually, each of these 

trends present significant change and challenge to the sector but when combined, they are resulting in 

operational and market disruption to which the sector must respond and adapt. Seven current and one 

emerging global megatrends are considered in this SCP: 

Urbanisation 

Technological 

evolution 

Asian 

century 

Changing 

energy mix 

Globalisation 

of business 

Changing 

demographics 

Low carbon 

future 

Search for energy 

security (emerging) 

The disruption caused by these megatrends requires the energy resources sector to find new ways of 

working and to work together to innovate. These trends pose challenges but also opportunities for 

the energy resources sector, to maximise the value from existing industry investment, to adapt to the 

changing landscape and to build a competitive, resilient and sustainable future for the sector. 

An environment of disruption 

These multiple trends, when considered together, form one overarching ‘megatrend’ – an increasingly 

disrupted energy market. This one megatrend is transformative, defines the present and shapes the future 

by its significant impact on societies, economies, industries, and organisations. It provides significant 

challenges and substantial opportunities to the sector, and the pace of change is likely to continue. 

Industry must be agile, adaptable and innovative and needs to build the organisational skills and 

attributes to stay at the forefront of the wave of disruption. 

Impact of global megatrends on Australia 

As a major supplier of the world’s conventional energy and as a country with its own established energy 

networks, the Australian energy resources sector faces a number of major challenges to remain competitive 

in the increasingly complex modern energy marketplace. While the global and regional demand for our 

resources in the energy market continues to be strong, internal changes in each market are placing 

additional complexity on what has, for a long time, been a relatively stable mix of energy demand. 

How the Australian energy resources sector responds to this new environment will determine its future 

trajectory. The sector must be prepared to undergo both incremental and transformational improvements. 

Incremental improvements alone will not be enough to keep pace with change. Transformational change is 

required for the sector to keep pace with the shifting energy paradigm and compete with global challenges. 

Finding ways to exploit the opportunities presented by the disruptions will be vital to the future of the 

Australian energy resources sector, allowing it to continue to play a significant role in the global energy mix. 



Incremental improvement 

• Leaner operations, as exemplified by the many operators already focusing on increasing asset utilisation; 

• Better management of high cost activities, particularly in new projects and other major capital investments; 

• Increasing movement by operators toward sharing infrastructure both at their facilities and in 

locations such as maintenance and supply bases; 

• Collaborative planning of labour and resource intensive planned maintenance and upgrade activities 

to avoid competition over labour and shop time; 

• Staff reviews at facilities and in various national head offices; and 

• An increasing drive to improve productivity from new and existing assets. 


Transformational improvement 

• Develop operating models focusing on new and innovative approaches to execution and better 

leveraging of existing capacity. Build on Australia’s highly regarded existing capabilities in areas such 

as remote operations and data analytics for process optimisation and decision making, to support 

operational and value chain optimisation; 

• Expand our strengths in the development of alternative energy sources and act as a baseline clean 

energy source for Asia; 

• Assist developing nations, particularly those transitioning from fossil fuels, to meet their emissions 

reduction commitments by providing energy diversification; 

• Increase ‘energy literacy’ of communities, governments, regulators, companies and other stakeholders; and 

• Export clean technologies to developing countries. This could include low carbon emission technologies, 

hybrid power generation, battery storage and carbon capture and storage (especially geosequestration 

where Australia’s geology provides a strong competitive advantage). Leading the development and 

adoption of these clean technologies is likely to help the sector strengthen its social licence, drive 

up the demand of our existing energy resource portfolio, as well as opening up new markets (i.e. 

gasification utilising coal deposits with low ash fusion temperatures). 

An imperative to change 

Standing still is not an option. The modern energy resources environment requires all sector participants 

to continually explore ways to change regulatory, business and operational models simply to remain 

competitive. As set out in this SCP, the Australian energy resources sector must find ways to: 

• Collaborate more - between peer organisations, vertically within value chains, across the traditional 

boundaries between industries and with research organisations, where directed and undirected 

findings can help lift the productivity of the industry; 

• Address the regulatory burden restraining many areas of the energy resources sector from thriving 

and growing in the future, in ways that maintain and enhance community support for the industry; 

• Identify and explore new markets for the products of the energy resources sector, opportunities that 

fill needs in the marketplace or displace expensive import alternatives: one example is expanding the 

use of LNG as a domestic source of energy. 


21


CHALLENGES, OPPORTUNITIES AND CONSTRAINTS 

Growing energy demand in Asia, increased societal environmental awareness, and an evolving global energy 

mix create immense opportunity and substantial challenges for the Australian energy resources sector. 

Major shifts are expected in the ways in which power is generated, distributed, controlled and consumed 

as the world moves to incorporate more renewable energy in the broader mix. This shift will force 

sector-wide adaptation, as new infrastructure needs to be built and integrated, and new operational 

frameworks are created. Despite these challenges, there are significant opportunities for Australian 

energy resources participants, particularly in meeting growing Asian demand. 

Sector wide 

A number of challenges and constraints are sector wide and, while impacting each sector differently, 

there are some common causes and solutions. 

Challenges 

• Volatile commodity prices due to major structural changes in global supply and an ongoing 

oversupply in the global market. 

• High capital (CAPEX) and operational (OPEX) costs making Australia uncompetitive as an investment 

destination. 

• Concerns associated with the ongoing management of water, ensuring it is equitably available for all 

land users including agriculture, human settlement and industry. 

• Understanding how best to manage carbon emissions from both the primary production of energy 

resources and their consumption. 

Constraints 

• Perception that Australia has growing sovereign risk for capital investment due to increased restrictive 

regulatory burden, frequent changes in policy and growing restrictions on development in various 

states. These restrictions are inhibiting both domestic exploration and the sector’s ability to develop 

discoveries necessary to underpin the long-term viability of the Australian energy resources sector. 

• Australia’s relatively poor adoption of innovation, making it dependant on imported ideas and 

technology rather than building home grown solutions. Australia was ranked twenty-sixth for 

innovation by the World Economic Forum in 2016 2 . 

In addition to these sector wide challenges, there are also a number of more discrete challenges and 

opportunities that will be faced by the industries making up the sector over the coming decade. 



Oil and gas 

The Australian Liquefied Natural Gas (LNG) industry’s capacity has increased more than four-fold over the 

past five years to supply the anticipated increase in demand. This rapid growth has created a number of 

challenges and opportunities for the developing industry. 

Challenges 

• Relatively high operating cost environment due to high labour costs, remoteness of operations, and 

distance from global supply chains result in many aspects of the Australian oil and gas industry being 

substantially more expensive than other jurisdictions. For example, costs to explore and develop a 

shale gas well in Australia are believed to be around 250 to 300 per cent higher than to develop a 

similar well in the United States. 

• Limited availability of process technicians and operators with the high-level skills required to run 

increased numbers of integrated teams and operations. Technological change will drive multiskilling 

into the future, requiring significant changes to current training regimes as well as articulation of skills 

development pathways to ensure a sufficient number of suitably skilled personnel for future needs. 

• A potential shortage of specialist skilled and experienced labour for maintenance and turnarounds 

for Australia’s 21 LNG trains. This could be further impacted by parallel activities in the broader 

energy resources sectors especially in the case of a recovery in commodity prices which will increase 

competition for such skills. 

• Challenges to the industry’s social licence to operate, including negative community perceptions of 

the social and environmental impacts of unconventional developments, concerns over the potential 

development of new offshore basins and increasing community expectations around the transition to 

renewable energy sources. This will require the sector to operate through high levels of community 

engagement, corporate transparency and exemplary social citizenship. 

• A reputation as a high cost/low productivity marketplace, given the many project budget and 

schedule overruns experienced during the recent expansion phase of the industry, is contributing 

to operators deferring future major capital investment in Australia in favour of other jurisdictions. 

To help restore Australia’s reputation, the industry needs to demonstrate that it can operate and 

maintain the new and existing facilities to world’s best standards at competitive cost. 

• Uncertainty over capital and regulatory costs of abandonment, as many operators begin to plan 

for the end of life of their facilities; and given that, to date such abandonment activities have been 

relatively few, the need to establish and test an appropriate regulatory framework. 

• The emergence of the United States as a new and materially low cost LNG supplier into both the 

Atlantic and Pacific basins. The United States is now seen as a low risk jurisdiction for project delivery 

and sovereign risk - a position which Australia held for many years. 

• The expansion of gas exports into China from Russian and Baltic nations. 

• The unknown but potential rise of a domestic Chinese unconventional source of gas supply. 

• Difficulty of local service providers to integrate into the international supply chain. 



23


While the output capacity of the Australian oil and gas industry has grown over the past decade through 

the construction of additional LNG trains, the long term viability of the sector has been jeopardised by the 

precipitous decline in exploration. This is illustrated by the almost tenfold decline in the number of new 

offshore wells being drilled 3 as shown in Figure 3. There are still a number of known offshore reservoirs yet 

to be developed, but without an active exploration regime the long-term future of the sector remains at risk. 

Figure 3: Offshore petroleum exploration wells 

100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 

2008 2009 2010 2011 2012 2013 2014 2015 2016 

Source: APPEA 

Opportunities 

• Increasing collaboration amongst operators to maximise asset productivity. 

• Improving collaboration between operators and technology and engineering service providers to 

increase innovation and productivity. 

• Leveraging the critical mass emerging in Australian operations to develop an export-oriented and 

competitive service and technology sector. 

• Addressing cost, regulatory and social licence concerns to ensure Australia continues to be perceived 

as a politically stable and economically reliable destination for future capital investment. 

• Developing shale and tight gas basins to support domestic demand, and potentially for export. 

• Emerging new markets, such as India, and from the expanded use of gas (LNG and compressed 

natural gas) as a source of transport fuel. 



Coal 

Increased pressure to reduce carbon dioxide (CO 2 

) emissions and a switch towards renewable energy 

sources means that domestic demand for thermal coal is forecast to decline over the next 10 years. 

However, reduced domestic demand will be offset by increased export demand from Asia and an 

anticipated overall growing demand globally 4 . Demand for metallurgical coal is expected to increase in 

the medium term with reinvigorated demand from China and other developing nations. 

Challenges 

• Sub-optimal asset productivity and costs in a volatile price environment. 

• High cost and inefficient infrastructure contracts impacting some producers. 

• Overlap of coal mining tenements with agricultural land in New South Wales and Queensland, 

leading to conflicting pressures on land and water use. 

• Effective management of both surface and ground water consistent with environmental requirements. 

• Increasing social concern with climate change and the environmental impact of resource extraction, 

which will limit the industry’s social licence to operate. 

• Increasing Government regulation and ‘green tape’. 

• Development of coherent and cost effective mine closure and rehabilitation plans. 


Opportunities 

• Technological advances and implementation of operator assist and decision support technologies 

used in other bulk commodities to unlock productivity improvements. 

• Ongoing utilisation of high efficiency low emission (HELE) technologies, control of fugitive emissions 

and carbon capture and storage (CCS) to minimise carbon footprint. 

• Improved mine design and operations to facilitate reduced consumption and compliance with 

regulatory scrutiny of water use. 

• Improving utilisation of the service industry to leverage existing capacity of workshops, skilled 

personnel and equipment. 

• Product mix evolution with the development of new superior products. 

• Strategic targeting of increasing Asian demand for higher quality coal with a higher specific energy 

and lower ash content. 


25


Uranium 

The uranium industry will need to overcome regulatory hurdles, perceived radiation safety concerns and 

social licence to operate issues to participate more fully in the energy future of Australia and the world. 

Challenges 

• Lack of informed public knowledge and understanding of the science associated with energy 

generation and the associated levels of risk with each technology. 

• Limits on the ports from where uranium can be exported, with only Darwin and Adelaide currently 

licensed for the export of uranium, and limits on the ability to access ports elsewhere in Australia 

whilst carrying cargoes of uranium. This restricts the options available to the domestic uranium 

industry to transport its products to international customers. 

• Legislative and policy restrictions at the Federal and State(s) level on mining e.g. in New South Wales, 

Queensland and Victoria, and on the development of nuclear power and other parts of the uranium 

value chain (e.g. waste management and disposal), which limits the growth of the industry. 

• Building a comprehensive understanding of the challenges associated with processing challenging 

ore bodies in which much of the known Australian uranium is found. 

• Equipment and skills shortages which limit the capacity of Australian mines to respond quickly to an 

increase in demand. 

• Strategic development of uranium production capacity by Kazakhstan 5 through counter-cycle 

investment has positioned them ahead of Australia to respond to any increase in uranium demand 

(although Australian uranium is still regarded by many customers as their preferred product). 

Opportunities 

Given the drive to reduce carbon emissions globally, Australia’s uranium has the potential to assume a 

much more significant position as a source of export revenue. To realise this potential, Australia needs to 

take advantage of the following opportunities: 

• As part of a broader energy literacy initiative, the sector needs to help enhance the overall level of 

public understanding of how energy resources are produced, how power is generated and the role 

energy resources play in the nation’s economy. The sector also needs to continue to test current 

attitudes towards uranium mining and other aspects of the nuclear value chain. 

• Reconsideration of restrictive legislation, replacement with efficient, fit for purpose regulation. 

• Testing of technological improvements such as heap leaching and in-situ leaching to improve 

production capacity with low operating expenditure. 

• Improving the attractiveness of the uranium mining sector to draw labour back from other mining 

sectors, both in terms of radiation safety and salaries. 



CROSS SECTOR CHALLENGES AND IMPACTS 

Many opportunities and challenges span two or more sectors or sit outside discrete sectors, and are likely 

to have a profound influence and impact on the energy resources sector in the coming years. 

These will include factors such as the rapid emergence of renewable energy technologies which, when 

added to the global and domestic mix, may drive markets in unanticipated directions. An example of this is 

seen in the deployment of domestic solar power technologies to meet household electricity needs, which are 

causing substantial disruption to the generation and distribution networks together with increased pricing 

instability. The impact of the increasing uptake in solar panels, combined with emerging domestic battery 

storage and smart grid technology, will cause even greater disruptions in the coming years. 

A further challenge facing not only the energy resources sector, but the broader Australian workforce 

is the ageing working population and declining numbers of students pursuing science, technology, 

mathematics and engineering (STEM) subjects in schools and universities. This will limit the available pool 

of appropriately skilled workers to pursue the next waves of innovation and to maintain the increasingly 

technologically challenging facilities operated by the sector 6 , all of which are highly influential on the 

future prosperity of the nation. 


SECTOR KNOWLEDGE PRIORITIES 

While many of the actions required by the sector to address the challenges and opportunities ahead are 

relatively well known and understood, there are other issues which are not as well defined or where 

there are known gaps in knowledge – these are referred to as knowledge priorities. Many of these 

knowledge priorities were identified in the initial consultation period during the preparation of this SCP, 

and have been aligned with NERA’s key themes. The nine knowledge priorities, listed in Table 1, identify 

the key areas where additional work is required to understand the challenges and choices the sector 

faces in the current environment. 

These knowledge priorities will change over time as the sector and new challenges arise. However, 

by systematically addressing these knowledge priorities now, the industry will maintain its globally 

competitive edge and thrive in the future. 

The nine knowledge priorities have been grouped into three broad categories: 

1. Capability and leadership; 

2. Business and operating models, technology and services; and 

3. Regulatory environment governing the industry. 

Many of the knowledge priorities encompass multiple challenges and opportunities. 


27


Table 1: Sector knowledge priorities 

Knowledge priority 

1 Work skills for 

the future 

Focus areas 

• Integrated operations of the future 

• Workforce capability 

• Project management skills 

Capability and leadership 

Business and operating models, technology and services 

Regulatory 

environment 

2 Enabling effective 

collaboration 

3 Understanding 

Australia’s 

resource base 

4 Social licence 

to operate 

5 Unlocking future 

resources 

6 New markets, 

new technologies, 

new business models 

7 Commercialisation 

of Research and 

Development (R&D) 

8 Efficient operations 

and maintenance 

9 Regulatory 

framework 

optimisation 

• Cross company collaboration 

• Intergenerational and interdisciplinary engagement 

• Industry and applied research collaboration 

• Developing a greater understanding of prospective 

basin geology across the minerals and energy sectors 

• Social benefits 

• Infrastructure closure and rehabilitation 

• Water management 

• Tailings management 

• Integrated geological information 

• Cross industry collaboration 

• Maximising ageing assets 

• Environmental science collaboration 

• Asian trade agreements 

• Develop international technology partnerships 

• Commercialisation of operational technological 

developments 

• Carbon capture and storage (CCS) 

• Low emissions technologies 

• LNG as a fuel 

• Hybrid technologies 

• Adapting to the changing energy mix 

• Living labs 

• Understanding and developing commercialisation 

pathways 

• Operating models for remote operations 

• Data, digitisation and predictive analytics 

• Robotics, sensors and automation 

• Develop a greater understanding of decommissioning 

techniques 

• Encouraging sensible regulatory frameworks to allow 

ongoing exploration 

• Harmonisation of standards 

• Review of self-imposed regulations 

• Industrial relations and workplace reform* 

• Resource management reform and review of the 

existing permitting systems 

* Note: Industrial relations and industrial reform are not part of NERA’s scope 



LIKELY EVOLUTION OF THE SECTOR 

For the foreseeable future, the energy resources sector will continue to make a significant contribution to the 

economic stability of Australia. However, as the world’s energy balance continues to evolve, the sector must 

adapt to remain competitive. While the full impact of the macro changes in the sector are hard to foresee, 

many aspects of the sector’s evolution during the coming decade can be more easily predicted. 

Asian demand 

A sustained increase in Asian demand across all energy resources is expected, as India and the Association 

of Southeast Asian Nations (ASEAN) take up the slack from plateauing Chinese demand. Indeed, the 

global demand for energy is anticipated to increase by 34 per cent between 2014 and 2035 7 . Australia 

is ideally located to service much of this growth, and can reasonably expect continued development in 

export volumes and revenue growth. 


High capacity export industry 

In the near future Australia is forecast to overtake Qatar as the world’s largest producer of LNG, though 

Australia could be challenged by capacity increases in the United States depending on how the United 

States gas market develops. Similarly, Australia already enjoys a very strong position as one of the world’s 

top exporters of coal and uranium. Having invested substantially in the infrastructure to achieve these 

rankings, the sector needs to continue to invest in their operations to ensure a strong future. 

International nuclear revival 

The extent and magnitude of the nuclear revival, and its impact on current uranium over-supply, could 

make a significant difference to Australian energy exports. In addition, an increased acceptance of 

uranium locally may result in other aspects of the downstream nuclear value chain being considered. 

Renewable energy sources 

With the increasing penetration of both wind generation and rooftop solar, electricity distribution networks 

are experiencing major disruptions. The impact of this change will be further deepened by the growing 

deployment of domestic battery storage. These technologies are exerting new pressures on the traditional 

coal and gas fired assets of electricity generators and distribution networks as the flow of electricity changes 

from purely outbound from the power stations, to a more dynamic and complex pattern. 

Demand for coal 

Domestically, increased commitments to reduce CO 2 

emissions, coupled with a move towards renewable 

energy sources, means that domestic demand for thermal coal may decline over the next 10 years. 

However, developments in clean technologies such as carbon capture and storage and increased export 

demand from Asia as high-quality Australian coal displaces domestic Asian production, is likely to offset 

this decline. Demand for metallurgical coal is expected to increase in the medium term with reinvigorated 

demand from China and other parts of Asia. Meeting this ongoing demand will require the timely 

approval of new developments to ensure adequate capacity. 

Exploration challenges 

The growth of the Australian energy resources sector is dependent on its ability to identify, appraise and 

produce from new fields and deposits cost effectively. However, the viability of exploration activities on these 

future and frontier assets are being placed under serious question. Exploration companies are subject to an 

increasingly onerous and unpredictable regulatory burden. For example, the future viability of the Australian 

oil and gas sector is being placed at risk by the current lack of exploration, especially because, in the current 

low-price environment, companies are producing from their reserves faster in order to maintain revenue but 

are not adding new reserves to their portfolio through exploration to ensure future production capacity. 

In parallel, activist shareholders are applying growing and conflicting pressures by simultaneously demanding 

greater immediate returns on their investments in a traditionally long-term industry and also divesting 

investments in industries such as fossil fuels, which are out of favour with sections of the broader society. 


29


Optimisation focus on facilities 

Significant capital investment in new major energy resource projects appears unlikely in the short to 

medium term, in view of the major expansion phase across the sector, most visible in the growth of the 

LNG industry, coupled with the decline in commodity prices for the sector over the last two to three 

years. The focus is expected to be on optimisation of new and existing facilities through productivity and 

efficiency improvements while maintaining capacity through smaller projects. 

HELE and CCS Development 

To enable industry growth to continue within required COP21 (also known as the 2015 Paris Climate 

Conference) emission levels, the energy resources sector will need to develop high efficiency, low 

emissions (HELE) technologies for coal fired power generation and CCS for both coal and gas. 

Incentives for research and development 

The focus on operational and social licence to operate research and development has been a strong 

industry-wide activity in the coal sector through the work of the Australian Coal Industry’s Research 

Program (ACARP) 8 , where a small voluntary but sector wide levy is placed on production. 

The fund generated from this levy, which qualifies under research and development tax incentive legislation, 

is managed by an industry body to support an ongoing list of around 200 individual and focussed 

research initiatives across the industry, including funding a number of PhD scholarships 9 . Such an 

independent, industry focussed scheme could be considered for the Australian oil and gas sector to build 

a broad, industry wide and transparent research community to examine issues of interest to the sector, 

complementing the joint industry project (JIP) model more traditionally employed by the sector. 

SUMMARY 

The Australian energy resources sector faces major challenges to remain 

competitive in the increasingly complex modern global energy market. 

Maintaining Australia’s current position as a world leading energy resources producer will require 

transformative effort by all those directly and indirectly involved across the oil and gas, coal and uranium 

industries. 

While global and regional demand for our energy resources continues to be strong, internal disruptions 

in each market are placing complexity on what has, for a long time, been a relatively stable mix of energy 

demand. The Australian energy resources sector needs to adapt to these market disruptions and it must 

be prepared to undergo both incremental and transformational changes. 


Incremental improvements include leaner operations, better management of high cost activities, particularly 

in the areas of new projects and other major capital investments, sharing infrastructure both at facilities and 

in locations such as maintenance and supply bases, collaborative planning of maintenance and upgrade 

activities to avoid competition over labour and shop time, reviews of staffing levels both at the facilities and 

in the various national head offices, and an increasing drive to improve productivity from new and existing 

assets. However, these incremental improvements alone will not be enough to keep pace with change. 


Transformational change is required for the sector to keep pace with the shifting energy paradigm 

and meet global challenges. The sector needs to develop new operating models, focusing on new and 

innovative approaches to execution and better leveraging of existing capacity. Given the expected 

high level of automation in future operations, we need to build on Australia’s highly regarded existing 

capabilities in areas such as remote operations and data analytics for process optimisation and decision 

making, to support operational and value chain optimisation. 



Finding ways to exploit the opportunities presented by the disruptions will be vital to 

the future of the Australian energy resources sector, allowing it to continue to play a 

significant role in the global energy mix. 

Opportunities exist for Australia to continue to act as a baseline energy source to meet the sustained and 

increasing demand from Asia. But Australia needs to build strengths in the development of alternative 

and renewable energy sources. Australia is well placed to assist developing nations, particularly those 

transitioning from fossil fuels, to meet their emissions reduction commitments by providing energy 

diversification and reliable electrical grids and systems. 

Standing still is not an option. In the modern energy resources environment, continually exploring ways to 

change regulatory, business and operational models is required of all participants to simply remain competitive. 

As set out in this SCP, the Australian energy resources sector must find ways to: 

• Collaborate better in all ways, between peer organisations, vertically within value chains, across 

the traditional boundaries between industries and with research organisations where directed and 

undirected findings can help lift the productivity of the industry; 

• Explore ways to address the regulatory burden that is restraining many areas of the energy resources 

sector from growing into the future, but in ways that maintain and enhance community support for 

the industry; and 

• Identify and explore new markets, create opportunities to fill needs in the marketplace or displace 

expensive import alternatives, such as expanding the use of LNG as a domestic source of energy. 


NERA is committed to working openly with stakeholders to identify and pursue strategic 

initiatives and projects that will assist the Australian energy resources sector to adapt to 

current and future challenges and disruption. 

NERA will achieve this through directing research and technology development to meet the needs of 

operators and end-users in ways which are tied to commercial pathways. It will facilitate industry-led 

projects and ensure they address NERA’s strategic themes, knowledge priorities and strategic initiatives 

set out in this SCP and are endorsed/supported by the energy resources sector and stakeholders. 

NERA is not acting alone in this endeavour, but is building on the work of many previous sector wide 

and specific economic and industry reports and research initiatives. Many of these previous reports 

have substantially similar findings, whether they investigated a single industry or jurisdiction, a specific 

technology or considered the broader energy resources sector in its entirety. 

Achieving an Australian energy resources sector that remains globally competitive over 

the next 10 years and beyond will require significant innovation, growth and behavioural 

change. To be considered competitive, Australia needs to be: 

• A top-ranked location for energy resources investment – somewhere international and domestic 

operators seek to invest because it is cost competitive and has a strong reputation with a stable 

and supportive policy and regulatory environment, and is recognised as a centre of excellence for 

knowledge and skills; 

• A centre for innovation in energy resource operations and supporting services – where new technologies 

and approaches to problems are actively sought, tested, refined and deployed, and where those 

innovations, technologies and approaches are seen as world leading and in demand; and 

• Positioned to capitalise on the shifting global energy mix – a sector that works cooperatively with the 

disruptive technologies and seeks to find the right balance for a sustainable sector, economy, society 

and environment. 

Key to this future success will be increased collaboration amongst operators, contractors, service 

providers, the government and research organisations; a willingness to explore challenging and, at times, 

uncomfortable new issues and opportunities; and a willingness to take considered risks on novel 

disruptive solutions to tomorrow’s pressing questions. 


31

Roadmap 

to the Future 

The Australian energy resources sector is at a historic inflection point. Each 

of the three industries which comprise the sector face major changes that, 

dependent upon their response, will determine the sector’s long term strength. 

All three industries have to respond to the lower emissions environment 

and a societal move to renewable energy sources and clean technologies. 

The oil and gas industry is nearing the end of an unprecedented investment 

in and development of new facilities, often delivered late and above their 

forecast budget, and into a market that is increasingly competitive, and 

with tighter margins than seen for the past decade. The coal industry is 

similarly experiencing a tightening market as the growth experienced 

by China and other regional emerging nations settles into more stable 

consumption levels, and faces increased pressure from environmental and 

activist groups. The uranium industry faces ongoing regulatory restrictions 

over its activities, despite world demand for the high quality and end-toend 

accountability of Australia’s product. 


ROADMAP TO THE FUTURE 

These pressures mean that the sector as a whole must find new ways of working to build a successful and 

sustainable future. Different approaches are required from the sector’s leaders - leadership that places 

strong emphasis on increasingly open collaboration with peers, suppliers, clients, the research community 

and the broad community, and a willingness to take considered risks in developing and deploying novel and 

cutting edge technology and solutions in the pursuit of a sustainable future for the sector. These changes 

will require significant cultural shifts within and between stakeholders. To survive and thrive in the 

coming decade will require new ways of operating and different ways of thinking to those of the past. 

The three levers to a strong future 

To remain competitive and build future markets and customers requires the sector to address three 

primary levers- a suitable business model, a contemporary and future focussed operating model 

incorporating technological capabilities, and building the right capability, skills and culture to succeed. 


1 

Business 

models 

2 

Operational 

models and 

technology 

capabilities 

3 

Capacity 

and culture 

The energy resources sector needs to find new markets to supplement 

current markets, secure new customers and provide alternate forms of services 

that more deeply engage with the value chain. This can include the provision 

of turnkey energy solutions and clean technologies to support the use of 

the energy resources. This could also include the provision of knowledge 

and skills in specialist areas such as LNG operations, remote operations and 

modular construction. 

Equally, the sector needs to build stronger, more collaborative partnerships, 

within the sector, between the sector and technology and research 

organisations and with other industry sectors where the synergies and common 

challenges may lead to novel and powerful solutions. 

The last two to three years have seen significant cost cutting across businesses 

but, there are still significant efficiencies to be captured by reconsidering 

existing operating models and exploring novel ways to reduce process 

complexity and waste, find ways to collaborate more broadly, share logistics 

demands through consolidation and support the establishment of regional 

innovation and industry clusters and common supply bases. 

In parallel, there is an opportunity to reduce unnecessary and expensive 

bespoke standards and conditions around contracts, inductions, training 

and qualifications and seek ways to use common, industry wide substitutes. 

Companies need to be open to sharing environmental and other research 

which is non-competitive and of benefit to the whole sector. Businesses in the 

sector could increase their efforts to optimise their operations through ongoing 

development and deployment of automation, the adoption of advanced 

manufacturing such as 3D printing, the use of alternate materials and the 

adoption of lean systems. 

For the sector to truly embrace the future operating environment, it must invest 

in the capacity, skills and culture of its workforce, to define and develop the 

‘operator of the future’, spread digital competencies more broadly throughout 

the businesses so that members of each organisation have the skills to leverage 

the volume of data available. They must invest in the development of enhanced 

commercial skills so that personnel understand the impacts of decisions earlier, 

and embrace innovation in an environment where the risks of deploying new 

technologies can be calculated and considered in a professional and future 

focussed way, with new technologies being brought into organisations earlier 

through measured demonstrations, possibly via the use of living laboratories. 


33


Regulations 

These three levers cannot truly deliver their potential benefits unless the regulatory environment is reviewed 

and appropriate adjustments made to allow the energy resources sector to thrive into the future. Regulatory 

reform must address the growing perception that Australian regulation poses a sovereign risk which 

inhibits both domestic and inward investment. Reform must consider for example, how regulations can 

be enablers to an innovative economy and focussed on delivering differentiated and high value outcomes, 

and how the sector can efficiently identify and explore future energy resources. Businesses themselves 

must also review their own internal requirements, and remove or streamline self-imposed and bespoke 

standards that simply add cost to the business without delivering an appropriate level of additional benefit. 

Pathway to a Sustainable, Resilient, 

Energy Resources Sector 

The complex interplay of the factors that contribute to building a sustainable energy resources future 

is diagrammatically represented in Figure 4 below. This diagram illustrates how each of the knowledge 

priorities and constraints identified and discussed in this SCP integrate and how, as a sector, it is critical 

that the issues are addressed in a coordinated, systemic and structured way. By addressing them through, 

working together concurrently on multiple fronts in a planned and measurable way, the sector will be 

able to build a sustainable future. 

Figure 4: Pathway to a sustainable energy resource sector 



Knowledge Priorities Action Plan 

Set out in Table 2 are focus areas and initiatives to address the sector wide knowledge priorities. 

Table 3 then broadly allocates responsibilities for each of the knowledge priorities to stakeholders 

within the overall energy resources sector, identifies which challenges each knowledge priority will 

help overcome, and proposes a timeframe during which action should be taken for the sector to move 

forwards in a structured and planned manner. 

Although specific stakeholders in the sector, such as the explorers and permit holders, major operators 

of facilities, service, technology and equipment suppliers, research organisations, skills development and 

education sector are identified against each activity, it remains the collective responsibility of the sector 

to address these challenges. The role of NERA is to act as the catalyst for many of the activities and to 

initiate and guide many through the provision of logistics support, networking, promotion of initiatives 

to a broader audience and co-funding where appropriate. 

The focus areas and initiatives identified in Table 2 set out the priorities for action in the short to medium 

term. The integrated pathway shown in Figure 4 and the knowledge priorities set out in Table 2 provide 

the overall strategic direction, and guide development and implementation of future initiatives. 



35


Table 2: Sector knowledge priorities and associated initiatives 


1 Work skills 

for the future 

Focus areas 






collaboration 


Australia’s 

resource base 




• Developing a greater understanding of prospective basin 

geology across the minerals and energy sectors 


to operate 







resources 


New technologies, 

New business models 


of R&D 









• Commercialisation of operational technological developments 







• Understanding and developing commercialisation pathways 




• Develop a greater understanding of decommissioning techniques 

Regulatory 

environment 

9 Regulatory framework 

optimisation 

• Encouraging sensible regulatory frameworks to allow ongoing exploration 




• Resource management reform and review of the existing permitting systems 




KPI’s 

Improve management and work skills 

• Map workforce skills and capacity in each sector cluster against project planning cycles. 

Improve efficiencies in workforce planning 

• Standardise training requirements to improve efficiencies in workforce utilisation. 

Increase cross company collaboration 

• Develop at least [6] clusters in high technology areas. 

Build knowledge and enhance access to information 

• Improve energy resources sector access to robust sources of geophysical data and 

promote trusted custodians of information. 

Initiatives 

• Identify future skills requirements 

• Identify and develop appropriate and accredited 

training to meet future skills needs 

• Ensure a future focussed training and education sector 

• Explore new opportunities to export knowledge 

• Establish regional industry and innovation clusters 

• Asset and equipment sharing 

• Infrastructure sharing 

• Shut-down scheduling 

• Industry specific collaboration 


• Common facility inductions 

• Shared operational practices 

• Weather research and modelling 

• Industry data initiative 

• Share non-competitive data across sectors 


Strengthen engagement with communities 

• Develop a communications strategy which engages with stakeholders outside 

the energy resources sector to articulate the social, economic and environmental 

benefits and challenges of the sector. 

• Identify and apply solutions for water stewardship and tailings management 

including by applying new technologies. 

Unlock resources 

• Add to the number of projects in the publicly announced and feasibility stages. 

Improve commercialisation and acceptance of new technology 

• Unlock value and accelerate commercialisation by identifying at least [25] new 

technology projects. 

• Community engagement and education 

• Research social, economic and environmental 

consequences of the activities of the energy 

resources sector 

• Energy literacy 

• Information stewardship 

• Work with technology suppliers to identify new 

ways to access resources 

• Computational geoscience 

• Unmanned aircraft systems geophysics 

• Extend the network of small scale LNG facilities 

• Broader support for focused innovation 

Improve R&D capability by identifying barriers and mapping gaps 

• Identify and map barriers and gaps in sector commercialisation funnel. 

• Respond to gaps by building alignment between research funding and emerging industry 

clusters in a least 2 key areas across oil and gas, coal seam gas, uranium and coal. 

Improve R&D commercialisation 

• Increase applied research and commercialisation. 

Increased commercialisation outcomes 

• Increase the number of companies claiming the R&D tax credits for sector relevant 

technologies by identifying and unlocking commercialisation barriers. 

Reduce costs and improve efficiencies 

• Adapt new technologies to improve efficiencies and productivity in existing projects 

by [20%], including by developing at least [2] shared remote operating centres. 

Identify and map barriers 

• Identify and map key areas where regulatory reform in the sector is needed, 

and support possible reforms. 

Align Australia’s standards with international best practice 

• Deliver 2 projects on enhanced alignment of Australian Standards with 

international best practice. 

• Strengthen industry-led research stewardship 

• Enhance industry engagement with research 

institutions 

• Research and development funding models 

• Improve understanding of Intellectual Property 

• Support living labs and pilot plants 

• Explore ways to build the industry’s skill base in 

remote operations and facility life extension 

• Focussed research and early deployment of 

new technologies 

• Research into life extension of ageing facilities 

• Adopt and harmonise international standards 

• Regulatory reform to support ongoing sector growth 

• Review regulatory frameworks 


37


Table 3: Knowledge priorities action plan 

Improve 

adoption of 

innovation 

Close the 

skills gaps 

1 

Work skills for 

the future 


2 

3 

Enabling effective 

collaboration 

Understand 

Australia’s 

resource base 

4 

Social licence 

to operate 


5 

6 

7 

8 

Unlock future 

resources 

New markets, 


new business models 

Commercialisation 

of research and 

development 

Efficient operations 


Regulatory 

environment 

9 

Regulatory 

framework 

optimisation 

KEY PARTIES: Operator Supplier Research Government Education 



Challenges 

Enhance 

productivity 

Manage 

water 

stewardship 

Address 

high cost 

environment 

Improve 

energy 

literacy 

Reduce 

sovereign 

risk 


. 

. 

WHEN: Short Medium Long 


39


Key Performance Indicators 

The Key Performance Indicators (KPIs) describe in a more concrete sense what can be achieved by 

stakeholders focussing on the knowledge priorities and aligning on a shared vision for the energy 

resources sector. They set a trajectory for transformation against which progress can be tracked and 

adjusted where needed. 

Work skills of the future 

With the construction phase generated by the energy resources boom largely complete, the focus now is 

to ensure sufficient breadth and depth of capability to support operating projects during their lifecycle, 

both for ongoing operations and maintenance, but also for shutdowns. Most plants will be scheduling 

maintenance shutdowns in the mid-term, which will put a strain on existing labour resources, drive up 

costs and potentially require overseas skills to be brought in. 

Table 4: Work skills of the future KPI target 

Knowledge priority Focus areas Initiatives 

Work skills 






• Identify and develop appropriate 

and accredited training to meet 

future skills needs 

• Ensure a future focussed training 

and education sector 

• Explore new opportunities to 

export knowledge 

KPI milestones Target Timing 

Improve 

management 

and work skills 

Improve 

efficiencies 

in workforce 

planning 

Map workforce skills and capacity in each sector cluster against 

project planning cycles. 

Develop and implement plans to ensure sufficient local skills 

are available to support the next phases of industry activity. 

Standardise training requirements to improve efficiencies in 

workforce utilisation by: 

1. Delivering a national safety induction framework; and 

2. Delivering standard role based competency matrices. 

By 2017 

By 2020 

By 2018 

By 2018 

The key initiatives NERA will support are aimed at improving efficiencies as well as upgrading workforce 

capabilities in the sector, with a pivot to higher skilled jobs. 

• Working with industry to map workforce capabilities/capacity in each sector hub against project 

planning cycles, and support the development of training facilities to ensure adequate local skills are 

available, with sufficient breadth and depth of skills to support the industry of the future. 

• Together with industry and education providers, invest in training and education relevant to the next 

major phase of industry activity – operations and maintenance, shutdowns. 

• Working with industry and education providers, to establish a national safety induction framework. 

• Work with industry and education providers, to develop standardised competences which are 

portable across the sector. 



Enabling effective collaboration 

Table 5: Enabling effective collaboration KPI target 


Enabling 

effective 

collaboration 


• Intergenerational and 

interdisciplinary engagement 

• Industry and applied research 

collaboration 

• Establish regional industry and 

innovation clusters 










KPI milestone Target Timing 

Increase cross 

company 

collaboration 

Develop at least [6] clusters in high technology areas. By 2026 

The key steps NERA will take to support increasing collaboration include: 

• Working with industry to develop new operations and maintenance, logistics and campaign models to 

improve efficiencies, reduce costs and improve productivity, including by sharing assets and equipment. 

• Encourage standardisation and simplification across the sector, focusing on the prequalification 

process, and work skill competences (see also work skills of the future KPI). 

• In collaboration with industry, develop regional industry and cluster strategies to maximise utilisation 

of infrastructure such as supply bases. 

• Promote collaboration between industry and research, including by supporting innovation clusters 

and providing funding for industry collaborative projects (see also commercialisation of research and 

development KPI). 


41


Understanding Australia’s resource base 

Table 6: Understanding Australia’s resource base KPI target 


Understanding 

Australia’s 

resource base 

• Developing a greater 

understanding of prospective 

basin geology across the minerals 

and energy sectors 


• Share non-competitive data 

across sectors 


Build knowledge 

and enhance 

access to 

information 

Improve energy resources sector access to robust 

sources of geophysical data and promote trusted 

custodians of information. 

Ongoing focus 

Deliver 2 key 

projects by 2018 

NERA will: 

• Take a lead role in promoting consolidation of geophysical data for under-developed basins. 

• Identify and support projects aimed at improving broader access to and sharing of geophysical data. 

Social licence to operate 

The sustainability of the sector requires engagement and support from the community to build a 

strong social licence to operate. Distrust, concern and unease of communities have been manifested 

in restrictions on developing onshore energy resources, which significantly inhibit exploration, future 

production and growth of the sector. 

Energy resources underpin the Australian economy, and a sustainable and energised industry is a 

fundamental part of Australia’s future. Constructive and respectful engagement on social, environmental 

and economic sector impacts is needed to address community concerns, whether by providing independent 

robust information or finding solutions to issues raised by stakeholders, and will, in parallel, deepen the 

energy literacy of the community and key stakeholders. 

Table 7: Social licence to operate KPI target 



to operate 


• Infrastructure closure and 

rehabilitation 



• Community engagement and 

education 

• Research social, economic and 

environmental consequences 

of the activities of the energy 





Strengthen 

engagement with 

communities 

Develop a communications strategy which engages with 

stakeholders outside the energy resources sector to articulate 

the social, economic and environmental benefits and challenges 

of the sector. 

Identify and apply solutions for water stewardship and tailings 

management including by applying new technologies. 

By 2026 




• Support research and commercialisation of technologies which provide solutions to community 

concerns, including uptake of clean technologies in the energy resources sector. 

• Help articulate economic, social and environmental benefits of energy resources in Australia. 

• Promote independent trusted custodians of science, and engagement with the community in 

public debate. 

• Together with industry, government(s) and other stakeholders, work to develop a multi-faceted short 

to long term strategy to increase energy literacy and public engagement on energy choices and the 

transition pathway (secure, sustainable and affordable). 

• Work with industry and government(s) to promote appropriate regulation and transparency, and 

to support improvements in community and stakeholder engagement as well as the perception of 

the sector. 


Unlocking future resources 

Table 8: Unlocking future resources KPI target 


Unlocking 

future resources 




• Environmental science 

collaboration 

• Work with technology suppliers 

to identify new ways to access 

resources 


• Unmanned aircraft systems 

geophysics 



Add to the number of projects in the publicly announced and 

feasibility stages. 

By 2026 


• Work with operators and other industry participants to develop collaborative solutions for sharing 

infrastructure and utilising ullage, including new operatorship models to allow third party access to 

infrastructure. 

• Build collaboration between the research and development sector and industry to promote and 

implement emerging technologies to mature new fields and marginal resources. 

• Support innovative methods of developing marginal and new resources through different business 

models, operating models and a contemporary culture and mindset. 


43


New markets, new technologies, new business models 

Australia is a net exporter of energy 10 , after becoming a net importer of petroleum and petroleum related 

products since 2004 10 . The next window of opportunity is to build from the platform of existing energy 

projects to develop new technologies, products and services for both domestic and export markets. Examples 

of these include hybrid energy solutions incorporating clean technologies, low emissions technologies and 

carbon capture and storage (CCS), as well as LNG for transport fuel, and remote operations technology. 

Table 9: Market growth KPI target 


New markets, 


new business 

models 


• Develop international technology 

partnerships 

• Commercialisation of operational 

technological developments 

• Carbon capture and storage 





• Extend the network of small scale 

LNG facilities 

• Broader support for focused 

innovation 


Improve commercialisation 

and 

acceptance of 

new technology 

Unlock value and accelerate commercialisation by identifying 

at least [25] new technology projects. 

2026 


• Improve the commercialisation of new technology by encouraging cross-discipline engagement across 

multiple sectors, and supporting pilot plants and technology application opportunities. 

• Support industry and research institutions to unlock and commercialise value. 



Commercialisation of research and development 

Table 10: Commercialisation of research and development KPI target 




development 


• Understanding and developing 

commercialisation pathways 

• Strengthen industry-led research 

stewardship 

• Enhance industry engagement 

with research institutions 

• Research and development 

funding models 

• Improve understanding of 

Intellectual Property 




Improve research 

and development 

capability by 

identifying 

barriers and 

mapping gaps 

Improve research 

and development 

commercialisation 

Increased commercialisation 

outcomes 

Identify and map barriers and gaps in the energy resources 

sector commercialisation funnel. 

Respond to gaps by building alignment between research 

funding and emerging industry clusters in at least [2] key areas 

across oil and gas, coal seam gas, uranium and coal. 

Increase applied research and commercialisation: 

• by supporting research institutions commercialising research 

and development with targeted project funding; and 

• by supporting the number of intellectual property, 

trademarks and licences taken out for sector relevant 

technologies through commercialisation facilitation. 

Increase the number of companies claiming a research and 

development tax credit for sector relevant technologies by 

identifying and unlocking commercialisation barriers. 

By 2017 

By 2026 

Ongoing 

By 2026 

Ongoing 

by 2026 


• Work with operators, service providers and research institutions to increase engagement and improve 

collaboration in applied research by supporting living labs. 

• Together with research institutions, work to increase the number of companies engaging with research 

and bridging the gap between industry and research for PhD students and other STEM graduates. 

• Support applied research maturation by developing a shared understanding of new technologies and 

building acceptance of new technology both within industry and with regulators. 


45


Efficient operations and maintenance 

Table 11: Efficient operations and maintenance KPI target 


Efficient 

operations and 

maintenance 

• Operating models for remote 

operations 

• Data, digitisation and predictive 

analytics 


• Develop a greater understanding 

of decommissioning techniques 

• Explore ways to build the industry’s 

skill base in remote operations 

and facility life extension 

• Focussed research and early 

deployment of new technologies 

• Research into life extension of 

ageing facilities 


Reduce costs 

and improve 

efficiencies 

Adapt new technologies to improve efficiencies and productivity 

in existing projects by [20%], including by developing at least [2] 

shared remote operating centres. 

By 2026 

The key steps NERA will take to support industry to build ‘future proof’ operating models and the 

industry’s skill base include: 

• Working with industry to support shared remote operating centres (ROCs) to bring together 

collaboration across different energy resources industries and researchers. 

• Promote use of data analytics to improve efficiencies in projects and support continuous 

improvement. 

• Support the commercialisation and application of new and emerging technologies such as advanced 

automation and 3D printing. 

• Support industry in developing data analytics capability for energy resources projects. 



Regulatory framework optimisation 

Table 12: Regulatory framework optimisation KPI target 


Regulatory 

framework 

optimisation 

• Encouraging sensible regulatory 

frameworks to allow ongoing 

exploration 



• Industrial relations and workplace 

reform* 

• Resource management reform and 

review of the existing permitting 

systems 

• Adopt and harmonise 

international standards 

• Regulatory reform to support 

ongoing sector growth 

• Review of regulatory frameworks 



Identify and 

map barriers 

Align Australia’s 

standards with 

international 

best practice 

Identify and map key areas where regulatory reform in the 

sector is needed, and support possible reforms. 

Deliver [2] projects on enhanced alignment of Australian 

Standards with international best practice. 

By 2018 

By 2018 

*Note: Industrial relations and industrial reform are not part of NERA’s scope. 

The key initiatives NERA will take to improve Australia’s regulatory regime include: 

• Working with government and industry stakeholders to identify areas where the regulatory regime can 

be streamlined and provide suggestions for possible reforms, moving to a performance based approach. 

• Harmonisation of international standards in Australia. 

UTILISATION OF KPIs 

These KPIs set a framework for stakeholders to build a transformed, sustainable and competitive 

energy resources sector. Some KPIs cover a 10-year period and set a stretch target, others address a 

more immediate horizon. Progress against the KPIs will be reviewed in the annual SCP reviews and the 

KPIs will be updated to ensure increasing alignment and traction on the knowledge priorities. The KPIs 

set a frame of reference to measure progress in identified areas but also to support activities on other 

initiatives identified in the knowledge priorities. 

The KPIs encompass multiple challenges and opportunities, and will inevitably change over the 

10-year horizon as challenges, information, knowledge and strategic outcomes evolve. However, 

through systematically addressing these issues, the energy resources sector will achieve an innovation 

driven, globally competitive edge together with a sustainable future. 


47


2 

GLOBAL AND 

NATIONAL 

CHALLENGES 

Section 2 provides a more detailed examination of the global and 

national megatrends and challenges facing the Australian energy 

resources sector. It examines the current status of each of the three 

industries represented in the sector, then introduces a series of industry 

competitiveness assessments and benchmarking reports commissioned 

by NERA. This benchmarking articulates the size of the prize for 

Australia of having an energy resources sector which is globally 

competitive, innovative, sustainable and diverse. 

The detail in this section has informed the knowledge priorities, focus 

areas and initiatives identified in the earlier road map section of this SCP. 


49

Global Megatrends 

and Implications for 

Australia’s Energy 

Resources Sector 

Globally, the energy resources sector is facing a number of megatrends. 

Individually, each of these trends present significant change and challenge 

to the sector but when combined, they result in operational and market 

disruption to which the sector must adapt. 


GLOBAL MEGATRENDS AND IMPLICATIONS FOR AUSTRALIA’S ENERGY RESOURCE SECTOR 

Global Megatrends 

Urbanisation 

Technological 

evolution 

Asian 

century 

Changing 

energy mix 

Globalisation 

of business 

Changing 

demographics 

Low carbon 

future 

Search for energy 

security (emerging) 

Seven current and one emerging global megatrends are considered in this SCP. Individually, each of 

these megatrends pose challenges to and require action from the energy resources sector. Combined, 

these megatrends present an environment of disruption. Such disruption from these megatrends 

requires the energy resources sector to find new ways of working and to work together to innovate, 

as individually, the sector participants will not be able to create the ‘step change’ required to compete 

globally. The disruption poses many challenges, but offers multiple opportunities for the energy resources 

sector to maximise the value from previous industry investment, to adapt, and to build a competitive, 

resilient and sustainable future for the sector. 

GROWING POPULATION AND CHANGING 

GLOBAL DEMOGRAPHICS 

The 2015 United Nations (UN) report 11 estimates that the world’s population will reach 8.5 billion people by 

2030, 9.7 billion people by 2050 and exceed 11 billion people in 2100. India is expected to surpass China 

as the most populous nation (by around 2022), and Nigeria overtaking the United States to become the 

world’s third largest country (by around 2050). Moreover, the UN report estimates that during the 2015 

to 2050 period, half of the world’s population growth is expected to be concentrated in nine countries: 

India, Nigeria, Pakistan, Democratic Republic of the Congo, Ethiopia, Tanzania, the United States, Indonesia 

and Uganda. Clearly a growing and changing world population, particularly the massive growth of India 

and Nigeria, has significant implications for energy supply and for the energy resources sector. 

According to the same UN Report, as fertility declines and life expectancy rises globally, the proportion of 

the global population in or approaching retirement is also rising significantly. Currently, Europe has the 

greatest percentage of its population aged 60 or over (24 per cent), but rapid ageing is occurring in other 

parts of the world, so that by 2050, all major areas of the world except Africa will have nearly a quarter 

or more of their populations aged 60 or over. 

Coupled with the world’s ageing population is the rapid emergence of the Asian middle class. This growing 

demographic is forecast to represent approximately 66 per cent of the world’s middle class by 2030 

(growing from 2009 levels of 23 per cent) 12 . The new members of the Asian middle class are emerging as 

major consumers of goods and services, opening up large markets for both domestic goods and imported 

luxury items, many of which will require inputs from the energy resources sector for their manufacture, 

transport and use. 

GLOBAL AND NATIONAL CHALLENGES 


51


URBANISATION 

In the developed world, the mass movement of rural populations to factories and urban environments largely 

took place at the time of the industrial revolution, and significant progress has been made in managing 

the associated pollution. In the developing world, populations are rapidly moving en-masse into cities as 

these developing nations undergo their own industrialisation processes. The UN has forecast that by 2050, 

approximately 60 per cent of the world’s population will live in urban environments compared to around 

54 per cent at present 13 . This mass migration is fuelling rapid expansions of the cities, with commensurate 

demands on energy for construction of new homes, for providing power to inhabitants and for powering 

industries which manufacture required goods. This is likely to be accompanied by a demand to accelerate 

learning from the experiences of the developed world and calls to adopt cleaner solutions more rapidly. 

Today, the most urbanised regions include Northern America (82 per cent living in urban areas in 2014), 

Latin America and the Caribbean (80 per cent), and Europe (73 per cent). In contrast, Africa and Asia remain 

mostly rural, with 40 per cent and 48 per cent of their respective populations living in urban areas. But all 

regions are expected to urbanise further over the coming decades. Africa and Asia are urbanising faster than 

the other regions and are projected to become 56 per cent and 64 per cent urbanised, respectively, by 2050. 

The rural population of the world has grown slowly since 1950 and will reach its peak in a few years. 

The global rural population is close to 3.4 billion people and is expected to decline to 3.2 billion people 

by 2050. Africa and Asia are home to nearly 90 per cent of the world’s rural population. India has the 

largest rural population (857 million people), followed by China (635 million people) 13 . Close to half of 

the world’s urban dwellers reside in relatively small settlements of less than 500,000 inhabitants, while 

only around one in eight live in the 31 mega-cities with more than 10 million inhabitants. 

Urban lifestyles result in changes to the way in which food and water is accessed, and has significant 

implications for the structure of energy markets and grids. 

The developed world will expect their energy to remain efficient, reliable and relatively low cost while 

increasingly demanding that the energy be produced from low carbon sources. In the developing world, the 

principal demand is gaining access to reliable energy, potentially in a bottom-up, localised and low carbon 

form, rather than the centralised networks seen in older, developed nations 14 . This is similar to the way the 

deployment of widespread access to mobile phones and the internet in these regions skipped much of the 

hardwired, expensive infrastructure that is a feature of a more evolutionary deployment in developed countries. 

TECHNOLOGICAL EVOLUTION 

Technological changes over the past decade are contributing to substantial changes in the ways in which 

societies access and consume energy and how businesses are able to optimise their production and distribution 

of energy. Among these developments is the ability for business to leverage data analytics to optimise their 

processes and production resulting from advances in data processing and storage and through what is 

known as the fourth industrial revolution 15, 16 . This revolution is making it possible for virtually any product 

to be customised to the exact needs of its purchaser, whether that be the ability to order a new car with a 

personally selected specification or to build an industrial product specifically tailored to the needs of the end 

user. The Internet of Things (IOT) increasingly enables household and industrial devices to be capable of being 

interconnected, networked and controlled to enable more efficient use and monitoring of energy consumption. 

Alongside the network and internet advances are technologies such as Unmanned Aerial Vehicles (UAV’s 

or drones) which are facilitating faster, safer activities with greater flexibility, such as inspections of facilities 

without the requirement to use scaffolding or other forms of access platforms; unmanned marine equipment 

which is similarly allowing more advanced activities without the requirement to deploy divers; 3D printing and 

rapid prototyping is facilitating the fabrication of complex physical shapes in fewer pieces, the fabrication of 

spares and components and providing the ability to build models more rapidly; Virtual Reality (VR) is being 

used to provide immersive training experiences for personnel, accelerating training, inductions and special 

modelling; the growing use of autonomous vehicles in mining operations, allows machinery such as haul trucks, 

locomotives, excavators and drilling equipment to be operated from central control buildings in major cities. 

These new and emerging technologies are transforming the way in which businesses operate and offer 

substantial opportunities for future development, supporting gains in safety and productivity. 



LOW CARBON FUTURE 

Driven by the global recognition of the impacts of climate change and agreements made at the Paris 

COP21 meeting 17 , there is a drive towards low carbon emissions, alternative and renewable energy sources, 

and development of technologies to capture the carbon produced in conventional energy extraction and 

production. This movement to a low carbon future is happening at the international, national and local 

level. Globally, nations are reviewing their future energy policies and making adjustments to their energy 

mix, looking for efficiencies and economic viability of alternative energy sources. Countries are taking steps 

to reduce their carbon emissions either through alternative and renewable sources, or remediation such as 

various forms of carbon capture and sequestration. As an example, the European Union has adopted targets 

of 20 per cent of final energy from renewables, with Sweden aiming toward 49 per cent 18 . 

At the household level there is a substantial uptake in the installation of rooftop solar panel technology 

for domestic power generation. This has been fuelled by a combination of government incentives, 

changes in societal attitudes and reduction in the cost per kilowatt of such technology (resulting both 

from greater demand and technological advances). At the state energy generation level there has been 

heavy investment from local and international and local investors in wind generation, in addition to 

hydroelectric facilities, all of which generate electricity without the consumption of fossil fuels. 

These developments in the generation and consumption of energy are having large, far reaching impacts 

on planning and deployment of traditional power generation, and the fuels used to operate them. 

ASIAN CENTURY 

As the 21st century has progressed, the Chinese economy has increased its global dominance in demand for 

natural resources, including all forms of energy, and production of consumer goods and input materials. This has 

driven substantial changes in the global economic balance, with China now the second largest global economy 

and the dominant economy in the Asia Pacific region where Australia conducts much of its trade. India is 

rapidly emerging as the next major nation to move its economy forward. India’s domestic consumption 

levels, driven by its growing middle class, are projected to be the highest in the world by 2030 19 . 

The Chinese economy is increasingly taking large ownership interests in the sources of natural resources 

on which their economy depends, with significant investments in numerous projects in Australian and 

other jurisdictions. This trend is forecast to continue for the foreseeable future. 

India is predicted to be the next growth economy, with a forecast demand for energy to increase from 

775 million tonnes of oil equivalent (Mtoe) in 2013 to 1,908 Mtoe by 2040 20 . This demand is largely 

projected to be met through the use of coal (for which India is predicted to be the world’s largest 

importer by 2020 21 ), oil and gas and uranium. 

In recent years, there has been an increasing and substantial demand for energy from other nations in 

the region. This includes Indonesia which, while largely self-sufficient, imports some energy to meet its 

growing needs 22 , and the Philippines which imports around 50 per cent of its required energy 23 . 


GLOBALISATION OF BUSINESS 

The globalisation of the world’s economy and businesses means it is becoming more common for 

ownership of industries to be held by international businesses. These businesses may only have a 

regional presence in the Australian marketplace, but a significant influence over Australia’s energy future. 

Globalisation covers resource energy companies, the engineering businesses which service, operate and 

maintain the projects and many equipment suppliers of all sizes on which they rely to provide technology 

and skills. This globalisation trend provides new opportunities for Australian organisations to export their 

skills and expertise to the global marketplace in ways previously not considered. 

At the same time, many areas of business are adopting more regionally focussed structures, reverting 

from their previous global approach. They are spinning off or launching local subsidiaries to exploit 

regional opportunities which are not always available to global organisations. 


53


CHANGING ENERGY MIX 

Driven by the increasingly competitive pricing and reliability of alternative sources, the global energy 

market is accessing alternate forms of supply. Historically the world’s energy has been sourced almost 

exclusively from carbon based sources (coal and oil and gas, supplemented by nuclear), but now 

substantial portions of the world energy demands are being met through deployment of alternatives and 

renewables, including hydro-electric, wind and solar energy. 

As these alternative and renewable sources penetrate the market, they are putting traditional sources 

under increasing pressure. The established power distribution infrastructure networks in many developed 

nations are facing challenges in the transition to non-synchronous and distributed energy sources. 

The networks were originally designed to distribute power only outwards from large, central power 

generation sources to the broader communities and were able to rely on system inertia provided by large, 

baseload generation to operate safely and reliably. 

With solar and wind in particular being more localised and intermittent in nature, governments and 

operators of traditional power grids are being forced to reconsider their operation and viabilities. By 2030 

Australia is predicted to have up to 30 per cent of its electricity generation decentralised 24 . 

The existing networks are being further pressured by the emergence of local storage solutions such as 

domestic battery technology which is predicted to reach up to 2.4 million Australian homes 25 . When these 

localised energy sources are coupled with ‘smart’ domestic energy management software and localised 

power sharing through interconnected neighbourhoods, homeowners will increasingly be able to rely on 

their own ‘virtual power station’ to meet peak loads, points of time when their local, unconventional sources 

may not be able to generate sufficient capacity. 

An Emerging Megatrend – 

The Search for Energy Security 

Alongside the seven megatrends discussed earlier, an eighth emerging megatrend has been shaping the 

energy resources sector for the past few years. This emerging megatrend is the combination of moves 

towards a low carbon future and the changing energy mix, with the driver to provide secure, reliable 

and affordable energy. The search for energy security is beginning to be seen both domestically in the 

Australian energy resources marketplace and on the world stage. 

SEARCH FOR ENERGY SECURITY 

In recent months Australia experienced a number of substantial, state based energy events. These include 

the spike in power prices in South Australia during July 2016 triggered by the scheduled outage of the South 

Australia to Victoria Interconnector. The South Australian blackout of September 2016 was triggered by an 

extreme weather event that caused cascading stresses to the transmission grid servicing both renewable 

and thermal power generation, and resulted in a rapid reduction of power system frequency, causing 

a complete blackout for the State. Ongoing issues were experienced in Tasmania as a combined result 

of the outage of the Basslink connection and historically low dam levels following low rainfall in the 

summer of 2015, which reduced the State’s ability to generate sufficient hydroelectric power. The issues 

in Tasmania have resulted in the formation of the Tasmanian Energy Security Taskforce 26 and at the 

national level, the Finkel Review into the reliability and stability of the National Electricity Market 27 . 

Outside Australia, many developed nations who have been previously relatively energy self-sufficient, 

such the United Kingdom, are seeing the approaching end of their domestic energy resources and are 

responding by seeking secure supplies elsewhere, as well as developing a broader mix of domestic supply 

from renewables and an expanded use of nuclear energy 28 . 

Secure and reliable energy supplies are important for several reasons: first, to deliver the energy needed to 

support the lifestyle expectations of the population, and to power essential services such as hospitals and 

schools, homes and offices; secondly, to ensure a reliable and price stable supply of energy for businesses and 

industries, in order to create jobs and economic prosperity in a reliable and sustainable way. Without energy 

security and price stability, business may be reluctant to invest and households will be under pressure. 



The Australian energy resources sector is well placed to supply much of the region’s energy security 

needs through the export of coal, uranium and gas, but domestically faces a number of state-based 

challenges that must be addressed for energy stability to be maintained. The interaction between 

renewable energy and thermal energy sources, and their impact on transmission systems, together 

with the interaction between energy policy and climate policy at a state and federal level need to be 

considered in a consistent framework, such as the ‘energy trilemma’. The energy trilemma 29 underpins 

the World Energy Council’s definition of energy sustainability, it has three counter-posing drivers of 

affordability, environmental sustainability and energy security. Australia ranks thirty-first between Japan 

and Romania on the energy trilemma index 30 , scoring a B for energy security and energy equity and a C 

for environmental sustainability of energy supply (the rankings are A to C with A being best in class). 

In some parts of Australia, the higher than expected uptake in renewables, coupled with retirement of 

thermal power generation has created stresses in the system, which have impacted on energy security, 

and increased the perception of investment risk. 

An Environment of Disruption 

These multiple trends, when considered together, give rise to a single overarching ‘megatrend’– an 

increasingly disrupted energy market. This megatrend is transformative, and defines the present and 

shapes the future by its significant impact on societies, economies, industries, and organisations. It is 

this convergence of global trends that is disrupting the global energy sector, providing both significant 

challenges for incumbents and substantial opportunities for those seeking to exploit new approaches. 

Although fossil fuels will be critical to meeting the world’s energy needs for years to come (80 per cent of 

the global energy mix is expected to be supplied by fossil fuels in 2035 31 ), renewables accounted for half 

of global new generating capacity in 2014, and are expected to represent more than 50 per cent of all 

capacity growth through 2040 32 . However, other estimates suggest that 60 per cent of the energy market 

will be taken up by renewable energy, leaving only 40 per cent of the market for the remaining industries. 

The changes in the generation, distribution and consumption of energy will have a profound impact on 

the domestic and international energy marketplaces in which the Australian energy resources sector 

operates. While the overall impact of these changes will become apparent over time, it is clear that the 

sector needs to be prepared to act now to remain competitive. 

Recent work by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) 33 has 

identified the following trends within the Australian electricity marketplace that will be repeated in 

different forms on the global stage: 

• Increasing electricity costs. 

• Peak demand and consumption has reversed the upward trend seen before 2008/2009. There is now 

an oversupply of generation capacity. 

• Residential electricity costs are not well aligned with the costs of services. 

• The nation’s electricity supply has started to decarbonise. 

• Uncertainty still exists around the nation’s future carbon politics, and societal attitudes towards 

electricity system reliability and costs are shifting. 



55


Impact of Global Megatrends on Australia 

As a major supplier of the world’s conventional energy and, as a country with its own 

mature established energy networks, the Australian energy resources sector faces a 

number of major challenges to remain competitive in the increasingly complex modern 

energy marketplace. 

While global and regional demand for our energy resources remains strong, internal changes in each of 

the three industries and markets in the sector are placing additional complexity on what has, for a long 

time, been a relatively stable mix of energy demand. 

• Customer countries such as China are investing heavily in renewables and trying to reduce their 

emissions in reaction to growing public demand for a cleaner environment and, while their demand 

for Australian energy exports remains strong, it is likely that demand will plateau sooner and at a 

lower level to previous forecasts. 

• The growth of unconventional oil and gas production, typified by shale gas developments, have 

led the United States to become energy self-sufficient in recent years and potentially become a net 

exporter of hydrocarbons 31 , putting new sources of supply into the global marketplace. This market 

penetration is being assisted by the recent expansion of the Panama Canal, enabling easier shipping 

into the Asian market. 

• The growing demand in the domestic market for energy from alternative and renewable energy sources 

such as solar and wind are placing changing demands on domestic energy generation, distribution and 

consumption patterns. This demand is demonstrated by the uptake of domestic solar power generation 

with approximately 16.5 per cent of all Australian homes having installed the technology 32 . 

• Increasing demands by communities and stakeholders that the production of conventional and 

unconventional energy resources be undertaken and regulated in a highly transparent manner, with 

significant timeframes required for early and ongoing community and stakeholder engagement; 

combined with this are the challenges associated with communicating complex technical and science 

based management of the risks and impacts from energy resource activities. 

• Growing international activism against and divestment of fossil fuels. 

• After unprecedented recent investment in new facilities, particularly in the LNG and coal sectors, 

followed by a substantial drop in commodity prices, Australia’s domestic producers are facing 

challenging productivity and ramp up situations in bringing their new facilities on line and containing 

operations costs in the depressed marketplace. 

• Emerging energy storage methods such as advancing battery technology and the use of hydrogen are 

beginning to change the energy mix, reframing the landscape in ways that are yet to be fully determined. 

The Australian energy resources sector needs a comprehensive and cohesive energy policy that addresses: 

• How to maximise the value to Australia from the large investments in the energy export industries 

of oil and gas, coal and uranium over decades, and how it can transform to be globally competitive, 

innovative, sustainable and diverse in this rapidly changing marketplace; 

• How we can use this strong industrial base to help balance societal needs and build a more secure 

future for our society as a whole; 

• The opportunities to partner with and participate in the emerging clean technologies sector, and with 

alternative and renewable energy industries; and 

• How domestic demands for energy can be met in a manner that balances economic, social and 

environmental factors and delivers energy that is secure, reliable and affordable way. 



Australia’s Response to Sector Trends 

Finding ways to exploit opportunities presented by disruptions will be vital to the future 

of the Australian energy resources sector. 

The Australian energy resources sector needs to adapt to market disruptions. It must be prepared to 

undergo both incremental and transformational improvements. 

Figure 5: Transformational versus incremental change 

Productivity 

Time 

Transformational change 

• Innovators 

• Early adopters 

• Risk aware 

• Forward looking practices and regulations 

• New skill sets 

• New markets 

Incremental change 

• Late adopters 

• Risk averse 

• Restrictive practicesand regulations 

• Traditional skill sets 

• Traditional market aspirations 


Incremental change 

Incremental change has been the default mode for most industries in the energy resources sector as 

buoyant demand and stable commodity prices has led industries to become complacent. 

This phase is now past and, while incremental gains are still valuable and worth pursuing, organisations 

also need to look to transformational opportunities to see the biggest future gains. 

Incremental improvements include: 

• Leaner operations, as exemplified by the many operators already focusing on increasing asset utilisation. 

• Better management of high cost activities, particularly in the areas of new projects and other major 

capital investments. 

• An increasing movement by operators toward sharing infrastructure both at their facilities and in 

locations such as maintenance and supply bases. 


to avoid competition over labour and shop time. 

• Reviews of staffing levels, both at the facilities and in the various national head offices. 


However, these incremental improvements alone will not be enough to keep pace with change. 


57


Transformational change 

Transformational change is required for the sector to keep pace with the shifting energy paradigm and 

compete with global challenges. 

The sector must develop operating models that focus on new and innovative execution approaches to better 

leverage existing capacity. Increased automation is expected in future operations. As such, the energy resources 

sector needs to build on Australia’s highly regarded existing capabilities in, for example, remote operations and 

data analytics for process optimisation and decision making, to support operational and value chain optimisation. 

Increased Asian demand 

Opportunities exist for Australia to continue to act as a baseline energy source to meet the sustained and 

increasing demand from Asia. 

Development of alternate energy sources 

Australia also needs to expand its strengths in the development of alternative energy sources as it is well 

placed to assist developing nations meet their emissions reduction commitments by providing energy 

diversification and systems. 

Increase energy literacy 

A key action will be to increase ‘energy literacy’ of communities, governments, regulators, companies and 

other stakeholders. 

Exporter of clean technologies 

The disruption in the energy market presents opportunity and incentive for Australia to become an 

exporter of clean technologies to developing countries. Such technologies include low carbon emission 

technologies including HELE, hybrid power generation, battery storage and carbon capture and storage 

(where Australia’s geology provides a strong competitive advantage as demonstrated by projects such as 

the Gorgon development 34 which is considered the largest greenhouse gas mitigation project undertaken 

globally to inject into a dedicated geological storage formation). 

Being part of the development and adoption of these clean technologies is likely to help the sector win 

social licence, drive demand of our existing energy resource portfolio, and open up new markets such as 

gasification, production of hydrogen and efficiently utilising lower ranked coal deposits. 

In addition to participating in its development, Australian businesses and energy resource consumers 

need to become earlier adopters of these new technologies. Such adoption underwrites the development 

investment and demonstrates the technology’s viability to the broader global market. 

Ultimately, the establishment of innovative, integrated and networked resource solutions, with even 

broader potential disruption and upsides, will enable the Australian energy resources sector to respond to 

the increased disruption in the energy market into the future. 

An imperative to change 

Standing still is not an option. In the modern energy resources environment, continually exploring ways 

to change regulatory, business and operational models is required of all participants to simply remain 

competitive. As set out in this SCP, the Australian energy resources sector must find ways to: 

• Collaborate better in all ways, between peer organisations, vertically within value chains, across 

the traditional boundaries between industries and with research organisations where directed and 

undirected findings can help lift the productivity of the industry. 

• Address the regulatory burden that is restraining many areas of the energy resources sector from 

growing in the future while maintaining and enhancing community support for the industry. 

• Identify and explore new markets for energy resources sector products, for example, opportunities 

that fill marketplace needs or displace expensive import alternatives, such as expanding the use of 

LNG as a domestic source of energy. 





59

Current State 

of the Energy 


Australia ranks as one of the top three global exporters of liquefied natural 

gas, coal and uranium. 

The Australian energy resources sector involves the exploration, development 

and extraction of energy and fuels from oil, gas, coal and uranium, and 

related services. In Australia, it directly provides approximately 89,800 jobs 

with a Gross Value Add of $42 billion (2015/2016), (Note that the statistics 

quoted do not include related supply and services inputs). This value is 

expected to increase as the balance of the LNG facilities currently under 

construction comes online later this decade. 

The total value of Australia’s energy resources commodity exports was 

$60 billion in 2015/2016 1 . Forward forecasts of export earnings from 

energy resources are uncertain given current volatility in commodity prices; 

as at December 2016 the Office of the Chief Economist forecast that 

Australia’s energy exports will grow to $92 billion (in current Australian 

dollars) by 2016-17 1 . Australia’s energy resources exports in 2015/2016 

contributed more than a quarter of Australia’s merchandise export revenue, 

and around a fifth of Australia’s total export revenue 36 . 


Sector Gross Value Add and Employment 

OIL AND GAS 

Gross Value Add * 

26.8 B 

Direct Employment ** 

28,500 jobs 

THERMAL AND METALLURGICAL COAL MINING 


13.4 B 


48,600 jobs 


PETROLEUM AND COAL PRODUCT MANUFACTURING 


1.3 B 


8,500 jobs 

URANIUM 


0.7 B 


4,200 jobs35 

Notes 

* Gross Value Add in current prices, $AUD, 2015/2016 Source: ABS (2016) Australian System of National Accounts, Catalogue no. 5204 and 5206. 

** Four-quarter average to August 2016. This does not include employment through the value chain e.g. contractors/service/technology sector supporting energy resources. Source: 

ABS (2016) Australian Labour Market Statistics, cat. no. 6291 


61

THE CURRENT STATE OF THE ENERGY RESOURCES SECTOR 

Current challenges and responses 

Currently, the sector is facing considerable challenges: 

Challenge 

A fall in commodity 

prices from the high 

levels experienced 

over the past decade 

and marketplace 

competition from new 

sources of supply. 

High capital and 

operating costs 

adversely impacting 

productivity and 

competitiveness. 

Increased 

community scrutiny 

and opposition 

to industry 

development. 

Response 

The sector has responded aggressively to falling commodity prices and 

high capital and operating costs by reducing workforce numbers and 

deferring discretionary expenditure (including reducing exploration, 

operating costs and research funding, and deferring capital investment). 

The current prolonged period of lower commodity prices, which many 

commentators believe will run for at least another 12 to 18 months, 

will likely result in further expenditure restraint. The most telling and 

concerning impact of reduced discretionary spending has been reduced 

exploration programs. If this continues, it will delay new greenfield/ 

brownfield expansions and reduce the future supply of the vital energy 

resources required to fuel the Australian economy. 

The sector continues to actively address community opposition to new 

development. However, more needs to be done in this area. The building of 

community and stakeholder trust, and maintenance of a social licence, is a 

complex and multi-faceted challenge that requires collaboration and action 

by commonwealth, state and local governments, industry, and communities. 

The sector must help build national energy literacy, so that the wider 

community can more fully understand the need to have a broad, stable 

and reliable energy mix that is affordable, reliable, secure and sustainable, 

as well as the implications of not achieving such an energy mix. 

Dialogue between companies and the widening range of stakeholders will 

need to be more robust, sophisticated, collaborative and trust-based, in 

order to achieve a greater level of credibility, a stronger sense of legitimacy 

and, ultimately, community acceptance. 

Both the industry and the community require independent trusted sources 

with impartial information to inform the debate. The key considerations in 

the management of scientific data are: 

• How and by whom the data are interpreted for meaning and significance? 

• How the data are presented, and by whom? 

• How to decide enough data exists, and by whom? 

• How to make decisions, given that the data are always incomplete 

and imperfect? 

• How to gain community acceptance of risk-based decision making, 

and how to deal with incomplete imperfect data (or raise awareness 

that this is the normal societal modus operandi)? 

• The role of the commonwealth, state and local governments, and the 

interactions with industry and community. 



A changing global 

energy market, 

developing viability 

of renewables, and 

an international 

commitment to 

reducing carbon 

emissions. 

The changing energy market will be increasingly disrupted. The industry needs 

to find ways to leverage on new technology and maximise the value to the 

sector. It needs to research how to convert raw materials into accessible energy 

in cleaner ways so that it can contribute to Australia and the world’s low 

emissions future, and build greater social acceptability for energy resources. 

At the same time, there is a growing level of complexity in the global and 

domestic energy market. Where once the world’s energy needs were largely 

met by conventional carbon-based, hydro-electric and nuclear power, there 

has been a rapid and significant deployment of photovoltaic and other solar 

energy, wind and hydro-electric, along with a diverse emerging range of 

other renewable energy sources, such as geothermal and wave energy. 

All of these newer sources are now competing with and interfacing with 

the traditional sources, making for a far more complex energy market. 



63


Current trends 

Pressure 

Australia’s 

depreciated dollar 

Export earnings 

Exploration 

expenditure 

1. Capital 

expenditure 

Impact 

While operating conditions remain difficult, the depreciation of the Australian 

dollar has benefited Australian exporters. The Australian Dollar (AUD) has 

depreciated against the United States Dollar (USD) over the past few years 

from levels over USD$1 to around USD$0.75, levels last experienced in 2010. 

Expectations are for the Australian dollar to remain around this level. 

In 2015/2016, export earnings in all resource and energy commodities are 

estimated to have declined by eight per cent year-on-year to $157 billion, in 

addition to the 12 per cent decline in the previous year. The 2015/2016 fall 

includes a 12 per cent decrease in iron ore; 10 per cent decline in metallurgical 

coal; and eight per cent decline in thermal coal export earnings 36 . 

Future forecasts for resources and energy export earnings, even for the 

current 2016/2017 period, are uncertain in the current volatile global market 

and price conditions. Nevertheless, resources and energy export earnings 

are forecast to increase over the medium term, with a key factor being the 

expected increase in LNG export earnings. LNG export earnings are forecast 

to rise rapidly, underpinned by new LNG production capacity coming online. 

This includes recently commissioned plants in Queensland, the ramp up 

of production at the Gorgon project, and the completion of other projects 

currently under construction 1 . 

Private exploration expenditure in energy resources was reduced to half 

from 2014/2015 to 2015/2016, year-on-year. Deep cuts were evident across 

onshore and offshore petroleum exploration and coal exploration, as falling 

commodity prices disincentivise exploration 36, 37 . With most commodity prices 

forecast to remain low in the medium term, exploration expenditure appears 

unlikely to rebound within that timeframe. 

Capital expenditure for the mining sector was down 30 per cent year-on-year 

from 2014/2015 to 2015/2016, further to a 16 per cent decline the previous year. 

2. Employment Total resources industry employment dropped by 15 per cent or 40,000 jobs 

between 2013/2014 and 2014/2015 year-on-year, then remained at similar levels 

in 2015/2016 36 . The decline in employment is partly a result of the transition 

from the investment phase of the commodity boom to the production phase. 

However, in the wake of falling prices and low profitability, industry has also been 

consolidating and reducing expenditure on service providers, which has led to a 

fall in the workforce. Employment is not expected to rebound in the short-term, 

as a fall in construction labour due to reductions in capital expenditure will 

offset any increases in employment associated with growing production. 

Australia is still ranked very competitively as an investment location by the Fraser Institute. Their 2015 

study 38 , released in 2016, which looked at the broad mining industry, including minerals and coal, ranked 

Western Australia as the top jurisdiction for mining investment in the world. In the survey, which polled 

449 companies, the Northern Territory ranked seventh, South Australia tenth and Queensland sixteenth. 

However, while Australia’s ranking remained high, the research did find that policy attractiveness dropped 

in a number of states, due to shifting regulatory requirements, labour regulation, uncertainty of disputed 

land claims and trade barriers. 



Australian Oil and Gas Industry 

Following the rapid expansion phase of the past 10 years, the Australian oil and gas 

industry is poised to become the world’s largest LNG exporter by the end of this decade, 

with 21 LNG trains in operation. 

The Australian upstream oil and gas industry is made up of distinct offshore and onshore segments. 

The offshore fields are located off Western Australia, the Northern Territory and in the Victorian Bass 

Strait. Onshore operations are more widely distributed, with conventional operations in Western Australia, 

the Northern Territory, South Australia and Queensland, and unconventional production concentrated in 

Queensland’s coal seam gas fields and the smaller shale resources in South Australia. 

In the mid-stream segment, the extensive gas pipeline network in eastern Australia connects Queensland, 

New South Wales, Victoria and South Australia, mostly operated by the APA Group. Both Western 

Australia and the Northern Territory have their own gas distribution networks, with plans under 

development to connect the Northern Territory network to that of the eastern states at Mount Isa. 

Oil, condensate and Liquefied Petroleum Gas (LPG) 

Australia’s production of oil, condensate and LPG - which are flammable mixtures of hydrocarbon gases 

used as fuel in heating appliances, cooking equipment, and vehicles - has been trending down since its 

peak in 2000, while production of natural gas has more than doubled since 1998 39 . Australia is a net 

importer of crude oil and oil products, with the share of imports continuing to trend upwards. Historically 

Australia had a surplus in the trade of oil and gas until 2003/2004 but has been a net importer since 

then 39 . In 2015/2016, Australia had approximately $24 billion imports of crude oil and refined products 

against exports of $8 billion of equivalent products 36 . While the increase in the volume of LNG exports 

from the new LNG plants commencing production will offset the overall oil and gas trade imbalance, the 

nation’s dependency on imported oil products will remain for the foreseeable future. 


Figure 6: Australia’s oil fields and basins 


65


Gas and Liquefied Natural Gas (LNG) 

Australian gas production is forecast to increase from 81 billion cubic metres in 2015-16 to 128 billion 

cubic metres in 2017-18, an increase of 58 per cent. Conventional gas production is forecast to provide 

91 billion cubic metres or 70 per cent of the 2017-18 total, with coal seam gas expected to provide 30 

per cent of total Australian gas production by 2017-18 1 . 

Around half of Australia’s gas production is now produced for export. This share will increase as further 

LNG export capacity comes on line and ramps up over the next two years 1,10 . 

Figure 7: Australia’s gas industry, excluding shale gas 



Australia’s LNG industry is clustered in three areas – Karratha and Onslow in Western Australia’s Pilbara 

region, Darwin in the Northern Territory and at Gladstone in Queensland. Over half of Australia’s LNG 

export capacity (both existing capacity and capacity under construction) - around 49 million tonnes per 

annum - is located in Western Australia. Queensland comes next with about 25 million tonnes per annum 

of nameplate capacity, followed by the Northern Territory. 

Australia has significant shale gas potential, according to contingent and prospective resources estimates 

from Geoscience Australia 40 , Gas production from shale gas resources started in the Cooper Basin in 2012. 

Figure 8: Australia’s prospective natural and unconventional gas resources 



67


Oil and gas industry forecasts 

Australia is ranked eleventh in the world with proven gas reserves, and has significant petroleum 

resources and potential and undiscovered resources. The long-term growth in the Australian oil and gas 

industry depends on the level of exploration, but the recent decline in profitability, low commodity prices 

and rising cost of exploration have resulted in a reduction in the number of exploration wells drilled. 

Oil, LNG and condensate exports 

Forward forecasts of export earnings from oil products and LNG are uncertain given current volatility in 

global oil prices. As at December 2016, the Office of the Chief Economist expected the value of Australia’s 

exports of crude oil and condensates to be $6.2 billion in 2016/2017, increasing to $8.7 billion in 

2017/2018. For LNG, prices are expected to rise from around AUD$7 per gigajoule (GJ) in 2016/2017 

to around AUD$8 per GJ in 2017/2018. The pricing of LNG exports tends to be linked to the oil price, 

with a complex structure of time lags and caps to adjust the price payable for gas. Rising LNG prices 

and volumes are expected to lead to LNG export earnings increasing from $23.7 billion in 2016/2017 to 

$37 billion in 2017/2018 1 . 

New Australian liquefaction capacity will support global LNG market growth, with major sources of 

supply from Queensland Curtis LNG (QCLNG), Australia Pacific LNG (APLNG), Gladstone LNG (GLNG), 

Gorgon, Ichthys, Wheatstone and Prelude. Australian gas production and exports will grow, but sustained 

contract and spot price weakness will temper export values. 

Contribution to the Australian economy 

By 2020, the sector’s contribution to the national economy is expected to more than double to $65 billion, 

and tax paid by the sector will rise from $8.8 billion in 2012 to $13 billion 39 . The anticipated increase in 

natural gas exports over the next decade is driving the forecast of strong growth in the sector. It is estimated 

that by 2030, when production and prices are expected to stabilise, the oil and gas contribution to the 

Australian economy will be 2.6 per cent. After accounting for interlinkages with the rest of economy, the 

sector is projected to be around 3.5 per cent of national output. 

Figure 9: Historic pricing of Brent Crude 

140 

120 

100 

80 

60 

40 

20 

0 

1986 1996 2006 2016 

Data source – www.indexmundi.com 



Global factors 

Australia is set to overtake Qatar as the world’s largest LNG exporter, with the combined nameplate 

capacity of Australian projects expected to reach 87 million tonnes per annum once the remaining LNG 

projects under construction are completed. Most of these volumes are destined for the North-East Asian 

gas markets of Japan, Korea and China. 

The industry has significant global participation, with all the supermajors (Exxon, Shell, Chevron and BP) as 

well as six global majors being key industry investors. Australia hosts almost all major global industry service 

providers in every service segment including oilfield service companies (e.g. Halliburton, Schlumberger, Aker), 

EPC contractors (e.g. Fluor, KBR, Technip) and equipment manufacturers (e.g. GE Oil and Gas, Enerflex). 

However, profit margins for projects are likely to come under strain over the next few years due to: 

• Low oil prices relative to a few years ago, which are linked to LNG contract prices in the Asia-Pacific 

market; and 

• Supply additions, concentrated in Australia and the United States, that are likely to outstrip growth in 

demand. 

As a consequence, operators of Australian projects are expected to restrain capital expenditure and 

focus heavily on reducing operational costs for some time, with a view to improving operational margins. 

This is expected to include a very heavy focus on effective decision making and data analytics to support 

operational and value chain optimisation. However, the need to prepare for the next phase of supply to 

facilities cannot be overlooked. Operators will need to continue to explore and bring on new sources 

of supply to maintain production, but, will endeavour to do so at the lowest investment cost possible 

to achieve their objectives. These cost pressures are anticipated to drive the operators and their service 

providers to pursue improved productivity and innovative ideas. 



69


Australian Coal Industry 

The coal industry has a long-established presence and history in Australia, as one of the 

industries that helped build the nation. 

With 37 billion tonnes in black coal reserves, and about 375 million tonnes in annual exports (metallurgical 

and thermal coal), the Australian coal industry is the country’s second largest source of export revenue. 

Australia has nine per cent of the world’s recoverable black coal and 22 per cent of the world’s brown coal. 

Globally Australia is ranked fourth behind the United States, Russia and China in recoverable resources 41 . 

The Bowen Basin in Queensland and the Sydney Basin in New South Wales dominate coal production and 

contain 60 per cent of Australia’s recoverable black coal. Significant black coal resources are also found in 

the Surat, Clarence-Moreton and Galilee basins in Queensland and Gunnedah Basin in New South Wales. 

At 2015 rates of production, Australia’s black coal resources will support more than 110 years’ production 42 . 

The vast majority of the industry’s operational mines are in eastern New South Wales and central 

Queensland, which together account for nearly 98 per cent of annual black coal production. These mining 

operations are concentrated in the Sydney-Gunnedah Basin in New South Wales and the Bowen Basin in 

Queensland, with 80 per cent of production from open-cut mines. Most production in Queensland is of 

metallurgical coal 43 , whilst New South Wales production is predominantly thermal coal 44 . Additionally, 

there are over 20 new coal mines under consideration in Queensland alone 45 . 

Coal is exported primarily through terminals at Newcastle in New South Wales, and in Queensland 

through Hay Point, Gladstone and Abbot Point, together accounting for some 94 per cent of overall coal 

exports. Around 70 per cent of all Australian coal exports go to the Northeast Asian markets of Japan, 

China and Korea, with Taiwan and India the next two largest destinations by volume. 

Australia has approximately 24 per cent of the world’s recoverable brown coal, and is ranked second 

behind Russia in terms of brown coal reserves. All of Australia’s brown coal is located in Victoria 

with approximately 93 per cent in the Latrobe Valley. Significant tonnages of other lower rank coals 

(Subbituminous) exist in South Australia, Western Australia and New South Wales. This coal is largely 

undeveloped. Brown coal is mined and exclusively used for electricity generation and at current rates, 

reserves will support 1,000 years’ production 46 . 



Figure 10: Australia’s coal basins and ports 


As well as being a key export product, coal is also the mainstay of Australia’s domestic power generation, 

accounting for over 60 per cent of power generated across the country and for as much as 80 per cent of 

power generated in New South Wales and Victoria 10 . 

Analysis from the Queensland Resources Council and Wood Mackenzie in late 2015 47 indicated that over 

30 per cent of coal mines were running at a loss and not covering costs. 

As a result, coal producers have made substantial reductions to operating expenses and corporate overheads 

and are continuing to pursue savings within their operations 56 . However, a large proportion of coal producers’ 

costs are ex mine with rail, port, energy and water supply costs essentially fixed as take or pay. Losses would 

typically need to be greater than the take or pay commitments before a producer will opt to close a mine 

and incur the full liability for contract commitments and other associated costs such as rehabilitation. 

Coal exploration expenditure in Australia has steadily declined from levels at around $200 million a 

quarter in 2012 to under $40 million a quarter through most of 2016 1 . 

On the international stage, coal producers have been under extreme financial pressure. Companies such 

as Peabody, Glencore and Anglo American are restructuring coal operations. Large United States producers 

have filed for Chapter 11 Bankruptcy including Alpha Natural Resources (the largest metallurgical coal 

producer in the United States), Arch Coal, Patriot Coal, and Walter Energy. It should be noted that most have 

now restructured and continue to operate. 

In Australia, Rio Tinto, Anglo American and others are reweighing their coal portfolios. 

In addition to the financial pressures faced by coal producers, activist shareholders are applying growing 

and conflicting pressures by simultaneously demanding greater immediate returns on their investments in a 

traditionally long-term industry and also divesting investments in industries such as fossil fuels, particularly coal. 


71



With around 54 per cent of international traded volumes, Australia is the leading supplier in the seaborne 

metallurgical coal trade. Australia also holds a competitive position in the thermal coal market, 

supplying approximately 24 per cent of the global trade in thermal coal 1 . 

As a consequence of Asia’s rapid industrialisation, demand for high quality Australian coal is expected to 

continue to grow, with Australia anticipated to overtake Indonesia as the world’s largest coal exporter on 

a tonnage basis, by 2017. 

However, growing concern with climate change and commitments made by large coal consumers such 

as China and India to reduce carbon dioxide emissions at the COP21 summit in Paris, 2015, could 

potentially slow the growth of Australian thermal coal exports to these countries. 

The other key issue is the volatility of the international energy sector which has the ability to change 

the supply/demand profile and price in a very short space of time. This was evidenced with the Chinese 

Government decree to limit coal production to five day operations earlier in 2016. This had a major 

positive impact on export price. 

Figure 11: Historic thermal coal prices 

200 

150 

100 

50 

0 

1986 1996 2006 2016 


Coal industry forecasts 

Metallurgical coal 

After remaining steady through 2014, metallurgical spot prices declined significantly in the first half of 

2015. After further declines in spot prices in the first half of 2016, spot metallurgical coal prices rallied 

to five year highs by December 2016, reaching USD$311 a tonne. The boost in prices were mainly driven 

by restrictive domestic supply-side policies implemented by the Chinese Government on China’s coal and 

steel industries. Cuts in capacity led to increased import demand which put upward pressure on prices 1 . 

Sustained low prices encouraged several companies to announce plans to close capacity or reduce output 

(in North America and Australia). The profitability challenge is highlighted by the example of the sale of 

Isaac Plains coking coal mine in Bowen Basin for $1 (down from a 50 per cent value in 2012 of $430 

million). Australian production of metallurgical coal has been affected by low commodity prices, with 

Glencore, Peabody announcing reductions in output. However, given the latest spike in metallurgical coal 

prices, some companies have announced the reopening/restart of mines both in Australia and elsewhere, 

including Glencore’s Integra mine in New South Wales, and Grand Cache Coal’s, Grand Cache mine in 

Alberta, Canada 1 . 

In 2016/2017 metallurgical coal exports are forecast to increase 1.7 per cent to 191 million tonnes, 

compared to 2015/2016. Export earnings in 2016/2017 are forecast to nearly double relative to 

2015/2016, at AUD$40 billion 1 . 

In 2017/2018, Australia’s metallurgical coal exports are forecast to stay similar to 2015/2016, at 191 

million tonnes. However, export earnings are forecast to decline 33 per cent to AUD$27 billion, as prices 

decline from highs seen in late 2016 1 . 



Thermal coal 

Prior to the second half of 2016, thermal coal prices reached nearly 10 year lows. However, by mid-November 

2016, thermal coal prices rallied to more than four-year highs of USD$110 a tonne. The main driver for this 

price rally was Government mandated capacity cuts in China. These capacity cuts are believed to have led to 

a shortage in supply in China, putting upward pressure on prices and increasing import demand 1 . 

Australia’s thermal coal production in 2015/2016 was similar to 2014/2015 levels at 251 million tonnes. 

Thermal coal production is forecast to increase slightly to 252 million tonnes, in 2017/2018. Export volumes 

declined by two per cent to 200 million tonnes in 2015/16. Earnings from thermal coal exports declined by 

eight per cent to $14.7 billion due to lower prices. In 2016/2017 export volumes are forecast to increase 

3.6 per cent to 308 million tonnes, with export earnings forecast to increase 25 per cent to $18.4 billion. 

The forecast slight increase in export volumes in 2016-17 is largely driven by increased demand from 

China in the latter half of 2016, brought on by a warm summer and Government instigated capacity cuts, 

similar to those imposed on metallurgical coal. These increased Chinese demand factors from mid 2016 

also explain the significantly higher thermal coal prices forecast for 2016-17 1 . After peaking at about 

USD$108 per tonne in October 2016, the spot price has now settled at around USD$90 per tonne. This is 

up from a low of about USD$45 per tonne in late 2015. 

The most recent International Energy Agency (IEA) World Energy Outlook 49 notes that global coal demand 

declined in 2015 for the first time since the late 1990s, but in its central scenario the IEA projects that world 

demand for thermal coal for power generation will remain fairly flat over the next two decades. By 2040 the 

IEA expects increased coal demand for power generation in Southeast Asia and India to be offset by declining 

coal demand in China, the US and the EU. Despite the projected flat global consumption of thermal coal, an 

11 per cent increase in electricity output from coal-fired power generation is projected, reflecting increased fuel 

efficiency particularly from supercritical and ultrasupercritical power plant technologies. These efficiencies, along 

with an assumed modest start to carbon capture and storage, help keep projected greenhouse gas emissions 

from world coal fired power generation in 2040 close to today’s levels. The IEA projects that Australia’s 

coal production (thermal and metallurgical) will increase by around 14 per cent between 2014 and 2040. 


Brown coal 

In 2015 the Angelsea brown coal-fired power station on Victoria’s south coast closed, leaving the Low Yang, 

Yallourn and Hazelwood power stations operating in the Latrobe Valley. Hazelwood is also scheduled to 

close in March 2017 42 . In the near term the use of brown coal in Australia is expected to fall. 

Medium to long term scenarios for utilisation of Victoria’s brown coal resources will depend on the extent 

of availability of cost-effective technologies to cut greenhouse gas emissions from brown coal-fired 

electricity generation, notably through carbon capture and storage, and to potentially produce alternate 

fuels from brown coal such as dimethyl ether (DME) or hydrogen 50 . 


73


Australian Uranium Industry 

Australia is the world’s third largest supplier of uranium after Kazakhstan and Canada, 

and holds the largest proportion (around 30 per cent) of the global reasonably assured 

resources of uranium. 

While known deposits are spread across the majority of mainland Australia, around 80 per cent of 

Australia’s known uranium resources are found in South Australia. 

Australia has approximately 30 per cent of the world’s Reasonably Assured Resources of uranium and 

produces 11 per cent of global supply. Market prices have been steadily declining since 2011, with 

spot prices now well below the level required to encourage investment in new mines. Companies have 

delayed uranium projects that are uneconomic in the current climate. Production increased solidly in 

2015/2016 as Olympic Dam and ERA Ranger facilities returned to full operation after supply disruptions 

the previous year. Export earnings in 2015/2016 were $959 million 1 . 

The three producing mines are located at: Ranger in the Northern Territory which commenced operations 

in 1981, producing 1,500 tonnes annually which ceased underground mining due to poor economics 

but continues to process long term stockpiles through to 2021 when processing must cease after which 

the facility is to be decommissioned and revegetated by 2026; Olympic Dam in South Australia which 

commenced operations in 1988, producing 4,300 tonnes annually and is the largest uranium resource 

globally (note however, uranium is mined alongside copper, gold and silver operations); and Beverley/Four 

Mile in South Australia which commenced operations in 2000, producing 800 tonnes annually. A further 

mine, Honeymoon in South Australia was placed into care and maintenance in 2013. 

Figure 12: Australia’s uranium deposits and mines 



Notwithstanding the recent downturn in uranium demand, a number of potential mines in Western 

Australia have progressed though the necessary environmental approvals processes. Four new mines 

have now received State environmental approval. Two of these, Cameco’s Yeelirrie project and Toro’s 

Wiluna project extension which is centred on the Millipede and Lake Way deposits, are shallow calcrete 

hosted uranium deposits which will have low mining costs and will bring new extraction technologies to 

Australia. Currently Namibia is home to the only similar mine in the world. The other two are Cameco’s 

Kintyre project, which is a narrow pitchblende vein deposit and Vimy Resources Mulga Rock project, 

which consists of four poly-metallic deposits with commercial grades of contained uranium hosted in 

carbonaceous material. Both the Mulga Rocks and Yeelirrie projects have been recommended by the 

Western Australian Government for Commonwealth approval following EPA assessment. 

Uranium industry forecasts 

World growth in uranium demand 

Australia is well positioned to benefit from the growth in uranium demand as the World Energy Outlook 

predicts around 80 per cent growth in nuclear power by 2040 49 . Between the start of 2015 and late 

2016, 19 new nuclear reactors commenced operation (two thirds of them in China), and construction 

started on nine new reactors in the same period. Currently, some 64 GW of new nuclear capacity is under 

construction, principally in China (one third) but also in Russia, the United Arab Emirates, the United 

States, Korea, the European union and India 57 . There was also a tentative restart to the Japanese nuclear 

power industry in 2015 to offset the country’s high reliance on fossil fuels. In 2015, two reactors were 

restarted and a third in 2016. There are a further 23 reactors with applications awaiting approval to 

restart. The process has been slow due to political and legal decisions and effects of public opinion. 

Over the next two years, up to a further six reactors are expected to restart. 

Globally in 2016 there are over 60 reactors under construction in 15 countries including two in Japan 51 . 

China is expected to expand its strategic uranium reserve as part of its five-year plan, and currently has 

36 reactors with 20 under construction. 


Innovation areas 

Key areas to bring innovation into the uranium industry are an improved understanding of in-situ 

recovery; improved understanding of the saline groundwater environment; and improved processing 

technology to increase recovery from calcrete hosted deposits. 

Exploration 

Exploration for new uranium deposits has slowed over the past four years but there is much unexplored 

potential in Australia. The focus for improved methods of exploration undertaken by Geoscience Australia, 

the Governments of South Australia and Western Australia and the Deep Exploration Technologies CRC 52 

should soon deliver measurable cost benefits for exploration in uranium prospective greenfields areas. 

Storage and disposal of used nuclear fuel 

The findings of the South Australian Nuclear Fuel Cycle Royal Commission 53 identified that an expansion 

of uranium mining has the potential to be economically beneficial, but the most significant opportunity is 

storage and disposal of used nuclear fuel. In its response on the Royal Commission’s recommendations 54 , 

the South Australian Government supports the recommendations to grow the mining sector through 

investment and streamlining of approvals, as well as ensuring responsibility for remediation. However, 

the South Australian Government considers that more investigation needs to be undertaken on the 

establishment of a used nuclear fuel and intermediate level waste storage and disposal facility. 

This is likely to deliver substantial economic benefits to the South Australian community. However, the 

consideration of similar storage and disposal of high level nuclear material may meet with community 

resistance as demonstrated by the findings of the Citizen’s Jury on Nuclear Waste 55 . 

In a separate process, the Australian Government has committed to the establishment of a National 

Radioactive Waste Management facility. The National Radioactive Waste Management Act 2012 only 

provides for an Australian facility to be established exclusively for disposal of Australia’s low-level 

radioactive waste and interim storage of our own limited holdings of intermediate level waste. 


75


Legislation and approvals process 

The South Australian community has longstanding experience with mining, including uranium mining. 

Uranium industry participants are well aware of the importance of community consent to maintaining 

current operations, and the significance of broader support to any new proposal. No additional measures 

to further regulate community consent or community engagement with respect to new uranium mining 

projects appear required. 

The current Western Australian Government has worked with the South Australian Government to ensure 

the necessary legislation and approvals processes and learnings are in place to safely manage a new 

uranium industry development in that State. 

Prices 

Prices as indicated in Figure 13 held up better than other commodities in 2015, but slumped to historic lows of 

USD$18.75 per pound in October 2016, well short of high prices established in 2007 (USD$138 per pound). 


All Australian uranium production is currently exported, under stringent safeguards agreements, to 

a range of countries with the United States as the largest single destination. Recently the Australian 

government has concluded new nuclear cooperation agreements with the UAE, Ukraine and India, 

providing new market opportunities for Australian producers. 

Other large destination countries have traditionally included Japan and South Korea, where demand has 

significantly declined following the Fukushima Daiichi incident in 2011, when nuclear plants were placed 

in long- term shut down whilst safety reviews were undertaken to determine whether plants are to be 

put back into service or permanently shut down. 

The nuclear shut down in Japan, and moves to reduce nuclear power generation in other countries such 

as Germany, has resulted in a global over-supply which placed downward pressure on uranium prices. 

Nevertheless, demand for Australian uranium is expected to increase with significant nuclear power 

growth anticipated in China, India, Russia and the United Kingdom over the next decade. 

Figure 13: Historic uranium pricing 

140 

120 

100 

80 

60 

40 

20 

0 

1986 1996 2006 2016 




Transition from Rapid Growth 

The Australian energy resources sector is coming to the end of an unprecedented 

period of rapid growth. Within the energy resources sector this growth has been most 

apparent in the coal and oil and gas industries. 

• The coal industry has added around 25 per cent of extra production in the decade since 2005. 

• In oil and gas, an entire, world first industry of converting coal seam gas to LNG has been built in 

Queensland. Darwin is completing the construction of the INPEX Ichthys facility and Western Australia 

has seen the construction of multiple new LNG facilities at Pluto, Gorgon and Wheatstone along with 

the ongoing development of the Shell Prelude FLNG facility. 

• During the same period, the uranium industry has worked to develop several new projects and has the 

potential to add substantial value to the national economy should they proceed with additional opportunities, 

including the development of a nuclear waste storage and disposal facility in South Australia 53 . While 

some of these projects may take many years to develop, they offer opportunities for growth of the sector. 

Construction boom 

This boom period sees Australia becoming the world’s leading producer of LNG by the end of this decade 

but has placed enormous pressure on virtually every link of the energy industry supply chain. Undertaking 

multiple multi-billion dollar projects concurrently in one sector alone would have been a major challenge, 

but this expansion coincided with similar expansions in other sectors such as iron ore mining. 

During this period of expansion, many projects were delivered late and substantially over budget into a 

declining market, leaving the operators of the facilities facing the challenges of bringing their new plant 

into production as quickly as possible to begin recouping their investment but with the additional hurdle 

of a substantially reduced market for their products. 

These same boom times occurred at a time of rapid globalisation of services, with much of the equipment, 

systems and knowledge that contributed to these new developments being drawn from overseas. 

This globalisation of the industry placed additional and previously unforeseen pressures on domestic 

suppliers who struggled to compete. 


Operations and maintenance 

The new resource facilities in the coal, oil and gas industries will operate for many years into the future. 

During their operational lifetime they will require ongoing maintenance, regular shutdowns and turnarounds 

to ensure they operate at peak performance. They will employ thousands of personnel and engage with 

all sectors of the supply chain. The LNG industry will contribute around $156 billion and the coal industry 

some $97 billion in direct tax revenue to state and federal governments between 2015 and 2030. 

Additional indirect tax of around $70 billion from the LNG industry and $82 billion from the coal industry 

will accrue via wages, taxes on other business inputs and second order business opportunities. 

The primary objectives of the operators of these facilities are to run the plants safely and as efficiently as possible. 

To remain competitive will require operators to identify, trial and exploit new ideas and new technologies, many of 

which will be accessed through third parties. For many operators, their own internal systems and processes 

often inhibit them from accessing the newest technologies. Instead, they wait for those in other jurisdictions 

to be the first movers (with attendant risks), but relinquishing the opportunity to gain first mover advantage. 

With the construction phase virtually over, many local industries and communities are looking to assist in 

the start-up, optimisation and running of the new facilities. Industries must build long term relationships 

with operators and, through them develop sustainable industries that will deliver highly skilled, wellpaying 

careers for their workforce. 

Long tail period 

next phase, the long tail after the project boom, offers many of the potential opportunities for Australian 

industry. Although the operational life of these facilities is long, the key period for the broader industry and 

community to collaborate on finding the best ways to achieve these opportunities are in the short term. 


77

Sector 

Benchmarking 

To fully understand the impact of both NERA’s and the broader industry’s 

activities it is important that consistent benchmarking is undertaken of the 

energy resources sector and the industries within it. Such benchmarking 

allows the sector to identify weaknesses to focus on, and to better 

understand its international competitiveness. As such, NERA commissioned 

Accenture to produce a series of sector competitiveness assessments, of 

which the oil and gas and the coal sectors have been completed at the 

time of writing this SCP. 

The assessments focus on the industries of oil and gas and coal and follow 

a common methodology. A number of similar issues were identified across 

these energy resources industries. The assessment provides statistical backing 

to NERA’s strategic goals, allowing for an empirical measure of the progress 

of the sector as the recommendations of this SCP are put into action. 


SECTOR BENCHMARKING 

Methodology 

The ICA comprises two core components. A framework for measuring competitiveness (ICF), and an index 

score of country competitiveness (ICS). The ICS is displayed in a dashboard to illustrate Australia’s relative 

performance (Dashboard), and a leader board to rank the world’s most competitive industries (Leader Board). 

To assess competitiveness effectively, a clear definition of the scope of the measurement is required. 

The business dictionary defines competitiveness as: 

“Ability of a firm, Industry, or a nation to offer products and services that meet the quality standards of 

the local and world markets at prices that are competitive and provide adequate returns on the resources 

employed or consumed in producing them” 56 

This analysis considers competitiveness of the industry in the context of a system of interdependent 

entities who participate in the industry. Within this context, the extent to which a single actor can 

excel in terms of overall performance is dependent the capacity and capability of the entire system. 

The competitiveness framework considers the four phases of the value chain; Exploration, Development, 

Production and Abandonment. It also considers operators, supply chain entities (including entities that 

manufacture, and or deliver products and services), as well as the industry regulatory environment. 

To identify a collectively exhaustive list of factors that influence industry competitiveness, Value Driver 

Trees (VDTs) were created for each of the four phases of the value chain, addressing four key questions. 

• Capacity – Does the industry have the required skills, infrastructure and equipment to produce its 

product to meet market demand? 

• Capability – Does the industry, collectively, have the capability (labour, capital and technology) to 

deliver energy to the market at market competitive prices? 

• Regulatory Environment – Is the regulatory environment contributing to and enabling the success 

of the industry? 

• Political and Social Environment – Are the political and social environments conducive to and 

supportive of the industry? 

These broad drivers are further broken down to specific metric level data points. A high-level breakdown 

of the VDT is shown in Figure 14. 


Figure 14: ICF value driver tree 

Capacity 

Infrastructure 

Assets 

Labour Force 

Industry 

Competitiveness 

Capability 

Regulatory 

Environment 

Capital 

Knowledge & IP 

Taxation System 

Regulation 

Political and Social 

Environment 

Industrial Relations 

Public (Social License to Operate) 


79


Oil and Gas Industry Competitiveness 

Assessment 2016 

The oil and gas ICA is based on research conducted over the course of ten weeks from May to July 

2016 to create an industry relevant measure of oil and gas industry competitiveness that is robust and 

repeatable, allowing improvements to be tracked over future releases. 

This Australian Oil and Gas Industry Competitiveness Assessment (ICA), includes an Industry Competitiveness 

Framework (ICF) and Industry Competitiveness Score (ICS). The score provides data-driven analysis 

of how to effectively allocate and direct effort to deliver maximum industry impact. It also presents a 

baseline against which the industry can measure its performance in future releases. This report outlines 

the methodology utilised and the results and insights gained from the ICS. 

OIL AND GAS INDUSTRY PEER GROUP AND 

DATASETS 

The competitiveness measurement requires a comparison of Australia’s performance against a peer 

group of oil and gas producers. This peer group was selected based on two criteria: market size and data 

availability. Countries were included if they had a greater than 0.2 per cent share of world production for 

either oil or gas and if they were captured in more than 80 per cent of the data sources. This resulted in 

an overall peer group of 32 countries. 

Data was collected primarily through secondary research from both public and proprietary data sources. 

The ICS uses 52 specific data points from 14 different sources across all 32 countries. All data is taken 

from 2015 data sources, although some metrics utilise longer periods. Key data sources used include; 

Wood Mackenzie 57 , International Gas Union (IGU) 58 , International Association of Oil and Gas Producers 

(IOGP) 59 , the Fraser Institute Global Petroleum Survey 60 , and Accenture’s “Ready or Not?” Study 61 . 

Where data on a specific industry group or value chain phase were not available, suitable proxy data 

points were used. Country specific data and surveys have also been used throughout the report to 

support findings of the ICS; however, these are not included in the competitiveness score. 

INDUSTRY COMPETITIVENESS SCORE 

To calculate the ICS, data points from the VDTs were logically split into eight components. Measures specific 

to a single phase of the value chain were included in their respective phase. Metrics that ran across 

the value chain were split into four industry growth enablers: Supply Chain; Research and Innovation; 

Workforce; and Government and Public Involvement. These growth enablers represent core capabilities, 

essential to the operation of a successful oil and gas industry. The structure is illustrated in Figure 15. 

Figure 15: ICS structure 

Value Chain Exploration Development Production Abandonment 

Supply Chain and Services 

Industry 

Growth 

Enables 

Research and Innovation 

Workforce 

Government and Public Involvement 



The combination of the 52 separate data points into a single score of overall industry competitiveness is 

achieved in three steps: 

1. All data points are scored relative to the peer group, between zero and ten, (where zero represents 

the weakest performance, and 10 the maximum achievable score). 

2. A weighted average of data scores is taken at the category level (i.e. Exploration or Workforce), 

generating eight scores for each country. 

3. The overall ICS is calculated as a weighted average of the eight components. 

This approach takes into consideration the broad definition of competitiveness used throughout this 

assessment. It also accounts for the interdependencies in the industry between the growth drivers and 

the different phases of the value chain. 

Figure 16: Oil and gas competitiveness dashboard 

Industry Competitiveness 

MEDIAN 

6.4 

AUSTRALIA 

BEST (USA) 

Supply Chain 

6.4 

MEDIAN AUSTRALIA BEST 

Research 

& Innovation 

6.4 


Industry Growth Enablers 

Workforce 

6.2 


Government 

& Public 

6.1 


Exploration Development & Execution Production Abandonment 


7.5 5.2 7.4 

MEDIAN AUSTRALIA BEST MEDIAN AUSTRALIA BEST 


1.8 


From the baseline results, which are illustrated in Figure 16, Australia has an overall competitiveness score 

of 6.4 out of 10, ranking it seventh on the leader board of global peers, above the world median of 5.6, 

and lagging behind the world best, United States, at 7.3. The analysis finds that improvements across four 

priority areas can improve this score by 15 per cent, in line with the world’s best, and adding approximately 

$5 billion in value to the industry {note, this figure of $5 billion is determined by applying the 15 per cent 

potential improvements to the oil and gas share of the nation’s GDP as illustrated in Figure 17. 

NERA has commissioned further analysis of Australia’s exploration competitiveness 

This Assessment ranks Australia as the most competitive country in the Exploration and Appraisal phase, 

with a score of 7.5, above the global median of 5.2. This is a combination score for both conventional 

and unconventional exploration and appraisal wells. Australia drills wells efficiently and effectively, but 

the large number of unconventional wells introduces a bias into the statistical score so the total score 

does not accurately reflect the real exploration state of play in Australia and does not analyse the exact 

nature of exploration or the potential of unrealised exploration. Further, due to low commodity prices and 

the high cost environment in Australia, exploration activity has almost stopped in the last 18 months. 

To address the above, NERA has commissioned Accenture to undertake further analysis of Australia’s 

exploration and appraisal performance, reflecting conventional and unconventional wells and will provide 

a report on this over the next months. 


81


Figure 17: Value of potential improvements in competitiveness of Australian oil and gas sector 

$1.6 T 

100% 

Australian GDP 

(2014 - 2015) 

$33.3 B 

2.05% 

O&G share GDP 

$5 B 

ICA Improvement opportunity 

(15% of O&G GDP share) 

Legend: T = Trillion B = Billion, O&G = Oil and gas, GDP = Gross domestic product 

According to the ICS, although Australia ranks first in the world in the Exploration phase, in the Execution 

(design and construction of new facilities), Production and Abandonment phases, the country ranks at, or 

below the world median. For the industry to be truly competitive, excellence must run through the entire 

value chain. Importantly for Australia, the industry is shifting from Execution to Production: consequently, 

the focus should primarily be on improving operational performance, with a view to building capability 

for the Abandonment phase. 

To achieve improvements in Australia’s overall industry competitiveness, four priority areas are identified 

where changes in the short-term have the ability to affect the country’s performance: 

• Supply chain: Collaboration between operators and service providers to share resources and 

infrastructure, as well as setting up regional supply hubs, could see Australia overcome many of its 

structural supply chain disadvantages. 

• Research and innovation: Increased collaboration between universities and industry, combined 

with a focus on commercialisation of research would see Australia become a world leader in oil and 

gas research and innovation. 

• Workforce: Investing in building local capability for the Production and Abandonment phases, 

so that Australia’s workforce maintains its high quality. 

• Regulatory reform: Increasing engagement between industry and government to reduce the 

“red tape” that adds costs and extends timelines within the industry. 

The ICS provides a comprehensive, data-driven assessment of the Australian Oil and Gas industry from 

a global viewpoint. The results identify numerous areas for more rigorous study and suggest several 

innovative and collaborative improvements, that will have a dramatic impact on industry competitiveness 

if implemented. In future years, the ICS will provide a solid baseline against which the industry can 

measure improvement. 



PRIORITY AREAS AND OPPORTUNITIES 

The analysis considers the four phases of the value chain, and identifies a number of industry improvements 

that can boost Australia’s competitiveness. These ideas have been grouped into four priority areas: 

• Supply Chain; 

• Research and Innovation; 

• Work Force; and 

• Regulatory Reform. 

The analysis suggests that by focusing on innovative and collaborative solutions within these priority 

areas, a 15 per cent increase in the competitiveness score is achievable. This would place Australia on par 

with the current world’s best and capture approximately $5 billion per annum in industry value 62 . 

These priority areas focus on potential improvements achievable within the short term through an industry 

wide approach to enhancing competitiveness. An “others” category is also included to capture potential 

improvements outside the four priority areas. There are also areas that the industry is either not able to 

influence, such as geographical remoteness, or will not be able to improve in the near term, such as the 

high cost of the Australian labour force. 

Detailed modelling of the opportunities was conducted using the Dashboard at the metric level. The 

Dashboard allows for detailed scenario modelling, with a 15 per cent increase representing the short term 

plausible scenario. Longer term changes are harder to forecast, however, improvements are potentially much 

greater. Figure 18 displays the possible increases across each measured category and shows how Australia 

could move to be on par with the current most competitive oil and gas producer in the world, United States. 

Figure 18: Scenario modelling - Australian 15 per cent decrease 

Competitiveness Score 

7.5 

6.5 

4.57% 

1.86% 

3.34% 

3.23% 

1.92% 


5.5 

Australia 

(Current) 

Supply 

Chain 

Research and 

Innovation 

Work 

Force 

Regulatory 

Reform 

Others 

Australia 

(Potential 

World Best) 


83


Supply Chain 

6.4 


Supply chain results and opportunities 

Australian oil and gas industry score 

Australia’s Supply Chain score of 6.4 places the country in the third quartile, leaving significant room for 

improvement, while the world’s best, Netherlands, scores 8.0. Performance of the supply chain affects the 

industry over all four phases of the value chain, consequently, improvements can deliver major impact. 

Analysis suggests that, of the five categories, supply chain improvements and innovations will have the 

biggest impact on overall competitiveness, with a potential increase in the score of 4.57 per cent. 

Rationale for the score 

Australia has structural characteristics that hinder the country’s ability to compete with the world’s best, 

namely, the size and age of the industry, and the remote and challenging environments in which most 

operations are situated. In recent years, supply chain improvements have focused on procurement processes. 

How we could improve the score 

Going forward, major gains to industry competitiveness will come from sharing of resources, and finding 

innovative solutions to alleviate structural disadvantages. Some include: 

• Learning from the United Kingdom oil and gas industry that established the Oil and Gas Authority 63 . 

The Authority is tasked with working with government and industry to ensure the United Kingdom gets 

the maximum economic benefit from its oil and gas reserves. It was established in response to identified 

challenges facing the sector in the North Sea and is pursuing strategies to enhance the value of 

the sector. The CRINE initiative, which created a single prequalification and procurement process, 

consistent throughout the industry, if implemented in Australia, could unlock enormous value 71 . 

• Finding collaborative solutions to the size and geography of the Australian market. Industry operators 

should work towards sharing infrastructure and developing regional “hubs” to better manage and 

streamline the supply chain process. 

• Investing in advanced manufacturing, which provides an enormous opportunity in the Development 

and Production phase. The industry should explore opportunities from trialling technologies and 

advanced manufacturing techniques, creating a technology value proposition to support the broader 

domestic value chain. 

Industry impact 

The industry must find innovative and collaborative solutions to overcome the structural disadvantages 

inherent to Australia. Improvements in this area provide the biggest potential impact on Australia’s 

competitiveness. 

Research 

& Innovation 

6.4 


Research and innovation results and opportunities 


Australia performs well in the Research and Innovation score, well above the world median of 3.7. 


This result runs contrary to popular perception. However, rather than a sign of Australia’s strong 

performance in this area, this reflects the poor state of research and innovation in many other oil and 

gas producing nations. Australia’s score is still far below the world’s best: the United States, the United 

Kingdom, and the Netherlands. 




Improvements in Research and Innovation will have flow on effects to other priority areas and the 

industry. Those changes specific to Research and Innovation capability can boost overall competitiveness 

by around two per cent. Achievable changes in the near term include: 

• Increasing engagement between industry operators, universities and research institutions. Universities 

and research institutes can play a larger role in developing innovative solutions to solve the 

latest industry problems. Industry participants should collaborate more effectively to unlock this 

underutilised resource. 

• Improving the commercialisation of research in Australia to find ways of turning innovative ideas 

across the entire value chain into commercial successes. 

• Building world-class data analytics capability. Australia has some of the world’s most advanced 

production facilities. Data analytics needs to be used within these assets to find innovative ways to 

improve production efficiency. Collaboration is essential as this is a new set of skills for the industry. 

• Investing in new and innovative methods of reducing the cost and difficulty of decommissioning 

fields. Abandonment represents a significant liability for the industry if current technology is used. 


A focus on building a successful research and innovation capability will have significant benefits for the 

rest of the industry. While NERA will pursue building a stronger research and innovation mindset, the 

industry needs to support this work to translate opportunities into tangible results. 

Workforce results and opportunities 


The measure of workforce competitiveness considers both cost and quality. Australia scores 6.2, behind 

the world’s best, China, with a score of 8.3. 


The balance between cost and quality is vital. While Australia’s costs are among the highest in the 

world, the current quality is of a high standard. Across the value chain, improvements in the capability of 

Australia’s workforce have the potential to boost the overall competitiveness score by 3.34 per cent. 


As Australia’s industry moves from the Execution phase into Production and eventually Abandonment, 

there are significant risks and opportunities. The country’s workforce must capitalise on this transition and 

strive to become the world leader in oil and gas operations. Key changes to achieve this goal include: 

• Investing in focused training and education to ensure the industry is prepared for the Production 

phase. Particularly in maintenance and technical operational knowledge. 

• Improving organisational structures to limit the level of overheads. Australia has seen some of the 

world’s highest execution costs in the recent construction boom. If new greenfield projects are to 

happen, operators must engage the construction workforce and ensure they are appropriately skilled 

to deliver projects on budget and on schedule. 

• Building and scaling abandonment and decommissioning capability. This could include forming 

partnerships with organisations outside of Australia and undertaking exchange programs to build 

local capability. 


A high-quality workforce is essential to a competitive oil and gas industry. As the industry moves from 

execution to operations, maintaining and improving Australia’s workforce competitiveness is paramount. 

Workforce 

6.2 




85


Government 

& Public 

6.1 


Regulatory reform results and opportunities 


Australia’s Government and Public Involvement score is 6.1, which is comparable to the world median, 

and provides ample room for improvement. Australia performs very well in the government policy and 

perception area: however, the regulatory component is a key area of weakness and presents the greatest 

opportunity for overall improvement. Changes here could add 3.23 per cent to overall competitiveness, 

the second largest in this analysis. 


Complexity, duplication and “red tape” increase costs and extend timeframes for all participants. While 

some work has been done to improve the situation, if Australia wishes to become a leader in the industry, 

there is a pressing need for the regulatory bodies and industry stakeholders to work together more closely. 


Specific potential improvements include: 

• Streamlining regulatory statutes and agencies to reduce the uncertainty surrounding regulation. There 

are approximately 150 statutes and more than 50 agencies regulating the oil and gas industry 65 . 

• Providing clear directives on environmental regulation. This area is currently a significant deterrent to 

investment in Australia. The state and federal governments must end the coal seam gas debate so the 

industry can move forward with certainty. 

• Revising the industrial relations framework. Seventy-five per cent of industry stakeholders reported 

feeling the country has an inflexible industrial relations framework 61 . {Note – industrial relations do 

not form part of NERA’s role} 

• Providing constructive and tangible feedback from industry. Government and regulatory bodies need 

to do their part by engaging with industry stakeholders to understand the voice of the customer. 


Both industry and government have a common goal, to maximise value for Australia. There is significant 

benefit to be gained from collaborating and improving competitiveness within this area. 

Other Opportunities 

Cost cutting 

Industry operators have spent the past two years slashing costs and reducing workforce numbers. 

While the cost decreases have allowed operators to stay profitable, it is not a sustainable option and 

does not help to build Australia’s long term competitive edge. 

Operators need to continuously improve and streamline their operations. There is added benefit to 

increase competitiveness in doing so by collaborating with other operators, suppliers and stakeholders. 

A significant focus has been placed on these forms of initiatives, so continued effort will provide limited 

returns, made evident by the 1.92 per cent improvement found in the ICS analysis. 

Public perception 

Public perception and the Social Licence to Operate (SLO) are a vital component of today’s oil and gas 

industry. Oil and gas companies cannot function sustainably without the backing of the society in which 

they operate. Unfortunately, there is currently no reliable data source to measure SLO competitiveness 

across a broad range of countries on a yearly basis. 

Data from the World Bank Public Perceptions Survey on Extractive Industries 73 found that, in Australia, 

41 per cent believe the industry does not have a positive impact on the environment and 24 per cent 

believe the industry does not have a positive impact on local communities. While this data suggests 

Australia has room for improvement, without a global data set it is not possible to understand the 

country’s relative performance. The industry should collaborate to define measurable KPIs, and identify 

opportunities to increase the public’s trust in oil and gas companies. 



Coal Industry Competitiveness 

Assessment 2016 

The Australian Coal Industry Competitiveness Assessment includes an Industry Competitiveness 

Framework (ICF) and Industry Competitiveness Score (ICS). The score results and findings are based on 

research conducted over the course of ten weeks from October to December 2016. The objective was to 

create an industry relevant measure of the coal industry competitiveness that was robust and repeatable, 

allowing improvements to be tracked over future releases. 

COAL INDUSTRY PEER GROUP AND DATASETS 

The competitiveness assessment requires a comparison of Australia’s performance against a peer group of 

coal producers and exporters. This peer group was selected based on four criteria; market share, growth 

outlook, industry structure within the country and data availability. Countries were included if they had a 

greater than 0.5 per cent share of world production or a significant year-on-year growth forecast of the coal 

industry (i.e. greater than 10 per cent), represented a sizeable share of GDP, and if they were captured in 

more than 80 per cent of the data sources. The assessment focused on world black coal production; as a 

result, lower ranked coals were excluded. This resulted in a peer group of 10 countries. 

The peer group of 10 countries had a combined share of 85.2 per cent of world black coal production in 

2015, making it a strong representation of the coal industry globally. Noticeably, India, which produces 

9.5 per cent of the world’s coal, is absent from the peer group due to the lack of sufficient data. Had 

India been included in the peer group, the combined group would have accounted for 94.7 per cent of 

world production. 

Data was collected primarily through secondary research from both public and proprietary data sources. 

The ICS uses 75 specific data points from a multitude of reputable sources across all 10 countries. 

All data is taken from 2015 data sources, although some metrics utilise longer periods. Key data sources 

used include; Wood Mackenzie, Metalytics, Fraser Institute, World Economic Forum, and Accenture’s 

internal research. The study uses data in 2015 United States Dollars (USD) with an exchange rate of 

Australian Dollar (AUD) to USD of 0.75 applied where applicable. Where data on a specific industry group 

or value chain phase was not available, suitable proxy data points were used. 



87


INDUSTRY COMPETITIVENESS SCORE 

To calculate the ICS, data points from the Value Driver Tree (VDT) shown in Figure 14 above were logically 

split into eight pillars of competitiveness, which fall under two categories: 

• Industry Value Chain – activities performed by the industry to deliver a valuable product or service 

to the market. 

• Industry Growth Enablers – activities performed to enable and support the industry to deliver a 

valuable product or service to the market. 

Measures specific to a single phase of the value chain were included in their respective phase. Metrics 

that ran across the value chain were split into the four industry growth enablers – Supply Chain, Research 

and Innovation, Workforce, and Government and Public Involvement. These growth enablers represent core 

capability, essential to the operation of a successful coal industry. The structure is illustrated in Figure 19. 

Figure 19: Coal industry ICS structure 

Value Chain 

Exploration & 

Development 

Extraction & 

Production 

Coal 

Transportation 

Closure & 

Rehabilitation 

Supply Chain and Services 

Industry 

Growth 

Enables 

Research and Innovation 

Workforce 

Government and Public Involvement 

The combination of the 75 separate data points into a single score of overall industry competitiveness is 

achieved in four steps: 

1. All data points are scored relative to the peer group, between zero and 10, (where zero represents 

the weakest performance and 10 represents the maximum achievable score). 

2. Where possible metrics are broken down into different production types (i.e. underground versus 

surface mining, and thermal versus metallurgical coal), generating up to four sub-scores for each 

metric. Each country is then given a weighted average of each sub-score based on the prevalence of 

that production type within the country. 

3. A weighted average of data scores is taken for each pillar (i.e. Exploration and Development or 

Workforce), generating eight scores for each country. 

4. The overall ICS is calculated as a weighted average of the eight pillars. 

The overall approach to calculate the ICS takes into consideration the broad definition of competitiveness 

used throughout this assessment. It also accounts for the interdependencies in the industry between the 

growth enablers and the different phases of the value chain. 



Figure 20: Coal industry competitiveness dashboard 

Industry Competitiveness 

Industry Growth Enablers 

MEDIAN 

AUSTRALIA 

BEST (CHINA) 

Supply Chain 

6.4 


Workforce 

5.2 


5.8 

Research 

& Innovation 

7.1 


Government 

& Public 

5.4 


Exploration & 

Development 

4.7 

Extraction & 

Production 

5.0 

Coal 

Transportation 

8.4 

MEDIAN AUSTRALIA BEST MEDIAN AUSTRALIA BEST 


*US$3.4 billion excludes establishing landform and revegetation costs 

Closure & 

Rehabilitation 

US$3.4b * 

Estimated Australian mine 

closure liability to 2045 for 

currently operating mines 

From the analysis completed and shown in Figure 20, Australia has an Industry Competitiveness Score 

of 5.8 out of 10, behind the world’s best, China, and marginally exceeding the world average of 5.4. 

Australia performs strongly in the coal transportation phase of the value chain, with a score of 8.4, and 

also performs better than the world average in three of the four industry growth enablers. However, weak 

results in both the Exploration and Development and the Extraction and Production phases ultimately 

undermine the country’s overall competitiveness. 

China leads the ICS due to having one of the lowest costs across the value chain. China is the largest 

consumer and producer of coal in the world and ranks first in the Exploration and Development and Coal 

Transportation phases, and third in the Extraction and Production phase. 

Figure 21, presents the ICS leader board, where Australia ranks as the world’s third most competitive coal 

producing nation. While Australia ranks only slightly above average, the spread of scores across the peer 

group is low. 

Analysis of the results suggest this is because no single country performs consistently well across all 

eight pillars of competitiveness. For example, Canada, ranked eighth, scores very highly in the industry 

growth enabler pillars (i.e. Supply Chain, Research and Innovation, Workforce, and Government and 

Public Involvement); however, it is among the worst performers in the Extraction and Production and 

Coal Transportation pillars. 

These results suggest all 10 countries within the peer group have significant room for improvement and 

that, with industry commitment and policy support, Australia has the opportunity to significantly increase 

its competitiveness ranking. 


Figure 21: Coal industry competitiveness leader board 

1 China 6 Indonesia 

2 South Africa 7 Colombia 

3 Australia 8 Canada 

4 United States 9 Vietnam 

5 Russia 10 Mozambique 


89


PRIORITY AREAS AND OPPORTUNITIES 

Implementing practical, innovative and collaborative solutions across key priority areas, 

will make Australia one of the most competitive and sustainable coal producing nations in 

the world. 

Industry improvements and opportunities have the potential to boost Australia’s competitiveness and add 

significant value to the industry and economy. These ideas have been grouped into four major priority areas: 

• Supply Chain; 

• Research and Innovation; 

• Work Force; and 

• Government and Public Involvement. 

These priority areas focus on improvements to the industry that are achievable within the short term 

across each phase of the value chain. 

To quantify the impact of the detailed initiatives, three separate measures were utilised: the change 

in Australia’s competitiveness score against the global peer group, cost savings to industry mining 

operations, and the industry value added increases. Each measure provides an alternate view of the 

potential benefit to the industry and country as a whole. The analysis suggests Australia could become 

the world’s most competitive coal industry, while unlocking AUD$4.5 billion in value for the economy. 

To understand the potential improvements to Australia’s coal competitiveness score, detailed modelling of 

the opportunities was conducted using the dashboard at the metric level. Figure 22 displays the possible 

increases across each measured priority area. Due to Australia’s uncompetitive mining and processing 

capability, priority areas that impact on the Extraction and Production phase of the value chain where 

found to have the largest impact. Overall the solutions detailed have the ability to increase Australia’s 

coal competitiveness score by 18 per cent. Based on 2015 figures, the industry has the ability to overtake 

China to become the world’s most competitive coal producer. 

Figure 22: Scenario modelling – Australian 18 per cent decrease 

Competitiveness Score 

7.0 

6.0 

5.1% 

3.7% 

4.6% 

3.8% 

1.0% 

5.0 

Australia 

(Current) 

Supply 

Chain 

Research and 

Innovation 

Work 

Force 

Government 

& Public 

Involvment 

Others 

Australia 

(Potential 

World Best) 



Supply chain results and opportunities 

Australian coal industry score 

Australia’s Supply Chain score of 6.4 places the country above the peer group average, but shows 

there is significant room for improvement compared to the world’s best, United States, which scores 

9.0. The performance of the supply chain affects the industry over all phases of the value chain, 

so improvements can deliver major impact. Analysis suggests that supply chain improvements and 

innovations will increase Australia’s overall coal competitiveness standing by 5.1 per cent. 

Supply Chain 

6.4 



For Australia to remain above the peer group average and be competitive in this area, it needs to 

consider a number of innovative solutions. Two possible solutions include: 

• Creating additional regional supply hubs and services, like the Hunter Valley Coal Chain Coordinator 

(HVCCC), to support the industry. The HVCCC is an excellent example of industry operators collaborating to 

form a joint-partner entity that focuses solely on managing a component of the supply chain in a particular 

region. Additional joint-partner entities should look at managing warehousing, logistics and transportation 

needed to support mining operations, allowing operators to focus on core mining capability. This could reap 

several benefits including the creation of new jobs, and the standardisation of supply chain operations. 

• Coordinating key operational activities such as shutdowns or major maintenance across the industry. 

The coal industry can learn how to set this up from the coal seam gas industry in Queensland. 

Coal operators can form better partnerships with service providers to facilitate a more effective and 

efficient flow of people and materials. This provides the opportunity to optimise resources, equipment, 

and ultimately increase overall utilisation. 


These potential solutions would require organisations to shift from the conventional “way of working” 

and adopt new operating models. Given the risks, the overall benefits would still outweigh them and 

allow Australia to increase its Supply Chain competitiveness. 


Research and innovation results and opportunities 


Australia performs well in Research and Innovation with a score of 7.1, well above the world average of 

5.1, and only behind leaders, the United States with a score of 8.2. 

Research 

& Innovation 

7.1 



Since 1992 the coal industry has funded major research and innovation through the Australian Coal 

Association Research Program (ACARP) 8 . The organisation is a strong and active research vehicle owned 

and funded by Australian coal producers. In combination with NERA, the coal industry has sufficient 

capacity to drive research, innovation and collaboration across the industry. 


Although Australia performs well in this area, there is still considerable room for the industry’s Research 

and Innovation capability to improve, in order to remain competitive with the United States. Possible 

focus areas include: 

• Solving industry issues such as reducing overburden removal. Operators must be willing to share 

information and invest in collaborating with research institutes and universities to solve key industry 

challenges together. Once a solution has been determined, commercialisation can easily take place 

because all stakeholder groups have been involved and engaged throughout the process. The industry 

should leverage both ACARP and NERA to grow and drive innovation and its commercialisation forward. 


91


• Investing in technology to create the world’s most advanced coal mining operations, including linking 

systems to equipment and vehicles to drive automation and integration. Additionally, the industry 

should leverage data analytics capability to increase productivity and utilisation. To implement 

these programs, the coal industry should look to other resources industries, such as iron ore, to 

leverage their knowledge and speed up adoption. NERA is well placed to facilitate this cross industry 

collaboration, and assist in the commercialisation of these technologies. 


Analysis estimates that there can be a 3.7 per cent increase in the Research and Innovation score 

should these actions be implemented successfully. The entire industry needs to support the research and 

innovation agenda. NERA has an important role in helping to accelerate and translate opportunities into 

tangible results and benefits for the nation. 

Workforce 

5.2 


Workforce results and opportunities 


With a score of 5.2, Australia performs just below the peer group average for Workforce, trailing well 

behind the peer group best, the United States, with a score of 7.3. 


Australia’s training, education infrastructure, and labour productivity (measured by marketable tonnes per 

employee), are world-leading; however, labour costs are by far the highest in the world. 


Major improvements to Australia’s Workforce coal competitiveness ranking are unlikely to come from 

cost reductions. Instead, the industry must focus on utilising the country’s high skilled labour to boost 

productivity. Initiatives in this area have the ability to increase Australia’s overall Workforce coal 

competitiveness score by 4.6 per cent. Key solutions include: 

• Embracing the “new” way of working. Leveraging the country’s highly qualified workforce to utilise 

digital, disruptive technologies and methodologies that have the potential to provide major increases 

to operational efficiency and productivity. 

• Improving the working partnership between operators and service providers and contractors. Focus 

on outcome and value-based incentives rather than headcount to execute specific scopes of work. 

This also promotes collaboration and innovation. 

• Building capability required for the upcoming wave of closure and rehabilitation activities. This includes 

investing in relevant training and potentially organising work secondments to countries with coalmines 

undergoing end-of-life closure and rehabilitation. 


An agile, competent and engaged workforce is essential to building a competitive coal industry. The ability 

of Australia’s workforce to continually evolve and be on the forefront of technology will be critical to its 

overall success. 

Government 

& Public 

5.4 


Government and public involvement results and opportunities 


The Government and Public Involvement industry growth enabler measures a number of factors such 

as regulatory climate, government policies (including taxation and royalties), and social licence and 

community perception. Overall, Australia scores 5.4, putting it just above the peer group average and 

behind the best, Canada, with a score of 6.3. Analysis suggests there is opportunity to improve Australia’s 

Government and Public Involvement coal competitiveness score by 3.8 per cent. 

This industry growth enabler concentrates on two very important areas of the industry: regulatory reform, 

comprising government involvement; and social licence, comprising community and public involvement. 



Regulatory reform 

Considering the regulatory climate, and government policy and involvement specifically, Australia ranks 

third with a score of 5.7, behind Canada and the United States, with scores of 7.3 and 5.9 respectively. 

Australia seemingly does well in this area; however, consideration of the peer group needs to be taken 

into account. Against the other developed nations in the peer group, Australia’s performance suggests 

there is significant room for improvement. 

An estimated 1.7 per cent increase in the coal competitiveness score is possible through the 

implementation of regulatory reform opportunities. These include: 

• Redefining the interaction between government bodies and the industry. Shifting to a more collaborative 

and partnership-orientated model would reduce industry time and money spent dealing with red 

tape, and allow better channelling of resources to value adding activities. 

• Working with stakeholders to establish a robust, clear, consistent and transparent set of directives on 

requirements and regulations e.g. environment and land usage. 

Australia has a stable, developed government, and provides a reliable supply of coal to key markets, 

placing the country above many of its competitors. If policy and regulation can align together with the 

strategic needs of the industry, Australia will climb the ranks of competitiveness in this area, overtaking 

other developed nations. 


Breaking down the Government and Public Involvement industry growth enabler score, Australia scores 

5.0 in social licence. This is just above the peer group average of 4.7, and trailing behind the best, the 

United States, with a score of 6.8. 

Public support for the coal industry lies heavily on the industry’s use and management of the environment. 

The general public has a poor view of the coal industry, which if not addressed appropriately, will continue 

to weaken the coal industry’s competitive position. Several opportunities exist to increase Australia’s 

social licence ranking and overall competitiveness score by an estimated 2.2 per cent through: 

• Promoting the “clean energy transition” message, and engaging communities to understand the 

global view. The industry can also set up a single platform to build a consistent message to increase 

coal mining literacy and education across the nation, ensuring that the modes of communication are 

relevant to today’s generation. 

• Forming an independent body made up of industry, government, and suppliers to manage heritage 

mines not previously closed or rehabilitated properly. This will increase jobs, increase collaboration, 

improve the environment, and ultimately improve community satisfaction. Taxes and royalties 

potentially could be directed towards this initiative, which promotes involvement and participation 

from all parties. 

Involvement and support from the community is vital to the coal industry’s sustained success. The current 

poor social licence within the country suggests that a well-coordinated approach by all industry 

participants has the opportunity to make significant gains. 


Other opportunities 

The industry has spent the last few years cutting costs through direct initiatives and headcount reductions. 

While there were immediate results at that time, it does not translate to significant benefit today, and 

will not be sustainable for operations going forward. There are many opportunities both internally within 

the coal operator organisation, and externally to pursue incremental and transformational improvement 

initiatives. Improving collaboration between operators, suppliers, government bodies and other industry 

stakeholders can unlock hidden and significant value for the coal industry. Estimates made from the ICS 

analysis suggest a potential increase of 1.0 per cent in improvement is possible in the near term. 


93


3 

SECTOR 

CHALLENGES 

AND KNOWLEDGE 

PRIORITIES 

Section 3 begins by identifying and discussing the challenges faced by the 

sector, and the opportunities and initiatives that the sector as a whole, and 

the industries individually, can pursue to make improvements in efficiency 

and productivity to create new market opportunities. It then goes on to 

discuss in detail each of the nine knowledge priorities identified by the SCP 

as the key areas that need to be addressed by the sector to ensure a globally 

competitive, innovative, sustainable and diverse future. 

These knowledge priorities are broken into three major categories or levers: 

capability and leadership; business and operating models, technology and 

services; and regulatory environment. By systematically addressing these 

knowledge priorities is the sector going to be able to retain its position as 

one of the world’s pre-eminent suppliers of energy and of the knowledge, 

services, technologies and skills that support the sector. 


95

Sector Wide 

Challenges and 

Opportunities 

Growing energy demand in Asia, increased environmental awareness 

and an evolving global energy mix, create immense opportunity and not 

insignificant challenge for the Australian energy resources sector. 

Major shifts are expected in the ways in which power is generated, 

distributed, controlled and consumed as the world moves to incorporate 

more renewable energy in the broad energy mix. This shift will force sectorwide 

adaptation, as new infrastructure needs to be built and integrated, 

and new operational frameworks are created. Despite these challenges, 

there are significant opportunities for Australian energy resources, 

particularly in meeting growing Asian demand. 


SECTOR WIDE CHALLENGES AND OPPORTUNITIES 

Sector Wide 

A number of challenges and opportunities are sector wide and, while impacting each sector in different 

ways, have potentially many common causes and solutions: 

Low 

commodity 

prices 

Water 

management 

Carbon 

emissions 

Sovereign 

risk 

Regulatory 

environment 

Low commodity prices due to major structural changes in global supply and a 

short-term (up to 2022) oversupply in the global market. 

Concerns and challenges associated with the ongoing management of water, 

ensuring it is equitably available for all land users including agriculture, human 

settlement and industry. 

Understanding how best to manage carbon emissions from both the primary 

production of energy resources and their consumption. 

A perception that Australia is becoming a nation of greater sovereign risk for 

capital investment by operators due to the increasingly restrictive regulatory 

burden, and restrictions on developments, both in place and being threatened in 

various states. 

A restrictive and onerous regulatory environment, which is particularly difficult in 

respect of the approvals process within many states, restricting operators’ ability 

to undertake the exploration activities that underpin the long-term viability of the 

Australian energy resource sector. 

In addition to these sector wide challenges, there are also a number of more discrete challenges and 

opportunities that will be faced by the industries making up the sector over the coming decade. 

PHOTO 

SECTOR CHALLENGES AND KNOWLEDGE PRIORITIES 


97

Sector Specific 

Challenges, 

Constraints and 

Opportunities 

Australian oil and gas industry 

The Australian LNG industry’s capacity has increased more than four-fold over the past five years to 

supply the anticipated increase in demand. This rapid growth has created challenges and opportunities 

for the still-maturing industry. 

Key challenges 

High cost operating environment 

Australia’s relatively high cost operating environment due to labour costs, remoteness of operations, and 

distance from global supply chains results in many aspects of the Australian oil and gas industry being 

substantially more expensive than other jurisdictions. For example, the cost to explore and develop a 

shale gas well in Australia is believed to be around 250 to 300 per cent higher than to develop a similar 

well in the United States. 

Declining exploration 

The unstable oil price combined with newly imposed moratoria and regulatory restrictions, has resulted 

in a significant reduction in exploration investment. An investigation into the east coast gas market by 

the Australian Competition and Consumer Commission (ACCC) 67 found that it was unclear whether new 

reserves would be developed in a timely fashion, noting that: 

• “The magnitude of gas flows to the liquefied gas projects, which are removing gas from the domestic 

market”; 

• “The low oil price, which is resulting in declining investment in gas exploration and lower production 

forecasts for domestic and LNG projects”; and 

• “Moratoria and regulatory restrictions, which are affecting onshore exploration and development”. 


SECTOR SPECIFIC CHALLENGES, CONSTRAINTS AND OPPORTUNITIES 

Many new discoveries, particularly offshore, are often in remote areas, and expensive to develop with 

limited existing infrastructure. Success rates are low. Geoscience Australia indicates a 28 per cent success 

rate between 1955 to 2011, with 14 per cent commercial success (585 wells from 4,248 wells drilled). 

Long-term growth in the Australian oil and gas industry is dependent on consistent levels of exploration. 

Slow commercialisation of oil and gas reserves 

There are substantial numbers of identified oil and gas discoveries not yet producing 68 for reasons such as 

difficulty of access (such as deep water, remote, offshore fields), lack of commercially suitable development 

opportunities, and technologies or regulatory issues impeding commercialisation of the fields. In the offshore 

basins, the cycle time from discovery to production is usually greater than 5 years. The length of time from 

discovery to production reported by Geoscience Australia demonstrates that the development cycle time 

often exceeds 10 years. 

• 16 fields greater than 20 years; 

• 32 fields greater than 10 years; 

• 52 fields greater than 5 years. 

Lack of current pathway to develop skills required for integrated teams and operations 

Limited availability of process technicians and operators with the high-level skills required to run increased 

numbers of integrated teams and operations. Technological change will require multiskilling in the future, 

which will need to be supported by significant changes to current training regimes, and the articulation of 

skills development pathways to ensure a sufficient number of suitably skilled personnel for future needs. 

Potential shortage of specialist skills for maintenance activities 

A potential shortage of specialist skilled and experienced labour for maintenance and turnarounds of 

Australia’s 21 LNG trains within the LNG sector. This could be heightened by parallel maintenance activities 

in the broader energy and resource sectors, if a parallel recovery in commodity prices occurs and drives 

demand for those skills across other industries. 

Social licence to operate 

Challenges to the industry’s social licence to operate, including negative community perceptions of 

the social and environmental impacts of unconventional developments, concerns over the potential 

development of new offshore basins and increasing community expectations around the transition to 

renewable energy sources. This will require the sector to operate through high levels of community 

engagement, corporate transparency and exemplary social citizenship. 

High cost reputation 

Based on both a 2013 McKinsey report 69 and work by the Oxford Institute for Energy Studies 70 , the cost 

of building new LNG plants has increased significantly in the past decade, with Australia now 20 to 30 

per cent higher than in North America and East Africa. 

Even if all compressible differences are resolved, Australian costs will remain higher than North American 

costs, so Australia needs to strive for best-in-class construction and operations performance to be competitive. 

A reputation as a high cost environment, resulting from the many project budget and schedule overruns 

experienced during the recent expansion phase of the industry is contributing to operators deferring 

future major capital investment in Australia in favour of other jurisdictions. To help restore Australia’s 

reputation, the industry needs to demonstrate that it can operate and maintain the new and existing 

facilities to world’s best standards. 


Abandonment costs 

Uncertainty over capital and regulatory costs of abandonment, as many operators plan for the end of life 

of their facilities; and given that, to date such abandonment activities have been relatively few, the need 

to establish and test an appropriate regulatory framework. 


99


International competition 

The emergence of the United States as a new and materially low cost LNG supplier into both the Atlantic 

and Pacific basins, with the United States seen as a low risk jurisdiction for delivery and sovereign risk – 

a position which Australia has held for many years. 

• The expansion of gas exports into China from Russian and Baltic nations. 

• The unknown but potential rise of a domestic Chinese unconventional source of gas supply. 

• Difficulty of local service providers to integrate into the international supply chain. 

Collaboration 

Increasing collaboration to reduce overall operating costs, with operators and the service sector working 

to find ways to reduce costs through sharing of knowledge, equipment and facilities. Where appropriate, 

this collaboration may need to be ratified through discussions with the Australian Consumer and 

Competition Commission (ACCC). 

Key opportunities 

Increasing and improving collaboration 

Increasing collaboration amongst operators to maximise asset productivity. 

Improving collaboration between operators and technology and engineering service providers to increase 

innovation and productivity. 

Develop an export-oriented service sector 

Leveraging the critical mass emerging in Australian operations to develop an export-oriented service sector. 

Ensure future capital investment 

Addressing cost, regulatory and social licence concerns to ensure Australia continues to be perceived as a 

politically stable and economically reliable destination for future capital investment. 

Develop shale and tight gas basins 

Developing shale and tight gas basins to support domestic demand, and potentially for export (note, that 

without the scale of a large market such as export LNG, domestic only unconventional gas may not prove 

economic using current indicators). 

Investigate emerging markets 

Investigate opportunities in growing and emerging new markets such as India, and explore and pursue 

alternate markets for existing products such as the use of gas as a transport fuel. 

Increasing capacity and critical mass of the LNG industry 

Based on the 2015 Accenture report 61 , key performance measures in the oil and gas industry are 

expected to increase in the next five years, but the size of the services sector and direct employment 

numbers in the oil and gas industry will decline. 

The total capital investment, including capital and operating expenses, will rise to over $750 billion by 

2040, significantly overshadowing project capital investment. This is a major opportunity for the services 

industry to reshape itself to manage the long tail of operations and maintenance associated with LNG 

projects. However, the total size of the oil and gas services market is expected to decline from its high of 

$29.3 billion in 2014 to $23.1 billion in 2020. Strong growth in demand for operational, maintenance 

and turnaround services will offset some decline in construction services. 



Domestic gas market growth 

A number of opportunities to grow the domestic market for oil and gas such as those identified by McKinsey 71 . 

These include: using natural gas to power Australia’s trucks; converting mining trucks to run on LNG; run 

Australia’s public transport busses on compressed natural gas (CNG); use LNG as bunkering fuel for domestic 

ships and ultimately international shipping; switch to LNG for rail; switch off-grid oil-fired power generation 

to gas; switch on-grid power generation to gas; and increase the utilisation of existing efficient gas plants. 

These changes will require financial investment and some changes in usage expectations. However, 

McKinsey are also forecast substantial ongoing cost savings and CO 2 

emissions reductions. Adoption of 

many of these opportunities are currently constrained by a combination of low costs for traditional liquid 

fuels and the pace of renewal of vehicle fleets which would need to be changed to use LNG. 

Such changes could decrease our national reliance on imported oil products but also assist in meeting 

Australia’s CO 2 

emissions obligations under COP21 17 . 

Australian coal industry 

Increased pressure to reduce CO 2 

emissions and a switch towards renewable energy sources locally 

means that domestic demand for thermal coal is forecast to decline over the next 10 years. However, 

reduced domestic demand will be offset by increased export demand from Asia and an anticipated overall 

growing global demand 4 . Demand for metallurgical coal is expected to increase in the medium term with 

reinvigorated demand from China and other developing nations. 


Market volatility 

Sub-optimal asset productivity and costs in a volatile price environment. 

Inefficient rail transport 

High cost and inefficient infrastructure contracts impacting some producers. 

Pressures on land and water use 

Overlap of coal mining tenements with agricultural land in New South Wales and Queensland, leading to 

conflicting pressures on land and water use. 

Water availability 

Effective management of both surface and ground water consistent with environmental requirements. 

Societal concerns 

Increasing social concern with climate change and the environmental impact of resource extraction, 

which will limit the industry’s social licence to operate. 

Regulatory burden 

Increasing Government regulation and ‘green tape’. 

Cost effective closure plans 

Development of coherent and cost effective mine closure and rehabilitation plans. 



101


Key opportunities 

Technology 

Technological advances and implementation of operator assist and decision support technologies used in 

other bulk commodities to unlock productivity improvements. 

Ongoing utilisation of high efficiency low emission (HELE) technologies, control of fugitive emissions and 

carbon capture and storage (CCS) to minimise carbon footprint. 

Mine water storage capacity 

Improved mine design and operations to facilitate reduced consumption and compliance with regulatory 

scrutiny of water use. 

Service industry utilisation 

Improving utilisation of the service industry to leverage existing capacity of workshops, skilled personnel 

and equipment. 

Product mix 

Product mix evolution with the development of new superior products. 

Asian demand 

Strategic targeting of increasing Asian demand for higher quality coal with a higher specific energy and 

lower ash content. 

Australian uranium industry 

The uranium industry will need to overcome regulatory hurdles, perceived radiation safety concerns and 

social licence to operate issues in order to participate fully in the energy future of Australia and the world. 


Public awareness 

Lack of informed public literacy around the science associated with uranium and nuclear energy 

generation, and the different risks associated with different energy sources and technologies. 

Limited port access 

Limits to the ports from where uranium can be exported, with only Darwin and Adelaide currently 

licensed for the export of uranium; and limits to the ability of the industry to access ports elsewhere in 

Australia whilst carrying cargoes of uranium, thereby restricting the options available to the domestic 

uranium industry to transport its products to international customers. 

Regulatory environment 

Legislative and policy restrictions at the Federal and State levels on mining uranium e.g. in New South 

Wales, Queensland and Victoria, and on the development of nuclear power and other parts of the 

uranium value chain (e.g. waste management and disposal), which limit the growth of the industry. 

Better processing knowledge 

Building a comprehensive understanding of how to better and more efficiently process the challenging 

ore bodies in which much of the known Australian uranium is found. 



Equipment and skill shortages 

Equipment and skills shortages which limit the capacity of Australian mines to respond quickly to an 

increase in demand. 

International competition 

Strategic development of uranium production capacity by Kazakhstan 5 through counter-cycle investment 

has positioned them ahead of Australia to respond to any increase in uranium demand, although 

Australian uranium is regarded by many customers as their preferred product. 

Key initiatives 

Given the drive to reduce carbon emissions globally, Australia’s uranium could acquire a much more 

significant position as a source of export revenue for the nation. To realise this potential Australia needs 

to pursue the following initiatives: 

Energy literacy 

As part of a broader energy literacy initiative, the sector needs to help enhance the overall level of public 

understanding of how energy resources are produced, how power is generated, the risks associated with 

different energy sources and technologies, and the role energy resources play in the nation’s economy. 

The sector needs to continue to engage with the community and test evolving attitudes towards uranium 

mining and other aspects of the nuclear value chain. 

Regulatory change 

Review restrictive legislation, and reform and replace with robust, risk and outcomes based, efficient, and 

fit for purpose regulation. 

Testing new technologies 

Test technological improvements such as reagent advances, heap leaching and in-situ leaching to 

improve production capacity with low operating expenditure. 

Work skills 

Improve the attractiveness of the uranium mining sector to the workforce, in terms of salaries and skill 

development for radiation safety. 

Cross Sector Challenges and 

Opportunities 

Many opportunities and challenges span two or more sectors or are broader than the energy resources sector, 

and these are likely to have profound influences and impacts on the energy resources sector in the coming years. 

This includes factors such as the rapid emergence of renewable energy technologies that, when added to 

the global and domestic energy mix, will drive markets in unanticipated directions. An example of this can be 

currently seen in the deployment of domestic solar power technologies to meet household electricity needs, 

which are causing substantial disruption to the generation and distribution networks, as well as increased 

levels of pricing instability. The impact of large scale uptake of solar panels, combined with emerging 

domestic battery storage and smart grid technology, will cause even greater disruptions. 

An ageing working population and declining numbers of students pursuing science, technology, engineering 

and mathematics (STEM) subjects in schools and universities is a challenge not only for the energy resources 

sector, but for Australia as a whole. This will add to the challenges the energy resources sector faces in 

ensuring it has access to a highly skilled and competent workforce to pursue future development, and 

to meet the requirements to develop innovative solutions and technologies, such as use of digital and 

diagnostic analytics, automation and advanced manufacturing technologies and processes. 



103

How the 

Australian Energy 


Should Respond 

The three levers to a strong future 

To remain competitive and build future markets and customers, the sector 

will need to address three primary levers: a suitable business model; a 

contemporary and future focussed operating model incorporating technological 

capabilities; and the right capability, skills and culture to succeed. 


HOW THE AUSTRALIAN ENERGY RESOURCE SECTOR SHOULD RESPOND 

1 

Business 

models 

2 

Operational 

models and 

technology 

capabilities 

3 

Capacity, 

skills and 

culture 

The energy resources sector needs to find new markets to supplement those it 

currently serves, secure new customers and provide alternate forms of services that 

more deeply engage with the value chain. This can potentially include providing 

turnkey solutions to customers rather than simply the products used to generate 

energy, delivering clean technologies and the gasification of coal to produce 

hydrogen. This could also include the provision of knowledge and skills in specialist 

areas such as LNG operations, remote operations and modular construction. 

The sector also needs to build stronger, collaborative relationships within 

the entire energy resources value chain, global partnerships to access 

global supply chains, and with other industry sectors such as advanced 

manufacturing, defence and shipping, where the synergies and common 

challenges may lead to novel and valuable solutions. 

The last two to three years have seen significant cost cutting across businesses 

but there are still significant efficiencies to be captured by reconsidering 

existing operating models and exploring new ways of reducing process 

complexity and waste, finding ways to collaborate more broadly, sharing 

logistics demands through consolidation, reduce unnecessary and expensive 

bespoke standards and conditions around contracts, inductions, training and 

qualifications and seeking ways to use common, industry wide substitutes. 

Businesses need to be open to sharing environmental and other research and 

data which is non-competitive and of benefit to the sector as a whole. 

Businesses in the sector could also increase their efforts to optimise their 

operations through ongoing development and deployment of automation, the 

adoption of advanced manufacturing such as 3D printing, the use of alternate 

materials and the adoption of lean systems. 

To drive innovation across the value and supply chains, the sector should support 

greater collaboration between the operators/miners, research sector and SME’s, 

through, for example, research/industry precincts and living labs to allow faster 

prototyping and testing, multi-user facilities and industry and innovation clusters 

(clusters can force-multiply investment, reduce risk for the participants and 

commercial contributors and speed innovation, whilst vendors can collaborate to 

achieve critical mass and improve ease of access for export opportunities). 

The sector could further collaborate to optimise processes through the development 

and adoption of disruptive technologies such as machine learning and diagnostics, 

3D printing, advanced materials and new ways to build small scale, economically 

viable plants that contain the capital investment required to maintain production. 

There are also further opportunities for the sector to share non-competitive and 

pre-competitive information such as environmental and meteorological data. 

For the sector to be competitive in a disruptive and rapidly changing 

environment with operations that are becoming more automated, integrated 

and digital, it must have the capacity, skills and culture to be agile, adapt 

and innovate. The sector must define and develop the skills required for 

the ‘operations of the future’, spread digital competencies more broadly 

throughout the workforce so that members of every organisation have the 

skills to leverage the volume and quality of data available. 

The sector must invest in the development of enhanced commercial skills to identify 

and respond to new market, customer and service opportunities, and reward 

innovation and the uptake of new technologies, through creating a more agile 

and adaptable workforce ad operating environment where the risks of deploying 

new technologies can be quickly calculated and innovative decisions made. 



105

HOW THE AUSTRALIAN ENERGY RESOURCE SECTOR SHOULD RESPOND 

Regulations 

Whilst addressing all of the levers above is essential to achieving a competitive, sustainable and 

innovative industry and maximising the value to the Australian economy, the full potential benefits cannot 

be delivered unless the regulatory environment supports industry, and costly and unnecessary barriers 

are removed. Regulation should provide stakeholders and the community with confidence that the 

industry is operating to, and held accountable by, governments for the achievement of clear, transparent 

and high standards of performance that take into account the proportionate risk associated with the 

activities being controlled. Regulations should not increasingly create sovereign risk that inhibits domestic 

and inward investment. In particular, the regulation of exploration activities across the sector requires 

review to ensure the sector can identify, access and develop future resources to support the last decade’s 

massive investment in infrastructure with future production, and to provide Australia with diversity in 

energy supply and secure, affordable and reliable energy into the future. Finally, businesses themselves 

also must review their own internal requirements and remove or streamline those self-imposed 

requirements that simply add cost to the business without delivering any ongoing benefits. 


• Leaner operations, as exemplified by the many operators already focusing on increasing asset utilisation. 

• Better management of high cost activities, particularly in new projects and other major capital investments. 

• Increasing movement by operators toward sharing infrastructure both at their facilities and in 

locations such as maintenance and supply bases. 


to avoid competition over labour and shop time. 

• Staff reviews at facilities and in various national head offices. 



• Develop operating models focusing on new and innovative execution approaches and better 

leveraging of existing capacity. Build on Australia’s highly regarded existing capabilities in, for 

example, remote operations and data analytics for process optimisation and decision making, to 

support operational and value chain optimisation. 

• Expand our strengths in the development of alternative energy sources and act as a baseline energy 

source for Asia. 

• Assist developing nations, particularly those transitioning from fossil fuels, to meet their emissions 

reduction commitments by providing energy diversification and reliable electrical grids and systems. 

• Increase ‘energy literacy’ of communities, governments, regulators, companies and other stakeholders. 

• Become an exporter of clean technologies to developing countries. This could include low carbon 

emission technologies, hybrid power generation, battery storage and carbon capture and storage (where 

Australia’s geology provides a strong competitive advantage). Leading the development and adoption 

of these clean technologies is likely to help the sector win social licence, drive up the demand of our 

existing energy resource portfolio, as well as opening up new markets (i.e. gasification, utilising lower 

ranked coal deposits with low ash fusion temperatures). 


107 

SECTOR CHALLENGES AND KNOWLEDGE PRIORITIES

Sector Knowledge 

Priorities 

While many of the actions required to address the sector challenges and 

opportunities are relatively well known and understood, there are other 

issues which are less well defined or where known knowledge gaps exist. 

Knowledge priorities were identified during the consultation period in 

preparation of this SCP and have been aligned with NERA’s key themes. 

These knowledge priorities are the areas where additional work is required 

to understand the sector’s current challenges and choices. 

The knowledge priorities will change over time as new challenges and 

breakthroughs arise; however, it is through systematically addressing these 

knowledge priorities now, that the industry will build and maintain its 

globally competitive edge and thrive into the future. 



Knowledge priorities have been grouped into three categories: 

1 

Capability and 

leadership 

2 

Business and 

operating models, 

technology 

and services 

3 

Regulatory 

environment 

Capability and leadership includes those priorities that require the 

development of work skills, either at the specific workplace level or 

more holistically across the industry, along with the development of a 

more mature and comprehensive knowledge of areas such as resource 

databases, specific research driven work, and, working with the broader 

community to develop a greater level of energy literacy. 

Business and operating models, technology and services considers 

how the sector can develop and deploy new and emerging technology 

to enhance its productivity and effectiveness in areas such as remote 

operations, the use of unmanned aerial and marine vehicles (drones) 

and exploring new and alternate marketplaces and uses of its products. 

Regulatory environment considers how a better and more balanced 

regulatory framework in which the energy resources sector can develop 

into the future. 

Many of the knowledge priorities, set out in Table 13, encompass multiple challenges and opportunities. 

Each of the knowledge priorities are broken down into focus areas and initiatives. The focus areas, 

developed following consultation workshops and industry research, are the major areas of opportunity for 

the sector and the initiatives highlight activities that are either already underway or under consideration. 

These knowledge priorities and initiatives will be periodically reviewed against NERA’s vision, mission, 

strategic outcomes and strategic views and revised periodically to ensure an ongoing focus on the most 

beneficial and relevant outcomes for the energy resources sector. 

The knowledge priorities action plan set out in Table 14 identifies the relationships between the nine 

knowledge priorities with the constraints facing the sector and, identifies both initial ownership and 

stewardship for addressing each of the related actions, along with timeframes to initiate activities. By 

addressing these priorities in a structured way, the sector will be able to build progressively toward its future. 



109


Table 13: Sector knowledge priorities 


1 Work skills 


Focus areas 






collaboration 


Australia’s 

resource base 




• Developing a greater understanding of prospective basin 

geology across the minerals and energy sectors 


to operate 







resources 





of R&D 









• Commercialisation of operational technological developments 







• Understanding and developing commercialisation pathways 




• Develop a greater understanding of decommissioning techniques 

Regulatory 

environment 

9 Regulatory framework 

optimisation 

• Encouraging sensible regulatory frameworks to allow ongoing exploration 




• Resource management reform and review of the existing permitting systems 




KPI’s 

Improve management and work skills 

• Map workforce skills and capacity in each sector cluster against project planning cycles. 

Improve efficiencies in workforce planning 

• Standardise training requirements to improve efficiencies in workforce utilisation. 

Increase cross company collaboration 

• Develop at least [6] clusters in high technology areas. 

Build knowledge and enhance access to information 

• Improve energy resources sector access to robust sources of geophysical data and 

promote trusted custodians of information. 

Initiatives 


• Identify and develop appropriate and accredited 

training to meet future skills needs 

• Ensure a future focussed training and education sector 

• Explore new opportunities to export knowledge 

• Establish regional industry and innovation clusters 










• Share non-competitive data across sectors 

Strengthen engagement with communities 

• Develop a communications strategy which engages with stakeholders outside 

the energy resources sector to articulate the social, economic and environmental 

benefits and challenges of the sector. 

• Identify and apply solutions for water stewardship and tailings management 

including by applying new technologies. 


• Add to the number of projects in the publicly announced and feasibility stages. 

Improve commercialisation and acceptance of new technology 

• Unlock value and accelerate commercialisation by identifying at least [25] new 

technology projects. 

Improve R&D capability by identifying barriers and mapping gaps 

• Identify and map barriers and gaps in sector commercialisation funnel. 

• Respond to gaps by building alignment between research funding and emerging industry 

clusters in a least 2 key areas across oil and gas, coal seam gas, uranium and coal. 

Improve R&D commercialisation 

• Increase applied research and commercialisation. 

Increased commercialisation outcomes 

• Increase the number of companies claiming the R&D tax credits for sector relevant 

technologies by identifying and unlocking commercialisation barriers. 

Reduce costs and improve efficiencies 

• Adapt new technologies to improve efficiencies and productivity in existing projects 

by [20%], including by developing at least [2] shared remote operating centres. 

Identify and map barriers 

• Identify and map key areas where regulatory reform in the sector is needed, 

and support possible reforms. 

Align Australia’s standards with international best practice 

• Deliver 2 projects on enhanced alignment of Australian Standards with 

international best practice 

• Community engagement and education 

• Research social, economic and environmental 

consequences of the activities of the energy 




• Work with technology suppliers to identify new 

ways to access resources 


• Unmanned aircraft systems geophysics 

• Extend the network of small scale LNG facilities 

• Broader support for focused innovation 

• Strengthen industry-led research stewardship 

• Enhance industry engagement with research 

institutions 

• Research and development funding models 

• Improve understanding of Intellectual Property 


• Explore ways to build the industry’s skill base in 

remote operations and facility life extension 

• Focussed research and early deployment of 

new technologies 

• Research into life extension of ageing facilities 

• Adopt and harmonise international standards 

• Regulatory reform to support ongoing sector growth 

• Review regulatory frameworks 



111


Table 14: Knowledge priorities action plan 

Improve 

adoption of 

Innovation 

Close the 

skills gaps 

1 

Work skills for 

the future 


2 

3 

Enabling effective 

collaboration 

Understand 

Australia’s 

resource base 

4 


to operate 


5 

6 

7 

8 

Unlock future 

resources 

New markets, 





development 

Efficient operations 


Regulatory 

environment 

9 

Regulatory 

framework 

optimisation 

KEY PARTIES: Operator Supplier Research Government Education 



Challenges 

Enhance 

productivity 

Manage 

water 

stewardship 

Address 

high cost 

environment 

Improve 

energy 

literacy 

Reduce 

sovereign 

risk 

. 

. 


WHEN: Short Medium Long 


113

Capability and 

Leadership 

1. WORK SKILLS OF THE FUTURE 

The recent rapid growth in the industry and the technological evolution occurring in the energy resources sector 

are causing substantial changes in the nature, makeup and profile of skills required to design, build, operate 

and maintain facilities now and into the future. Adapting the role of education in supporting this “fourth 

industrial revolution” 71 is key to the sector’s ongoing success. Ongoing collaborative investigation is required 

to identify, develop and deploy the work skills required to maintain the Australian sector at the forefront 

of operational competitiveness, and to provide well paid, safe and productive jobs for future generations. 

Integrated operations of the future 

Without an operations workforce of critical mass that is suitably skilled in new technology, the Australian 

energy resources sector will struggle to achieve high productivity and global competitiveness. 

New practices and evolving technologies are changing the maintenance and operations requirements of 

industrial facilities. The operations and maintenance must adapt in order to allow the sector to get the 

most benefit from these changes. 

The sector needs to build a comprehensive understanding of the requirements for future operations in 

terms of scope, scale, skills and experience and, in parallel, identify how the next generation of operations 

and maintenance staff will be attracted to the industry and where they will receive the training and 

preparation required. 


CAPABILITY AND LEADERSHIP 

CASE STUDY 

Collaborative Training Project 

Research undertaken by Deloitte on behalf of the Resources Industry Training Council 75 identified 

that within Western Australia and the Northern Territory alone, savings of up to $22 million per 

annum could be made through the development of a collaborative employee training approach. 

Such an approach would see the adoption of industry wide training standards and certification for 

new personnel accepted by all employers, after which employers would provide specific additional 

training to bridge the gap to meet their requirements. 

The reports found the delivery of training for common competencies at an industry level is more 

cost effective than the delivery of training by each operator and the pooling of training resources 

allows operators to access higher quality training infrastructure and programs. 

The report goes on to suggest that further savings are available through the development of quality 

training infrastructure through pooling of training resources. Increased confidence in training would 

be evident through development of a pool of recognised training providers. Such an approach 

could offer improved business outcomes and success in this initiative could pave the way for 

further collaborative training programs. 

Workforce capability 

The sector must continue to drive development of a consolidated sectoral perspective on skills needed 

to meet future industry requirements. It is possible such a perspective may involve the transition to a 

multi-skilled workforce able to work across functional disciplines (e.g. multidisciplinary operations and 

maintenance providers) as well as Australian based subject matter experts to support the operation 

and maintenance phases of the facilities. This will include aspects such as training and competency 

development and labour retention in all workforce categories. 

Research could also focus on the requisite future skillsets required for uranium mining. This could include 

nationally consistent and recognised formal education and training pathways for radiation safety officers 

to support not only the potentially growing uranium industry, nuclear waste disposal and the operation of 

nuclear power stations, but also those industry areas dealing with naturally occurring radioactive materials 

such as the mineral sands industry, and industries who use radiation sources for metering purposes. 

Project management skills 

While the Australian energy resources sector is well regarded internationally for its technical and operational 

expertise, there is a definite and urgent gap in the depth of project management skills. Some of these 

deficiencies were apparent in the project delivery timeframes and costs experienced during the recent 

construction, development and expansion phase, where many projects across the sector were delivered 

late and substantially over budget. This has in part contributed to the perception of Australia as a high 

cost and difficult place to do business, and which may impact on international investment in any new 

future projects in Australia. 

The need to address these deficiencies has been considered and outlined in a number of research 

publications, including the work of the International Centre for Complex Project Management (ICCPM), 

which made specific recommendations 73 around delivery leadership, collaboration, benefits realisation, 

risk opportunity and resilience, culture, communication and relationships, sustainability and education 

which, if addressed will go some way to ensure future project delivery is world class. 

The issues in this area sit both at the operators’ level, where those shaping the projects may lack the 

experience, training and support to understand their roles in establishing the project framework 74 , and with 

the organisations within the value chain, where pressures to deliver multiple projects concurrently, often 

mean personnel are placed in roles for which they are not fully prepared. With the energy resources sector, 

highly sensitised to costs, it is vital that future projects are delivered to time and to budget, if not better. 



115


Initiatives to support the development of future works skills 

Identify future skills requirements 

To effectively plan for its future workforce, the energy resources sector first needs to know what skills 

will be required to operate the plants of today and tomorrow, with existing and emerging technologies. 

These workforce requirements will span the business and leadership skills required to enable the 

sector to adapt, innovate and be globally competitive, the engineering and design skills required to 

conceptualise, design, test and construct new technologies and new facilities, and the operator and 

maintenance skills required to run the plants using innovative and new technologies. Many of these skills 

will already be present to some degree in the workforce, and can provide the base on which to build. 

The gaps need to be identified and strategies for developing appropriate skills established to build a 

skilled workforce of an appropriate scale and quality to serve the industry as a whole. This is likely to 

deepen implementation of new learning technologies to support skills development such as technology 

enabled learning and virtual/augmented reality. 

Identify and develop appropriate and accredited training to meet future skills needs 

As the skills requirements for the future workforce are identified, it is necessary to ensure the appropriate 

education, training and development resources, technologies and facilities are in place. This will 

include both the vocational training and tertiary education sectors either developing new programs or 

modifying existing material, and identifying the most appropriate skills development methodologies and 

technologies (e.g. virtual, simulated and interactive). 

Research undertaken for the Resources Industry Training Council (RITC) suggests that there is the 

opportunity for the resources sector in Western Australia and the Northern Territory alone to save up to 

$22 million per annum through the development, deployment and adoption of common standards 75 . 

Similarly, in the engineering space, the recently completed Australian Pipelines and Gas Association (APGA) 

Pipeline Engineer Competency Standards 76 which benchmark pipeline engineering skills and the Petroleum 

Engineering Guidelines 77 jointly administered by the Society of Petroleum Engineers (SPE) and Engineers 

Australia are examples of where standardisation will give rise to greater industry confidence in outcomes 

and drive efficiencies. From a skills development delivery perspective, learner demands are forecast to 

substantially alter, causing training providers and universities to reconsider learning strategies and adopt 

more innovative ways of delivery. 

Ensure a future focussed training and education sector 

Those tasked with meeting the training needs of the workforce will need to recognise the diverse and 

rapidly changing employment landscape. Research into jobs of the future 78, 79 is increasingly identifying that 

the workforce of the future will need to continually refresh its skills to keep pace with technological change 

and allow for horizontal, vertical and diagonal movement into new roles. To support this need, training 

organisations and universities must continually explore future skill needs and develop new and evolving 

material and training opportunities to service the skills requirements of the workforce. 

It is expected this may further blur the boundaries between vocational education and training and university 

based higher education programs. Energy resources sector participation in processes established by the 

Australian Industry and Skills Committee 82 to review and refine vocational education and training programs 

is a tangible way of achieving a greater match between work skills of the future and the formal education 

and training sector. 



Explore new opportunities to export knowledge 

There is a real and growing opportunity to grow and develop Australia’s specialist and niche skills export 

capability. During the resource sector’s recent expansion there was a focus on ensuring a sufficient skills 

depth to meet demand from both the construction and operational phases. The investment in this capability 

now presents an opportunity for Australia to export this “know how” to other countries and sectors. 

Exploiting these opportunities should focus on those areas where Australia has a competitive advantage 

and where demand exists in the global market. Further exploration of how these skills can be developed, 

commercialised and marketed, within and across sectors both domestically and internationally, will be 

key to achieving competitive advantage. Potential candidates for further exploration include: remote 

operations, operations in hostile and challenging environments, robotics and automation, and data and 

analytics for process optimisation and decision making. 

The export of Australia’s skills development capability can be achieved by large providers of education 

and training services through their global alliances and networks. For many small and medium enterprises 

this access is extremely difficult to build, presenting a case for government bodies such as Austrade to 

provide specific international support in the export of these capabilities. 

2. ENABLING EFFECTIVE COLLABORATION 

It is broadly acknowledged within all areas of industry that a combination of competitive pressures and 

the culture of the sector has prevented meaningful collaboration to date on issues that are of benefit to 

everyone. This lack of collaboration has resulted in duplication of infrastructure and wasted opportunities 

to reduce costs of project development and operations, while at the same time limiting opportunities 

to form strong partnerships between operators/miners, the service sector and research organisations to 

drive innovation and technology. 

There is a shortage of opportunities for protagonists in the industry to meet in non-competitive, truly 

independent environments where they can share their problems and work together to identify the best 

solutions, regardless of their position in the value chain. Collaboration and strong innovative partnerships 

focus on key strategic challenges such as sharing critical infrastructure, developing common safety and 

operating practices, sharing research and development investments and communicating learnings, and 

in the areas of new technologies, new approaches and cross industry sharing of knowledge so that 

the industry and the economy can benefit. If such independent and collaborative forums could become 

more common, there is a great potential to seed and nurture new ideas, innovations and solutions and 

to significantly improve the global competitiveness and export potential of the energy resources supply 

chain in Australia. 

Clearly, in the current tight marketplace, substantial collective benefits could be achieved through targeted 

collaboration, whether in contributing information, resources or infrastructure. Such collaboration could 

occur in several ways: amongst operators within a sector; between operators and the research sector; 

between the service providers; between service providers and the research sector; and, between different 

industry sectors. Such approaches also need to consider potential impacts on competition and would 

require early engagement with the Australian Competition and Consumer Commission (ACCC). 

The participants in the sector need to continue to open their doors to one another and actively explore 

ways to grow together. 



117


Cross company collaboration 

Collaboration between organisations working in the same value chain could offer substantial cost savings 

in logistics, workshop and stores space and stock levels. Historically, operators and their suppliers of 

goods and services have operated their own value chains, resulting in duplication of materials and effort. 

Finding safe, independent mechanisms for collaboration across the value chain could result in substantial 

cost savings for all parties. 

Organisations potentially seeking to collaborate could work together, and with the ACCC, to establish 

clearly defined and sanctioned areas for collaboration. These would be areas where, through working on 

common issues, the industry would provide a greater level of benefit for the nation and for themselves 

without jeopardising their corporate competitive advantages or being considered as anti-competitive. 

Once a consensus has been clearly established and, if necessary ratified, of where collaboration can 

occur, other areas where there is less clarity, that emerge as the industry evolves can be given specific 

consideration on a case by case basis. Such agreements would make ongoing discussions much easier 

and clearer since issues of anti-competitive behaviour would have been removed. 

Intergenerational and interdisciplinary engagement 

As the Australian energy resources sector seeks to embrace new and emerging technologies, a deeper 

and stronger engagement is needed with all generations, particularly the emerging generation of digital 

citizens entering the workforce. 

New methods for engaging with new potential sources of, and partners to, ideas, innovations and solutions, 

such as hackathons and crowd sourcing, have already emerged and have strong early industry support. 

Such engagement may not be easy for all participants in the industry, particularly where the culture 

has often been about guarding ideas and knowledge within a business, with the perception that this 

knowledge constitutes a key strategic asset or advantage. In an environment of rapid change, this view 

is being challenged. Experiences in other sectors have demonstrated that fully unlocking and transferring 

knowledge, as well as pooling data held by multiple organisations, can ultimately create a more resilient 

and agile industry essentially growing a bigger pie, which will benefit those involved. 

Industry and applied research collaboration 

Australia has a very strong and accomplished research community, spanning government research 

organisations such as CSIRO and the Australian Nuclear Science and Technology Organisation (ANSTO), 

along with many public and private research centres in universities and business. These groups are 

conducting world leading research in many areas that would be of benefit to the energy resources sector. 

Similarly, the energy resources sector is often in need of independent, cutting edge research to better deal 

with the challenges faced in improving the sector’s global competitiveness and adapting to clean and low 

emissions technologies. Yet the issue of understanding the opportunities to collaborate and then leveraging 

them into meaningful outcomes is an ongoing challenge for many researchers and industry representatives. 

Australian society invests more than two per cent of GDP in the research sector, a percentage which has 

been declining in recent years. Nationally, Australia ranks only twenty-sixth 2 on the global innovation 

index, having slipped three places in the previous 12 months, placing the nation behind many other major 

energy producing nations. Building stronger ties between industry and researchers is a major priority for 

the community and is an area where the nation ranks poorly at thirty-third on the global innovation index. 

Several capability areas identified in the National Research Infrastructure Roadmap 81 translate directly 

into the energy resources industries: environment and natural resource management; advanced physics, 

chemistry, mathematics and materials; and understanding cultures and communities and underpinning 

research infrastructure. These priorities need to be pursued and the relationships strengthened. 



Initiatives to enhance cooperation and collaboration 

Improved collaboration amongst industry and sector participants will lead to sharing of innovative 

solutions, development of synergies to drive value creation, reduction in duplication and create further 

cost saving opportunities. The following initiatives have been identified to enhance collaboration 

amongst operators and/or between operators and suppliers to harness existing capabilities and identify 

solutions that will improve the supply chain and operations, drive deeper engagement and improve 

overall sector competitiveness. 

Establish regional industry and innovation clusters 

Historically, the Australian energy resources sector has relied on a combination of local vendor 

representatives and workshops, major city based vendor and engineering hubs and international supply 

chains to support their operations. This situation existed in part due to the sub critical mass in any one 

location of sufficient operations to provide a sustainable client base for organisations in the supply chain 

to establish facilities local to the operations. 

This situation has resulted in extended supply lines, long turnarounds for equipment servicing, difficulty 

accessing critical, but only intermittently required skills, and increased costs and risks on the operators 

who increase their own spares inventories to mitigate their exposure to potential long shutdowns while 

sourcing appropriate supplier support. 

International experience is that once established, clusters can become thriving industry innovation centres. 

In the technology arena, they are a way to nurture strong growth by bringing start-ups together with academia 

and research 82 . In the resources sector, cities such as Aberdeen and Stavanger in Europe, clusters employ tens 

of thousands of personnel in supporting the North Sea offshore oil and gas industry. Local skills and service 

centres are supported by educational infrastructure that both trains the workforce to support the industry and 

undertakes industry focussed research that has resulted in numerous spin off businesses and innovations. 

CASE STUDY 

Toowoomba and Surat Basin Enterprise (TSBE) supports job 

growth across 24 sectors 

Toowoomba and Surat Basin Enterprise Pty Ltd (TSBE) is a unique, industry funded, multi sector 

cluster that exists to help businesses of all sizes grow and promote the sustainable economic 

growth of the region. Established in 2012 to give support for coal seam gas, TSBE has now 

expanded across other sectors with appropriate focus on investment attraction, economic growth 

and infrastructure development. TSBE has contributed to bringing more than 60 businesses and 

hundreds of investors to their local region. TSBE support has increased job growth and its 24 

industry sector members deliver $4.6 billion turnover for the region. 

TSBE has a growing membership of 460 businesses across 24 industry sectors working in the 

Toowoomba and Surat Basin. Industry sectors include for example: coal seam gas, coal, water, 

agriculture, and food processing. Each industry sector has multiple business segments with 

common areas for collaboration linked by TSBE to support new regional projects. 

TSBE assists businesses grow in the region by delivering a diverse membership offer with direct 

and indirect assistance tailored to suit business needs at their chosen level. Business membership 

is tiered to suit business size and the services needed. TSBE links business with opportunity to 

achieve sustainable growth and diversity for the Toowoomba and Surat basin region. TSBE has 

a unique cluster model, allowing collaboration across multiple sectors and technical business 

segments for issues such as water management and regional projects requiring collaboration. 

A recent initiative of TSBE is the development of a Water Cluster combining an extensive group 

of businesses using economies of scale to overcome regional challenges, build opportunities for 

growth, drive costs down, find efficiencies of scale and realign costs with risk 141 . 



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Industry clusters 

The footprint of the Australian energy resources sector has grown over the past decade, and there 

are new developments that will enhance the performance of the sector, such as development of new 

and improved techniques for remote diagnostics and on-demand manufacturing through 3D printing 

technology. An emerging opportunity exists to establish industry clusters and regional multi-user facilities 

that could provide substantial levels of local support to the growing clusters of operations and supply 

chain. Such clusters could be linked to multi-user facilities and established local to regional population 

centres within close proximity to new and existing operations, shortening of the supply lines, enhancing 

access to skills that are otherwise held in major cities and boosting local employment. 

Innovation clusters 

In parallel with industry clusters, there is also an opportunity for sections of the energy resources industry to 

gather in innovation clusters. These innovation clusters would form around a common industry problem or 

opportunity and include: operators of the plant experiencing the problem or for whom resolving the issue 

could unlock future potential; technology providers and innovators who may have insights to help address the 

challenge; research and academia to provide the deep research capacity to explore major issues causing the 

problem; and government to lend regulatory guidance and support together with potentially resolving access 

issues. These clusters would include both co-located and virtual membership, with some personnel being 

located close to the problem and others located in regional centres, research facilities and international offices. 

Such clusters would offer a new business model for both the organisations participating in them and their 

prospective customers. For the customers it would offer a potential alternative to their reliance on relatively 

generic products from their traditional and, generally, large scale suppliers, instead providing direct access 

to those developing the products who could then develop solutions specific to the customer needs. For the 

cluster members it would offer scale, access to like minded manufacturing and research collaborators and 

improved ability to access customers, allowing them to compete on a more level playing field. 

Establishing industry and innovation clusters will require commitment from operators/miners, service and 

research sectors and governments. To be successful, clusters will require operators of the various plant to 

provide ongoing support, and a willingness to work with the cluster members to take up solutions and 

innovation. It will require cluster members to agree on how they will operate and compete within the 

cluster, and to make a commitment to sharing and transferring knowledge and skills within that cluster. 

Governments need to support the establishment of clusters by providing a supportive regulatory and 

research and development tax incentive environment e.g. of SMEs and innovation, and through trade 

agreements and access to Australian trade missions. For multi-user facilities, governments might identify 

and provide suitable land. Businesses and the employees of those businesses participating in regional 

clusters need to be prepared to relocate to the location of the cluster. 

Asset and equipment sharing 

Direct, tangible, tactical opportunities are available to enhance cooperation between operators through 

asset and equipment sharing to maximise efficiencies and improve sector competitiveness. Initiatives in 

this area may include the development of a platform and business model to allow the sharing of spare 

parts and equipment to reduce costs and inventory. Other opportunities could include collaboration on 

transport logistics for equipment and personnel, sharing of ex-mine gate coal infrastructure including 

wash-plants and other cooperative opportunities. There is also a significant coordination role for 

operators to assist with initiatives to standardise operating standards and compliance requirements. 



CASE STUDY 

Collaboration in coal transportation 

Transportation of coal, both by land and sea, is a key strength for the Australian coal industry. 

Quality infrastructure, structured collaboration and comparatively short distances to key markets 

place Australia among the world’s best in this component of the value chain. Key attributes are: 

• Australia’s transport infrastructure is currently clustered around coal operations in Queensland 

and New South Wales. 

• Significant focus over the past few years has been placed on improving productivity and 

utilisation of transportation assets in Australia e.g. regulated collaboration and coordination. 

• Australia has the world’s leading port utilisation rate of greater than 75 per cent, which in turn 

translates to the country having one of the lowest global port costs among the peer group. 

• Close proximity to the world’s four largest coal importers (China, Japan, India, and Korea) leads 

to Australia having lower than average shipping costs compared to its peer group. 

Infrastructure sharing 

Building an increased willingness to share infrastructure could deliver substantial gains to the sector. 

The infrastructure servicing mines and processing facilities within the energy resources sector represent a 

substantial capital and operational cost to the industry. This cost could be reduced into the future through 

more open planned sharing. Enhancing cooperation between operators of facilities to enable sharing of 

infrastructure and reducing duplication of effort during the design phase is ideal; however, post start-up 

and during operation there are still opportunities to identify benefits. Sharing of service infrastructure and 

equipment, transport facilities for personnel and equipment (particularly in the offshore environment) and 

even sharing of non-critical and, on occasion critical spares would offer potential savings. 

Similarly, there is an opportunity for significant collaboration in the coal industry on post mine gate 

infrastructure and the optimisation of rail transport arrangements. These include addressing current 

“take or pay” arrangements to access rail infrastructure used to transport production from mine sites 

to ports for export, where rates were often fixed during times of higher coal prices. Other areas include 

controlling fixed operating costs of the mines and increasing asset productivity to ensure the long-term 

viability of many mines currently facing severe financial pressure 83 . 

Shut-down scheduling 

Enhancing cooperation between operators to optimise coordination of major shut-downs will assist with 

maintenance planning, minimise impact on labour requirements and ensure service provider availability. 

This model was initiated by the east coast coal seam gas operators as their projects transitioned to the 

operations and maintenance phase and could be replicated for west coast oil and gas operations and 

other industries. With Australia moving toward 21 operational LNG trains, the need to maintain a skilled 

workforce capacity ready to undertake regular maintenance turnarounds is an increasing challenge to the 

industry. To be able to balance personnel across a levelled workload will reduce risks and provide surety 

of workload to maintenance providers and personnel, safely enabling a more sustainable, long term 

prospect for investment. 



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CASE STUDY 

RISKGATE collaboration: improving safety across the coal industry 

RISKGATE – an Australian Coal Industry Research Program (ACARP) funded initiative, is an interactive 

online risk management tool designed to assist in the analysis of priority unwanted events unique to 

the Australian coal mining industry. 

The primary mission of RISKGATE is to focus the coal industry on prioritising control management to 

achieve acceptable risk. RISKGATE was developed in collaboration across coal operators, research 

institutes and supply chain. RISKGATE is designed to assist the coal mining industry improve 

minimum standards for safety performance, efficiency, operating practice, and training. 

The online system is an innovative platform built on a foundation of industry expert knowledge 

gathered through action research workshops, which is further supported by a broad array of industry, 

academic and technological resources. 

In operation, RISKGATE offers a continuum for knowledge transfer and redefining best practice in risk 

identification, assessment, and management in the coal industry. Future RISKGATE work will increase 

collaboration between the coal equipment supply chain and coal operators. RISKGATE provides a 

platform for the coal industry to standardise new mining methods and solve infrastructure integration 

challenges. ACARP is funding the innovation precinct, Mining3, expand RISKGATE to develop 

communication standards for future automation projects 140 . 

Industry specific collaboration 

While there are many initiatives within the energy resources sector where organisations are actively 

collaborating, some are still in the formative stages and need support to help them grow. One example 

where this type of early collaboration could be expanded is for operators in the uranium sector to work 

with government research agencies, such as ANSTO and CSIRO, to better understand the geology specific 

to the formation of uranium deposits. 

Additionally, there is scope for many organisations to build better internal integration and relationships, 

thus allowing for enhanced exchange and uptake of ideas across different segments within an 

organisation that may have been blocked in the past due to internal barriers and sector separation. 

Cross industry collaboration 

Much of the sector collaboration occurs between peers, where oil and gas, coal or uranium focussed 

organisations at various levels meet to discuss issues. Typically, these meetings are restricted to 

organisations at a peer level within whichever sector they represent. This type of collaboration could be 

improved in two areas. Firstly, engaging the entire value chain in any given sector, as otherwise the whole 

problem will not be understood and an incomplete solution reached. Secondly, by not engaging outside 

of a sector, the opportunity to learn from the activities in other sectors are lost, resulting in duplication of 

effort, repeated mistakes and an overall loss of opportunity. 

Appropriate forums a need to be established and fostered to allow open, entire sector value chain and 

cross sector networking. This will provide opportunities for communication of learnings and problems to 

improve the efficiency of the broader industry, especially in new and emerging areas of digital technology. 

Common facility inductions 

Historically each plant and facility has operated with its own unique induction processes. These processes 

cover a variety of matters from very general activities and behavioural expectations through to highly specific 

requirements and issues. Each induction costs both the inducting organisation and the employer of the 

inductee time and money. Often many facets of the induction will be similar or even identical to inductions 

required to enter similar sites owned by the same operator or operating the same equipment or processes. 

Yet these inductions are generally not transferable. Developing a more common, transferable induction that 



reduces the impost of time and cost on both operators and the inductee, topped up with shorter, local, site 

specific addendum inductions has the potential to substantially reduce the overall cost to the sector. 

Developing such induction processes will require operators in an industry to work together to establish 

acceptable induction procedures and timeframes, develop their own supplemental requirements and then 

undertake a mutual recognition program on which all inducted personnel can be registered. 

Shared operational practices 

Many organisations have developed their own, unique, set of operating practices and procedures. 

These practices and procedures are unique due to the nature of their plant: however, opportunities 

exist for these organisations to share best practice and potentially develop some common, transferable 

operational practices. 

Having such common practices would simplify the training process for new personnel as it would allow 

courses to incorporate more generic material, with the smaller remaining portion then being delivered 

on a plant-by-plant basis. It would conceivably, also allow organisations to learn from one another in 

terms of how they each operate identical equipment, often from the same supplier, improving the overall 

productivity of the industry. 

Weather research and modelling 

Many of Australia’s resources are in extreme climatic environments. Locations where, for instance, 

cyclones can have substantial impact on operations and the safety of both the personnel and facilities. 

Consequently, it is very important that focussed research is conducted to enhance the prediction of these 

extreme environmental events, to forecast with greater certainty the timing, scale, exact location and 

track the potential impact of cyclones. Establishing this enhanced understanding of these events will 

provide benefits for both the energy resources sector operating within the cyclone areas but also to the 

broader industrial and societal community, such as farming, transport, mining, education, health care and 

emergency response groups. 

CASE STUDY 

Tropical cyclone predictions 

NERA is supporting a collaborative project with the Bureau of Meteorology to better understand 

potential tropical cyclone impacts. 

The project will deliver significant benefits not just across the offshore oil and gas sector, but also 

across multiple industry and government sectors in Australia. 

The project, which includes key industry partners Chevron, Shell and Woodside along with the 

Australian Bureau of Meteorology (BOM) as project lead, involves the re-analysis of tropical cyclone 

data in Australia since 1981. 

The re-analysis will improve on existing tropical cyclone data by incorporating recent advances in 

algorithms that extract key information from geostationary satellite data. 

The data will be used in wind, wave and current modelling and is expected to lead to greater 

certainty in engineering design, not just across the oil and gas industry, but across all tropical 

cyclone-related engineering. This certainty will deliver efficiencies in construction, maintenance and 

operating costs for a wide range of infrastructure. 

By providing the ability to better understand tropical cyclone risk, this project will assist in 

improving safety for Australia’s infrastructure through better design and response strategies and 

provide substantial cost savings. 

The project, which involves collaboration with leading researchers in the field of tropical cyclone analysis, 

is an opportunity to put Australia at the forefront of international efforts in tropical cyclone analysis. 

Once success with this approach in Australia can be demonstrated, it will be replicated in other 

basins affected by similar weather patterns around the world. 



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3. UNDERSTANDING AUSTRALIA’S RESOURCE BASE 

Despite the moderately long history of the energy resources sector in Australia, there is still significant 

room for improvement in the understanding of its resource base outside of the sector’s established 

areas of operation. Understanding the nation’s natural resources and geology is critical to identifying the 

future supply that will underpin the sector’s operational sustainability. Nation-wide and priority driven 

frameworks are for the acquisition, evaluation and distribution of pre-competitive information that will 

promote a thorough understanding and evaluation of Australia’s unexplored resource base. 

Developing a greater understanding of prospective basin geology 

across both the minerals and energy sectors 

Understanding the geology of prospective energy resource regions is critical to identifying areas for 

prospecting and future production. While Australia has a great deal of historical data in this area, much 

of it is fragmented across multiple businesses and organisations. In addition, the data was often captured 

for one purpose but may in fact be applicable across multiple sectors. Understanding the scale, scope and 

transferability of existing data, coupled with improving the nation’s abilities to interpret new and existing 

data, and improve access to that data, will help the energy resources sector and the broader mineral 

extraction industries become more competitive. 

To support the development of the onshore oil and gas industry, there is a pressing need for ongoing 

research to enhance the understanding of reservoir geology. Expanding this knowledge will allow 

operators and regulators to make well informed decisions on the future trajectory of the onshore 

industry, and to use the information to select the most viable areas to explore and develop, in the most 

environmentally and economically effective manner. 

Initiatives to help understand Australia’s resource base 

Industry data initiative 

Large volumes of data are currently held in local, state and federal databases that, if made available 

in a searchable and consistent manner, could support desk top and field research by organisations 

into prospective resource areas. These data sets have accumulated over many years through numerous 

projects and initiatives, and represent substantial untapped value. 

The Federal Government, through the National Map Open Data initiative 84 is working to build a common 

portal for organisations to access and search all obtainable data. As this portal becomes available, it will 

be possible for resource companies to examine and use the data to support their future exploration plans. 

The data will also be available to start-ups to access through events such as Hackathons and Gov. Hacks. 

Share non-competitive data 

Non-competitive data is often generated at numerous stages in the development and operation of a 

resources facility. This can include environmental data, weather data, health and safety initiatives and 

many other types of information. Often an organisation will generate the data from first principles. 

This can result in either full or partial duplication of existing data, or in multiple organisations paying 

for the same work to be performed. In both cases, there is wasted effort, a reduction in productivity and 

potentially lost opportunities. 

The energy resources sector needs to find ways to share non-competitive data and information to assist 

in the ongoing pursuit of productivity and efficiency gains. 



4. ENHANCE SOCIAL LICENCE TO OPERATE 

The social licence to operate of the energy resources sector is under increasing scrutiny and challenge, 

largely due to its perceived negative environmental impact. For the community to recognise and 

support the social and economic benefits of the sector, a number of factors need to be addressed. 

The industry must genuinely and transparently engage over the short to long term with its stakeholders 

and the community, and demonstrate and be accountable for the highest standards of environmental 

performance at all times. Environmental regulation needs to provide a sensible framework that provides 

for genuine environmental outcomes and supports industry activities, whilst providing stakeholders and 

the community with confidence that there is independent and objective oversight of those activities. 

Social and economic benefits 

While the energy resources sector has been responsible for establishing and sustaining many local 

communities, as well as changing the lives of the world’s population, its societal impact often goes 

unrecognised or is misunderstood. It is important that the energy resources sector continues to work to 

build a better scientific understanding of its social impact, and that this information is shared as part of 

an overall energy literacy program. 

At its most visible, the sector provides 89,800 jobs in Australia 10 , generating both direct and indirect 

taxation revenues and economic benefits to government, and to the businesses which rely on the sector 

and its employees for their revenue. With many of the sector’s jobs being in rural locations, they also help 

to sustain local communities where employees live and shop, and where their children are educated. 

Many organisations in the sector also support academic research through the provision of projects and 

funding to universities and ongoing employment of skilled personnel who require training and education 

on an ongoing basis to perform their roles. 

Infrastructure closure and rehabilitation 

As assets in all three industries in Australia’s energy resources sector approach their end of asset life, 

and owners look toward closure or divestment, it is apparent that many gaps in the industry’s knowledge 

and regulations exist that must be addressed to ensure a safe, orderly and cost effective closure and 

rehabilitation of the facilities. These knowledge gaps are present in three principle areas: 

1. The science around the challenges; 

2. The technical solutions to address the scientific challenges; and 

3. The regulatory landscape that establishes the required work and ongoing monitoring of the facilities. 

The following knowledge priorities aim to use leading science to deliver improved environmental 

outcomes to better inform and engage with communities, regulators and governments and develop an 

improved social licence for the energy resources sector. 

Building scientific understandings around closure and rehabilitation 

The industry must engage in ongoing scientific and technical studies to develop best practice guidelines 

for managing asset end-of-life to ensure closure procedures are transparent, fit-for-purpose and outcomes 

based. Best practice asset closure and rehabilitation, based on leading science, and through working 

together with initiatives such as the Cooperative Research Centre for Contamination Assessment and 

Remediation of the Environment (CRC:CARE) 85 , will help secure stakeholder support and recognition 

of the sector’s environmental sustainability and facilitate the move from prescriptive to fit-for-purpose 

closure regulation. One such example is to explore the use of Source Zone Natural Attenuation (SZNA) 86 

as an endpoint for ceasing liquid hydrocarbon recovery operations. 

Evaluation and refinement of rehabilitation science and technological advancements will be essential to 

identify leading practice for this very important element of the project life-cycle. 



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Addressing the technical challenges of closure and rehabilitation 

The closure of both onshore and offshore energy resources sites each present many technical challenges. 

These must be identified and understood so they can be addressed to satisfy both the specific issues 

present for the location, and the societal and regulatory expectations around rehabilitation. There is a 

need to undertake the necessary ongoing technical work alongside the scientific research to be able to 

implement appropriate and acceptable solutions. 

Establishing an appropriate closure and rehabilitation regulatory regime 

To provide both society and asset operators clarity into the future, the continued development and 

application of appropriate, risk-based and transparent regulatory processes for closure and rehabilitation 

are needed. Establishing appropriate regimes will also help secure stakeholder support and recognition of 

the sector’s environmental sustainability, as well as facilitating a move from prescriptive to fit-for-purpose 

closure regulation. 

Water management 

Water is one of our nation’s most precious resources. Understanding how the different users of the finite 

available quantities of water can coexist constructively, now and into the future, is essential if the energy 

resources sector is to continue to grow. 

It is essential the industry continues to pursue collaborative and openly accessible research into water 

management and conservation, and develops improved technologies to better address these important issues. 

Significant community concerns exist with water management in onshore gas production, uranium and 

coal mining. Concerns over depletion of reservoirs and water quality contamination are impacting the 

social licence to operate of all the energy resources industries. For example, in 2013/2014, potential water 

contamination in the Great Artesian Basin 87 was the most significant concern for landholders in respect 

of the Coal Seam Gas (CSG) industry, creating community concerns over the industry and resistance to its 

development. However, it should be noted that development in Queensland continued relatively unabated, 

while in New South Wales CSG has effectively halted while the State works through its new gas plan 88 . 

At the national level, in 2013 the water trigger legislation was introduced as an amendment to the 

Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) 89 to facilitate the review 

by the federal environment minister of the impact of any new coal seam gas or major new coal 

developments on the water in the location of the proposed development, in addition to State review. 

The use of independent, openly accessible, leading science and innovative technologies to address water 

management concerns will positively impact social licence to operate in these areas. 

Tailings management 

A major challenge to mining based process operations, including both coal and uranium, is the 

management of tailings from the facilities. Environmental, social and operational requirements and 

expectations for the management of tailings are evolving, in respect of water management and disposal 

of solids, and impacts on the entire life of the plant. 

To meet these evolving requirements, there is an ongoing need for focussed and collaborative research 

for the safe design, management and decommissioning of tailings dams, to develop better, cleaner and 

more efficient, techniques and technologies and to continue the work of the Department of Industry, 

Innovation and Science 90 . 

Initiatives to enhance the social licence to operate 

Community engagement and education 

Community support is integral to the success of resource projects, and to the success of the sector, 

particularly in a time of growing environmental awareness. The initiatives described below aim to enhance 

the broader societal understanding of the benefits and impact of the energy resources sector, to build 

energy literacy and allow more informed community debate on the future of Australia’s energy supply, 

while also overcoming existing scepticism and popular misconceptions. 



Research social, economic and environmental consequences of the activities of the energy 


Community support is integral to the long-term viability of the energy resources sector, particularly in 

a time of growing societal environmental awareness. As the sector expands its footprint in Australia, 

overcoming existing scepticism and popular misconceptions will be integral to accessing future resources 

and markets. This makes it essential for the sector to: 

• Identify better ways to engage with the community; 

• Ensure that the community understands how it directly and indirectly benefits from the sector’s 

activities; and 

• Demonstrate the sector’s commitment to environmental sustainability. 

The sector must develop robust frameworks to build a better level of community awareness of the value 

of the energy industries in Australia and, through that, gain greater community support to sustain the 

industry’s social licence to operate. Key to this is to create trust and understanding of stakeholders through 

transparency of all actions (good and bad), including the development of an environmental performance 

dashboard. For several parts of the sector improved and more open engagement approaches are required 

to address community concerns relating to social and environmental impacts. The Western Australian 

Marine Science Initiative (WAMSI) model 91 is widely seen as a successful approach to deep and enduring 

stakeholder engagement and is one potential model on which to develop such engagement. 

Further opportunities for industry to actively support community environmental groups include working 

collaboratively to ensure community questions and goals are supported, and for industry to work to build 

more open, trusting relationships with these groups. 

Whilst building trust is paramount, engagement may also include educating stakeholders on the broader 

benefits of the energy resources sector, and discussing the distribution of benefits such as direct and 

indirect employment opportunities, the value and distribution of royalties and equity with impacted 

stakeholders (see energy literacy below). 

Energy literacy 

A major objective is to develop a program of work to improve the energy literacy across the community, 

to deepen the understanding of the energy value chain, life-cycle, energy economics, choices, benefits and 

impacts. For society to fully engage in an informed discussion on Australia’s energy future, there needs 

to be awareness of the trade-offs in energy choices and better understanding of the context in which 

they are made. To enable full, open and informed debate and understanding of the issues around the 

Australian energy resources sector, NERA aims to promote ongoing discussions and information sharing 

for all forms of energy, oil and gas, coal, uranium and the emerging range of renewables. 

This will include: promoting public discussion and literacy around how these energy resources are 

produced, used and safely managed: how they contribute to the nation’s economy; how they combine 

into the overall energy mix; and what alternatives exist. Such activity will help improve overall 

understanding of the implications of new developments, such as the electrification of transport, and how 

the nation’s power generation will be managed as demand increases and sources of supply expand. 

Information stewardship 

To augment the development of a deeper level of energy literacy in the community, it is important that 

steps be taken to support the development of “trusted and independent custodians of scientific data and 

information.” Currently there is a lack of trust between industry, their stakeholders and the public, with each 

believing the other parties manipulate information to suit their purposes. An organisation (or group of such 

organisations and bodies) that is seen by all parties as a genuine independent custodian of information 

would provide a trusted “source of truth” and could potentially arbitrate on disputed science matters. 



127

Business and 

Operating Models, 

Technology and 

Services 

5. UNLOCK FUTURE RESOURCES 

The Australian energy resources sector needs to improve its ability to identify, appraise and develop 

marginal resources in a cost effective and sustainable way. Development of marginal resources will 

require government and non-competitive corporate data to be more widely accessible to allow operators 

sufficient information to allow them to assess potential and known resources for future development. 

The sector must review national and state based regulations and restrictions that heavily influence the 

costs associated with, and the ability to undertake new exploration. New technologies and approaches 

continue to make significant impacts to energy resource extraction, which enable new resources to be 

developed and recovery maximised. While the regulatory burden is discussed elsewhere in this SCP, there 

are opportunities to unlock marginal resources in providing access to geological information and through 

greater cross industry collaboration. 

Integrated geological information 

Development of nation-wide priority driven frameworks are required for acquiring, evaluating and 

distributing pre-competitive geological and geophysical information to enable companies to identify and 

assess onshore and offshore geological basins. This will enhance the understanding of Australia’s natural 

resources and geology and help identify new projects to underpin the sector’s operational sustainability. 

As an illustration, only 12 per cent of Australia’s marine territories are properly mapped, with deep water 

exploration of new zones expected to identify additional petroleum acreage. 

Additionally, operators in all resources industries must continue to explore alternate and more costeffective 

ways to acquire new geophysical data to allow them to build accurate models of prospective 

formations for future exploration. 


BUSINESS AND OPERATING MODELS, TECHNOLOGY AND SERVICES 

Cross industry collaboration 

The ability to amortise the costs of exploration between organisations within one sector, or even between 

sectors, could provide a further way to control exploration costs and unlock access to more marginal 

resources. Establishing a National Exploration Research Programme similar to that proposed by AMIRA 92 

could help in unlocking some of the benefits of such collaboration. 

Managing ageing assets 

Many of Australia’s energy resources sector facilities, mines and reservoirs are beginning to reach the 

later phases of their production lives. As they move into these phases, production becomes increasingly 

difficult and the volumes and quality of extractable product declines. In many instances, these assets are 

then sold on to smaller operators who, through lean operations and focussed production can still operate 

the facilities profitably and effectively. 

As ageing assets are passed along the chain from one operator to the next, there is the risk that new 

owners will need to minimise some compliance commitments to ensure profitability. Commitments for 

closure and rehabilitation may prove to be too expensive and may be undertaken in marginal ways. 

As the broad array of resource facilities begin to reach the ends of their lives, it is important that the 

industry ensures the best possible standards of closure and rehabilitation be fully understood, that safe 

and economically viable solutions be researched and embedded in regulations, and that all members of 

the industry comply to these requirements. The acts of each organisation reflects on the entire sector and 

the industry as a whole must work together to maintain standards and reputation. 

Environmental science collaboration 

The role and value of ongoing environmental science is critical to the long-term commercial and societal 

sustainability of the entire energy resources sector. 

Environmental scientists assist in building a better understanding of the impact of operating facilities on 

the natural environment. They provide understanding on how mines and wells can be optimised to operate 

productively and maximise recovery during their entire lifecycle, with minimal environmental impact and how to 

return the landscape to its former condition at the end of the facility’s operational life. For the sector to maintain 

its social licence to operate it is imperative that the strong relationship between environmental science 

and energy production is maintained, and that both groups continue to support each other’s activities. 

An example of this can be seen in the offshore oil and gas industry, which relies heavily on marine 

science to support its operations safely and effectively, and to ensure the marine environment is managed 

appropriately. As such, enhancing the knowledge and use of environmental science is critical to the 

industry’s future from a technical, operational and social licence perspective. The offshore oil and gas 

industry needs to continue to collaborate with organisations such as the Western Australian Marine 

Science Institute (WAMSI) 91 to progress the development of understanding of the marine environment for 

current operations and into the upcoming abandonment phase for some facilities. 

Initiatives to assist in unlocking marginal resources 

Marginal resources are those which cannot be accessed in economic ways using presently available 

technologies and approaches. As such, the energy resources sector needs to either access these marginal 

resources using novel approaches or less costly means, or wait until either the value of the resources 

increases relative to the cost of extraction or new or existing technology is available. 

Work with technology suppliers to identify new ways to access resources 

Resource development companies need to work with technology suppliers to identify technologies being 

used in other locations and fields, that can be transferred for use in marginal resources. They need to 

consider how best to cooperate on the design, development and deployment of new technologies. 

Examples of such technologies could include advances in heap and in-situ leaching for uranium projects 

and long subsea tiebacks for offshore oil and gas, both of which could help to unlock potential in their 

respective industries. 



129


CASE STUDY 

Guidelines for prediction of geotechnical performance of spudcan 

foundations during installation and removal of jack-up units 

InSafeJIP provided new guidelines for engineers for use in their daily analysis of whether a jack-up 

unit is safe to install, operate or remove from an offshore oil and gas site. 

InSafeJIP was a Joint Industry Project (JIP) established by three universities – The University of 

Western Australia (UWA) through the Centre of Offshore Foundation Systems (COFS), University of 

Oxford (Oxford) and National University of Singapore (NUS), and the engineering consultant RPS 

Energy – to work with 19 offshore oil and gas companies and government regulators. 

There is a perception within the industry that modern jack-ups have lower reliability (safety from 

structural failure) than traditional fixed offshore platforms, with the majority of the accidents attributed 

to geotechnical failures. These can lead to rig damage, lost drilling time, and injury to personnel. 

The consequential cost to industry is estimated to be between USD$10 million and USD$30 million 

per geotechnical incident which occurs on a scale of between five and 10 times per year. 

Under the JIP, the universities reported on the benchmarking of the latest research on jack-up 

installation and extraction of jack-up platforms against the offshore data sets provided by the project 

participants. This two-year project was funded by 19 oil and gas partners and was dependent on data 

sharing between the partners. In an industry first, companies – including operators hiring jack-ups, 

jack-up owners, jack-up builders, engineering consultants and government regulators – shared data 

to create a single point of information. 

This resulted in better guidelines to bring about safer installations going forward. 

These guidelines are now being widely used across the oil and gas industry. 

Subsea tieback technology 

Research and development of innovative technologies will continue to unlock marginal resources in oil 

and gas, for example, targeted research into subsea tieback technology as a mechanism for developing 

stranded oil and gas assets, or allowing existing subsea tieback infrastructure (such as manifolds and 

pipelines) to be used to develop other fields in the vicinity (e.g. in the Carnarvon Basin). 

Reagent chemistry 

Research and development of innovative technologies will continue to unlock marginal resources in 

mining, for example, research into reagent chemistry for uranium leaching to support cost effective in-situ 

or heap leaching in an Australian geological context. This will increase yield and reduce the cost per 

pound of uranium extraction, and as a result increase the viability of a number of uranium projects. 

Computational geoscience 

Computational geoscience entails the use of advanced computational technology and software to 

undertake increasingly complex analysis of seismic imaging data. The techniques involved enable energy 

resources companies to build a greater understanding of the properties of their existing and potential 

deposits as well as identify potential locations for future carbon geosequestration. 

Computational geoscience depends on access to supercomputer capacity, appropriate seismic data 

and cutting edge software. Leading the development of the techniques offers both an opportunity for 

Australia’s resources companies to exploit the insights gained in the growth of the sector while at the 

same time building a computational centre of excellence that can be marketed to other locations. 



Unmanned aircraft systems geophysics 

Historically, geophysical data has been acquired through the deployment of either fixed-wing aircraft or 

helicopters equipped with the technology needed to undertake the surveys. However, with advances in 

both the technological capability and payload capacity of unmanned aerial systems (UAS) or drones, it is 

now possible to undertake this data collection work using unmanned aircraft. These aircraft can operate 

autonomously, programmed to automatically cover only the area required, do not require access to 

large runways, can operate much closer to the ground than conventional aircraft and can be very flexibly 

deployed, as they operate without a pilot. They are low risk and can operate for extended periods, only 

pausing for fuel and maintenance. 

6. NEW MARKETS, NEW TECHNOLOGIES, 

NEW BUSINESS MODELS 

For the sector to plan effectively for the future there is a strong and immediate need to look to new markets, 

consolidate and expand the sector’s presence in existing markets, and exploit the use of new technologies. 

Australia has established trade agreements with most nations in the Asia Pacific Region, under which 

it has for a long time exported both energy resources and the technologies used to consume them. 

Australia also has strong trade ties, and is a signatory to, many trade agreements with nations outside 

the region. Many opportunities exist for Australia to leverage these trade agreements and relationships 

to sell the nation’s resources and the associated knowledge, skills and technologies, and to partner with 

other nations or organisations in the energy resource sector. Such opportunities would facilitate the 

commercial innovation in Australia’s energy resources value and supply chains, and growth in globally 

competitive exports from the sector. 

With the proliferation of renewable and alternative power generation, there is a need to more 

fully understand the impact that widespread adoption of these technologies pose, and to identify 

opportunities for the energy resources sector stemming from these changes. The energy resources sector 

needs to be able to adapt quickly to the growing market share of these alternative energy sources, and 

find and seize new opportunities. 

Both incremental and transformational change across the energy resources sector are required. 

Incremental improvements include leaner, smarter operations to improve productivity and drive down 

costs. Transformational change includes new operating models and a focus on new and innovative 

approaches to project execution and leveraging existing capacity more fully. The increased awareness 

of society’s environmental impact, along with disruptions in the energy market from the increased 

deployment of renewable energy technologies, present an opportunity for Australia to develop and 

adapt clean technologies. Australia can potentially commercialise these technologies and become an 

exporter of clean technologies to developing countries as they transition from fossil fuels. 

While global demand for Australian energy resources remains strong, there is a movement toward 

cleaner ways to consume this energy. As the supplier of energy commodities there is an opportunity 

for Australia to be a major player in the world’s development of enabling technologies such as Carbon 

Capture and Storage (CCS). 

Asian trade agreements 

Australia holds many trade agreements with other nations in the region 93 , including those recently concluded 

with China, Japan and South Korea, older agreements with Thailand, Singapore and Malaysia and the ASEAN 

– New Zealand free trade area. Future agreements are being considered with Indonesia, India, the Gulf Cooperation 

Council and the European Union. These trade agreements provide strong and agreed frameworks 

for the exchange of goods and services and may facilitate the Australian energy resources sector to increase 

its level of trade in the sale of energy resources, and the export of technology, know-how and skills. 

The Australian energy resources sector has recently undergone a substantial expansion that has resulted 

in the development of new and highly sophisticated skills, such as the design and construction of large 

modular plant, skills that may have strong applications in many of the nation’s regional trading partners. 



131


Develop international technology partnerships 

While many Australian energy resource businesses are already members of international technology 

projects, the sector can leverage significant additional international relationships. These relationships 

can be partnerships to develop and deploy new technologies and practices in Australia, and to develop 

technologies for export to other locations. 

Such partnerships can enable Australia to improve its global performance in the commercialisation of 

innovation, drive deeper partnerships between the research sector and the Australian value and supply 

chains, and place Australia at the forefront of the deployment and export of new technology. This in turn 

can enhance domestic productivity, identify new markets for Australian technology and build a stronger 

and more diverse export portfolio, including beyond the energy resources sector. 

Commercialisation of operational technological developments 

Many Australian operators and service companies invest heavily in developing technologies for internal 

use where either the suitable commercial technology is unavailable or not suitable for their applications. 

In many instances these developments are either only used internally or given away for free. Only in a 

few instances will the developing organisation attempt to commercialise their technology. Often the 

failure to commercialise internal technology results from such efforts being seen as external to core 

business. If the company is a supplier of energy resources, the sale of software or specialised hardware is 

frequently considered a distraction. If they are a service company they may either see the development as 

a commercial advantage or an evolutionary tool they do not consider as commercialisable. 

However, with the current instability of energy resources and many organisations looking to diversify 

their base, seeking to commercialise existing operational technological developments or developing new 

concepts with a view to commercialisation presents a substantial new market opportunity. 

Carbon capture and storage (CCS) 

Research and development should continue into Carbon Capture Storage (CCS) technology for both pre and 

post combustion phases in the use of fossil fuels for power generation through mechanisms such as Coal21, 

Australian Coal Association Low Emissions Technology (ACALET), Australian National Low Emissions Coal 

(ANLEC) research and development organisation and the CO2CRC 94 , as well as developing cost effective 

and efficient technologies that could be incorporated into new facilities or retrofitted into existing plants. 

The success of this technology has the potential to enable a zero to low carbon emission process for the 

coal and gas industries, and reduce carbon dioxide (CO 2 

) emissions by up to 90 per cent 95 , thereby 

strengthening the resources market. 

Low emissions technologies 

Research and development should be targeted at low emissions technologies, particularly for the coal 

and gas industries. Development of such technologies will build technical expertise in Australia and open 

the opportunities to export these technologies and skills to the rest of the world. 

Areas where such technologies are currently being developed include gas processing at the well head and 

the reinjection of CO 2 

for geosequestration, as implemented on the Chevron Gorgon project 34 . Ongoing 

research into this technology is also underway as part of the National Geosequestration Laboratory 96 . 

Significant work is being undertaken into developing low emission fossil fuel technologies in Australia 

and overseas. The coal industry has partnered with governments and the private sector to invest in the 

demonstration of such solutions through its Coal21 Fund 97 , which funds the industry’s low emission 

research and development programs (ACALET and ANLEC). The fund, through ACALET, has directly invested 

$300 million and leveraged a further $550 million in significant low emission technologies since 2006. 



LNG as a fuel 

Significant opportunities exist to expand the use of LNG as a general transport fuel and to support the 

development and use of LNG bunkering facilities for marine vessels, following on from the Sulphur emissions 

(SOx) limitations set by the International Maritime Organisation (IMO) under MARPOL Annex VI 98 . DNV GL 

reported that there were 77 LNG fuelled vessels operating worldwide in early 2016 with a further 85 vessels 

either under construction or on order. The majority in operation are in Europe with 69 per cent in Norway 

while those on order are split 72 per cent in Europe, 25 per cent into the United States, with the balance 

distributed around the rest of the world 99 . Research has commenced into the use of LNG as a transport fuel 

for trucks and ships with potential economic and environmental benefits compared to diesel and fuel oil. 

Other uses include powering locomotives, uses in the mining sector and industrial applications as well 

as in operations. Modelling by McKinsey 71 indicates that by adopting LNG and Compressed Natural 

Gas (CNG) as fuels for a proportion of transportation trucks, mining trucks, public transport buses and 

locomotives, together with using it as a bunkering fuel for Australian shipping could generate savings 

in excess of $1 billion. Further benefits would be reduced emissions of Sulphur Oxides (SOx), Nitrous 

Oxides (NOx) and particulates found in the combustion of conventional fuels such as marine bunker oils, 

together with a reduction of the nation’s CO 2 

emissions by up to 1.7 million tonnes equivalent. 

Such developments would have multiple potential benefits to the Australian energy resources sector and the 

nation’s economy such as: 

a) Opening up new domestic markets through the development of additional small scale LNG facilities; 

b) Underpinning potential spin-off uses of LNG around the ports and other locations where LNG is stored; 

c) Reducing the emissions of many heavy transport vehicles such as bulk cargo carriers and locomotives; and 

d) Potentially allow for adjustments in current fuel tariffs and tax concessions, whilst allowing Australia 

to remain at the forefront of the development of technologies and skills needed to undertake such a 

development. 

Another opportunity to monitor is the provision of small electricity generation capacity in less well 

served locations, to infill gaps in the network and avoid the costly need to install traditional pole and 

wire infrastructures. This could be undertaken as part of a collaborative exercise with the Institute of 

Sustainable Solutions at the University of Technology, Sydney 100 who maintain Network Opportunity 

Maps showing locations where there is a potential need for such supply. 

Hybrid technologies 

Research and development should be considered in respect of new fossil and renewable hybrid technologies, 

such as renewable/ gas hybrids. Building on the growing interest in low emission technologies, hybrid fossil/ 

renewable electricity generation merits further investigation to capitalise on Australia’s natural resource 

base. Australia has abundant solar energy and coal resources with 80 per cent of the nation’s electricity 

generation currently based on coal 101 . In 2015, CSIRO (through ARENA funding) completed a pilot of 

the world’s first practical demonstration of pilot scale post-combustion carbon dioxide capture (PCC) 

processes integrated with solar thermal energy, at coal-fired (and gas) power stations 101 . Despite the 

success of the pilot, commercialisation of renewable hybrids has been limited because it is not currently 

price competitive in the absence of a price on greenhouse gas emissions. 

Enabling technologies 

The industry needs to consider the impact of enabling technologies, such as battery storage, on the 

Australian energy resources sector over the next ten years. At commercial scale, battery storage 

technology could allow under-utilised energy to be captured during off-peak periods, and utilised 

during on-peak periods. Such energy storage technologies would address the inherent intermittency of 

renewable energy supplies, such as solar generating its output during peak midday sunlight hours while 

peak demand for electricity is typically during mornings and evenings. An efficient, stable and reliable 

integration of energy sources and technologies to supply electrical systems should be a significant 

consideration for the future of the Australian energy resources sector. 



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Adapting to the changing energy mix 

World-wide the energy sector is undergoing significant change as renewable power and alternative 

energy sources become economically and commercially viable on a large scale. The Australian energy 

resources sector must consider the disruptive impact that widespread adoption of renewable power will 

have over the next ten years, as well as the changing dynamics in the demand for energy exports to key 

markets such as Asia. 

The sector needs to find constructive ways to participate in this evolving power mix, which will create 

export opportunities for clean, reliable energy supply, and help address the challenges of providing 

energy security in parallel with clean energy initiatives. Within Australia, there are issues of integration 

between initiatives at state and federal levels which impact on energy supply, affecting consumers and 

increasing the perception of risk for investors. An example is South Australia 102 , where 45 per cent of 

power generation is produced by renewable sources of energy (mainly wind and solar). The intermittent 

generation has put a significant strain on the transmission system, which had been designed for base 

load thermal generation, and resulted in a higher reliance on interconnectors to access power from other 

states, which in turn has escalated power prices in that state. 

The interaction between renewable energy and thermal energy sources, and their impact on transmission 

systems, together with the interaction between energy policy and climate policy at a state and federal 

level need to be considered in a consistent framework, such as the ‘energy trilemma’. The energy 

trilemma 29 underpins the World Energy Council’s definition of energy sustainability, it uses the three 

counter-posing drivers of affordability, environmental sustainability and energy security to determine an 

overall index on a national level. From a practical perspective, finding solutions to integrate alternative 

energy sources with more conventional sources will improve the depth of the market, and offers 

opportunities in both domestic and export markets. 

Initiatives to support the development and adoption of new technologies 

Extend the network of small scale LNG facilities 

To leverage opportunities presented through expanded domestic use of LNG, it will be necessary to 

extend the existing network of small scale LNG production facilities to provide comprehensive national 

coverage and security of supply for organisations wishing to adopt LNG as their fuel source. Existing 

domestic LNG facilities currently comprise one each in Chinchilla, Queensland; Newcastle, New South 

Wales; Dandenong, Victoria; Westbury, Tasmania; Kwinana and Dampier, Western Australia; with 

capacities of between 50 and 200 tonnes per day. An expansion of the network could incorporate 

shipment of similar volumes of LNG from the major export production facilities. 

With this expansion, marine operators would be guaranteed supply around the nation’s coast, and other 

potential consumers, such as mine sites, could then further explore the use of LNG as an alternate to 

their current dependence on imported diesel. 

As the impact of the International Maritime Organisation (MARPOL) 98 legislation becomes better 

understood, there is a strong likelihood that increasing numbers of ocean going vessels will convert to 

LNG as their primary fuel source. These vessels will require security of supply either in Australia or in the 

region and, as the region’s principal producer of LNG, there is an opportunity for Australia to be both a 

major supply hub and a supplier of LNG to other ports in the region. 



Broader support for focussed innovation 

For any economy to be globally competitive, to support a diverse and healthy economy for its citizens and 

to have the capacity to quickly adapt to change, it must continually seek new and improved ways to do 

existing work and find new commercial opportunities. Progressive innovation in the Australian economy 

requires strong collaboration between industry and the research sector. In the energy resources sector it 

requires new partnerships and ways of working between large operators/miners and their supply chain, 

and between the supply chain and the research sector to drive innovation. 

To foster innovation in the energy resources sector it is critical Australia’s policy and regulatory framework 

facilitates industry led research, supports collaboration between the operators and supply chain, 

encourages commercial risk taking, and concurrently provides strong environmental oversight. 

While the innovation ecosystem in Australia is growing rapidly, much of the focus is outside the energy 

resources sector. The findings in the Western Australian Start-up Ecosystem Report 103 show that major 

economic opportunities for innovation are in automation of knowledge work, advanced robotics and 

the internet of things. The focus of many start-ups is in mobile internet and cloud computing. There is a 

strong need to provide mentoring, facilities and focussed support to those in the start-up and innovation 

community to develop ideas and technology which could have positive impacts on the future productivity 

and sustainability of the Australian energy resources sector. This support should come from industry 

and government in the forms of investment, access to data and existing knowledge, tax incentives and 

customers for the ideas that emerge. 

7. COMMERCIALISATION OF RESEARCH AND 

DEVELOPMENT 

Australia currently faces challenges in capitalising on the nation’s significant research and development 

capability. Identifying industry requirements to better focus both academic and industry research 

and ensure uptake and commercialisation will be key to increasing supply chain capability and 

commercialisation of research in the sector. 

Australia is a world leader in many areas of technology research, ranking in the top 10 Organisation 

for Economic Co-operation and Development (OECD) nations for academic publications, yet regularly 

stumbles when trying to commercialise these developments, where the nation ranks at the bottom for 

collaboration between industry and academia 104 . The operators of many Australian facilities continue 

to require international demonstrations of equipment before they deploy new technology, making it an 

ongoing challenge for many Australian innovators to reach commercial outcomes especially given the 

difficulties in securing capital to upscale pilot projects and implement international trials. The result of 

which means many Australian businesses are unable to capitalise on their cutting edge work. 

Identifying and leveraging the research and industry connections between end users, research institutions 

and product developers is critical in defining and developing new technology, and yet many organisations 

still struggle to find the right linkages. Building these linkages and leveraging this knowledge into the 

broader sector is a major role of NERA. It is critical to the future competitiveness and sustainability of 

Australia’s energy resources sector that research and industry build stronger ties, and establish ways to 

effectively communicate emerging science on technical and socio-economic challenges of the sector. 

This requires all parties to provide leadership and actively seek opportunities to collaborate and to 

innovate together. Industry must work with the research sector to address its pressing current and future 

challenges. In turn, Australian universities and research organisations need to achieve greater consistency 

and engagement in knowledge and technology transfer. 

If we are to maximise the impact and utility of research and innovation spend, Australia needs to build 

on the work undertaken by programs such as the Australian Research Council, Co-operative Research 

Centres and Co-operative Research Centre projects to ensure research is assessed for its impact including 

social, economic, environmental and health. Energy resources related research and innovation should 

have a clear pathway to commercial impact in that sector. Australia also needs to further explore the use 

of incentives, including financial, for the research sector to engage in knowledge transfer. 



135


Living laboratories 

The commitment of the National Research Infrastructure Council 105 to build public collaboration facilities 

sufficiently large enough to provide a test bed for exploratory work, testing, certification and qualification 

and international engagement, provides significant support for innovation, product development, skills 

and services in Australia. Private organisations with testing facilities can also build breadth and depth into 

the system by developing clusters of organisations, small and large, around an industry discipline, and in 

effect developing the “living lab” concept 106 . Using Australia’s existing facilities, whether public and private, 

enables continuous learning and development and creates an environment of trust and shared risk. 

Using infrastructure as a tool to build collaboration, knowledge, skills, new and improved products has 

been shown to be successful in clusters around the world. Clusters based on infrastructure draw in 

start-ups, small to medium enterprises, universities and large industries all supporting the science and 

innovation supporting the maturation of the idea to market. 

Understanding and developing commercialisation pathways 

While many large organisations have the capacity to access commercialisation pathways for their new 

products and innovations, it remains difficult for smaller, less established organisations to understand 

how best to commercialise their ideas. Many innovations developed within organisations, whether large 

or small, are developed without the pathway to commercial outcomes clearly identified or understood 

upfront by the developers. This leaves many innovative business ideas and products unexplored or 

unrealised, and many smaller organisations are unable to exploit their ideas to their full potential. 

Many new and innovative ideas will be progressed to the point of feasibility only to fail at the development 

stage, through lack of funding or the inability to secure the support of potential clients and users willing 

to undertake trials. Bridging this gap between technology readiness and commercialisation readiness is, 

often an almost insurmountable challenge in the energy resources sector, where the high capital cost 

environment makes participants risk averse. 

To address these challenges, organisations seeking to innovate need assistance to identify the commercial 

potential and how to take their ideas, innovation and products to the global marketplace. There are a 

number of existing tools that could be extended to assist with this process, for example, concepts could be 

evaluated and assigned the accepted Technology Readiness Levels (TRL’s) 107 and Commercial Readiness 

Index (CRI’s) 108 and then supported through the product development funnel process shown in Figure 25 

until they are capable of becoming self-sustaining commercial successes. The relationship between TRL’s 

and CRI’s is set out in Figure 23 109 . 



Figure 23: A pictorial representation of the relationship between TRL’s and CRI’s 

(from Technology Readiness Levels for Renewable Energy Sectors, ARENA 109 ) 

CRI 

6 

5 

Bankable Asset Class 

Market competition 

Driving widespread development 

4 Multiple Commercial Applications 

System test, 

TRL 

Launch & Operations 

9 

System / Subsystem 

8 

Development 

Technology 

7 

Demonstration 6 

Technology 

5 

Development 

Research to 

4 

Prove Feasibility 3 

Basic Technology 

2 

Research 

1 

3 Commercial Scale Up 

2 Commercial Trial, small scale 

1 

Hypothetical 

Commercial Proposition 

Figure 24: The pathway from TRL to CRI 

(from Technology Readiness Levels for Renewable Energy Sectors, ARENA 109 ) 

Research and 

Development 

Technology readiness 

Demonstration 

Pilot 

Scale 

1 2 3 4 5 6 7 8 9 

Commercial 

Scale 

Commercial readiness 

Deployment 

Supported 

Commercial 

Competitive 

Commercial 

1 2 3 4 5 6 



137


Figure 25: Product development funnel 

Commonwealth funding, 

university & industry 

support resources along the 

research to market funnel 

Identify 

Problem, 

Unproven 

Concept 

NERA guidance 

and assessment 

support CRC, 

CRC-P, ITRP, GIL 

NERA publication 

– Research Ready 

Ideas 

Ideas 

Ideas 

Ideas 

Ideas 

Ideas 

Ideas 

• CRC, CRC-P 

• ARC Linkage, ITRP 

• Collaborations 

• Student Projects 

• iPrep 

• ATSE Mentoring 

• Hackathons 

• Fedex Days 

• Accelerators 

Proven 

Concept 

Tested 

NERA financial 

support for 

the PhD ATSE 

mentoring Program 

• PhDs, ECRs, CSIRO 

• CRC, CRC-P 

• University & Commercial Labs 

• Consulting 

Validated 

Concept 

NERA Innovation 

Voucher 


• Technology Qualification 

• IP Australia 

• R&D Tax Incentives 

• State Government Funding 

Programmes 

Prototype 

NERA support for 

COREHub & SME 

networking events 

• Entrepreneurs Programme 

• Innovation WA 

• Accelerators 

• Austrade 


• Angel Investors 

• Venture Capital 

• Classification Societies 

Environment 

& System 

Tested 

NERA support 

for the formation 

of clusters, living 

labs, technology 

competitions & 

promotion 

• Facilities & Experts for Testing 


• Austrade 

• Marketing 

• Commercial Labs 

• Angel Investors 

• Venture Capital 

• Classification Societies 

System 

Installed & 

Field Proven 

NERA identification 

of R&D 

commercialisation 

gaps, barriers 

and investment 

channels 

• Customers 

• Clients 

• Sales 

• Marketing 

• Product Cycle 

• EFIC 

• Austrade 

• Australian Landing Pads 

• International Clusters 

Market 



Initiatives to assist in the commercialisation of Research and Development 

Strengthen industry-led research stewardship 

Enhanced collaboration and research stewardship between industry and research organisations will 

provide greater research and development focus on industry requirements, increasing solution uptake 

and commercialisation. Mechanisms to support this include the ongoing use of the Cooperative Research 

Centre Association scheme (CRC) 110 and the Australian Research Council scheme (ARC Linkage) 111 . 

Enhance industry engagement with research institutions 

The sector needs to understand and adopt, where appropriate, world’s leading practice for the adoption 

of research translation, i.e. transferring research into industry practice 112 . This includes both industry 

and the broader research community working to fully and holistically understand sector challenges 

and opportunities and identifying key business people to actively manage the research engagement. 

These personnel need to understand the potential barriers and pathways to ensure research outcomes 

are efficiently transferred into business practice. 

Research and development funding models 

There is an opportunity to better coordinate, achieve efficiencies of effort and maximise the value from 

industry research by investigating collaborative funding models. This may include, for example, a research 

funding trust in the oil and gas sector similar to the highly effective model operated by ACARP and the 

Coal21 fund (ACALET) discussed elsewhere in this SCP. Such an initiative could be solely industry funded, 

with research and development tax concessions, or jointly funded by industry and government to support 

research and development in identified fields. 

A range of research opportunities are currently available, but information on them is scattered across 

multiple private and government bodies, making it difficult to identify the best source of funding and best 

capability to undertake the research. The result is duplication of effort, with multiple institutions often 

undertaking parallel research where, with better sharing of information, the effort could be combined 

and the monies streamlined. Money that would otherwise have been used to support the parallel efforts 

could be redirected to other research. 

CASE STUDY 

Assisting in the delivery of safer, more efficient and reliable 

pipelines to meet Australia’s growing energy needs 

The Energy Pipelines Cooperative Research Centre (EPCRC) provided the Australian energy pipeline 

industry with the technology necessary to extend the life of the existing natural gas transmission 

network, and build better, cheaper and safer networks to support increased demand for energy. 

EPCRC is a collaboration involving the Australian Pipelines and Gas Association Research and 

Standards Committee (APGA RSC), the University of Adelaide, Deakin University, the Royal 

Melbourne Institute of Technology and the University of Wollongong. 

APGA RSC consists of approximately 60 companies from across the pipeline supply chain including 

pipeline owners, designers, constructors, pipe suppliers, contractors and consultants. 

Pipelines are technologically advanced and complex systems required to operate continuously, 

efficiently and safely. Pipeline failure or outage can have significant, far-reaching consequences 

including impacting the security of supply for export and domestic markets and consequently the 

Australian economy. Moreover, the existing pipeline network was largely constructed in the 1970s 

and 1980s with large portions nearing end of life. Combined with a huge increase in the demand 

for domestic energy and export gas, urban sprawl and a changing pipeline ownership landscape, 

the pressures on the pipeline network have never been greater. 

The EPCRC collaboration received strong industry support and project teams were made up of 

actively engaged industry personnel and researchers. It has provided significant value to the 

Australian pipeline industry and has been recognised for its world leading research into pipeline 

innovation and improved safety. 



139


Improve understanding of Intellectual Property 

Ownership of, and access to, intellectual property emerging from new research is often problematic and 

can pose additional barriers to the effective exploitation of new ideas. This situation can be particularly 

complex when multiple businesses, research centres and universities are involved. Tension exists between 

industry’s desire to either own and/or capitalise on any advantages the research offers, while the research 

community can be more motivated to publicly share findings and continue investigations. Furthermore, 

many operators are generally most interested in having new technology available for their use, rather 

than any opportunities to earn royalties. While resolving this tension can be a relatively simple task, it is 

one that is typically addressed individually for each project, causing delays and adding potential barriers 

to timely research. 

Support living labs and pilot plants 

Living labs and pilot plants need to be developed and supported in Australia, allowing all levels of 

industry and researchers to test and demonstrate their technologies and products in a readily accessible 

environment prior to product launch. Such facilities would allow the developers of new technologies 

to prove their products to potential clients without needing to negotiate their deployment into full 

scale operating industrial plant. Without such facilities it remains extremely difficult for new technology 

developers to prove their products to clients who frequently demand demonstrated use prior to adoption. 

8. EFFICIENT OPERATIONS AND MAINTENANCE 

Australia’s reputation as a high cost jurisdiction to develop, execute and operate projects means 

that improving efficiency of operations and maintenance is critical to maintaining and enhancing our 

competitive advantage. Identifying appropriate avenues to improve the efficiency of operations and 

maintenance, and improve asset utilisation, is critical to the sector’s future competitiveness. 

Operators must continually explore, test, develop and adopt new and different innovative solutions, in 

some cases becoming early adopters rather than followers. Given the constantly evolving technological 

environment, ongoing work is required, particularly in respect of utilisation of service sector capacity, 

system standardisation and coordination of major shut downs. 

Operating models for remote operations 

The Australian mining sector is recognised globally as a leader in remote operations of process plant. 

This is a position that has been built over the past decade through innovative changes to operations 

in both the mining and energy resources sectors. However, the sector needs to continue to push the 

boundaries of what can be safely and effectively monitored and controlled remotely. The focus needs to 

be maintained developing effective operating models for remote operations (including those in hostile 

and challenging environments) and understanding and adopting ‘smart operations’ to drive performance 

improvements and potential costs savings. Co-location of remote operations centres may help improve 

knowledge transfer and enable sharing of functional activities. 

Understanding the future labour requirements in these new operating models, and ensuring training and 

development of relevant skills will be essential, requiring ongoing open collaboration between operators, 

service sector companies and education providers. 



Data, digitisation and predictive analytics 

The ongoing gains possible through advanced process modelling, diagnostics and data analytics are 

becoming well recognised and in recent years these facilities have been increasingly adopted by many 

operators. New gains will continue to be found as technology develops. To exploit these opportunities, 

the energy resources sector must push boundaries, support focussed research and develop the use 

of data and digital technology to support better decision making and bring about a step change in 

operating performance to drive more efficient operations. 

To make the most of the opportunities presented by advancing automation, dynamic modelling and 

real time predictive control may require investment in new control systems and metering for older 

facilities. These changes could include the development of open architecture control systems, such as 

that proposed by the Open Process Automation Forum 113 , in place of traditional closed systems currently 

in use in many plant. This would be accompanied by open technology, plug-and-play measurement 

equipment. It would also be necessary to ensure all of the right measurements are being made in the 

right way to allow the level of advanced control anticipated in the future. Essentially, operators must 

ensure they are measuring the right variables correctly so they can move beyond the conventional DCS 

or PLC level. Without meeting these needs it will not be possible to build accurate analytical models or 

undertake realistic and meaningful advanced modelling. Without ensuring the right technology is in place 

to make and maximise the measurements, millions of dollars could be wasted trying to grapple with 

predictive analytics from using the wrong approach. 

Data and digital enablement will result in lower operating costs and enhanced productivity for facilities, 

while supporting improved performance analysis. Industry benchmarking of Australian facilities against 

international best practice should be considered while developing a local technology industry that can 

then export these skills and knowledge to the rest of the world. 

Such technologies could include machine learning, artificial intelligence and the use of supercomputers. 

A focus on effective decision-making technology will support data analysis to drive value chain optimisation. 



141


Robotics, sensors and automation 

For decades, process plants have relied on traditional monitoring and control equipment along with human 

operators and maintenance personnel. The emergence of remote and autonomously controlled machines 

and sensors has meant that new, more efficient technological options are available. This technology includes 

such things as Unmanned Aerial Vehicles (UAV’s also known as drones) and their marine counterparts, 

which are being adopted for inspection roles across projects in the energy resources sector. 

To exploit the opportunities presented by advances in sensing, automation and monitoring, focussed 

research into applications and technology, supported by commitments to test and deploy the resulting 

advancements in the areas of robotics, drones, sensors and automation to deliver a step change in 

operating performance, is required from all parts of the value chain. 

The calculated use of automation and robotics will help to improve plant safety, drive down costs, improve 

productivity and allow better access and operations in hostile environments. Focussed development of 

leading edge technologies and applications could result in the development of domestic, world leading 

businesses which are able to export their technology to the world. 

Develop a greater understanding of decommissioning techniques 

Each of the uranium, coal and oil and gas industries undertake decommissioning, abandonment 

and mine closure in safe and environmentally responsible ways as their assets reach the end of their 

productive lives. These activities are costly and complex, exposing the businesses to greater expense and 

risk. It is important that Australia remains at the forefront of relevant knowledge and technology and 

undertakes research to build the national capabilities and also monitors the international practice and 

technology used in decommissioning, abandonment and mine closure activities being undertaken in other 

jurisdictions and other industry sectors. 

Initiatives to enhance efficient operations and maintenance 

Explore ways to build the industry’s skill base in remote operations and facility life extension 

Australia is a leading proponent of remote operations. This has been driven by the extreme distances and 

harsh environments where facilities are located. Australia is leading the deployment of semi-autonomous 

and, increasingly, fully autonomous vehicles and machinery on mine sites as well as ‘not normally 

manned’ offshore facilities. However, these steps are just the beginning of increasingly autonomous 

operations. While Australia is currently a world leader in this field, we must keep pushing the technology 

to deliver increasing benefits in productivity, efficiency and safety, by establishing collaborative 

agreements and research centres focussed on the continuing development of remote operations. 

Focussed research and early deployment of new technologies 

New technologies continue to emerge which are relevant to the energy resources sector, although 

they may first be deployed in other industries. This technology includes drones used for surveys and 

inspections, 3D printing technology used to manufacture components and prototypes, initially in 

plastics but increasingly in metals, virtual reality (VR) technology used to provide immersive training and 

developmental environments, and machine learning and advanced computing techniques used to deliver 

process plant optimisation. The sector must seek out emerging technologies wherever they are developed 

and consider innovative ways to quickly deploy them within the sector in order to deliver productivity and 

safety gains together with leading edge capability. 



Research into life extension for ageing facilities 

Across the world, many energy resource facilities are facing their end of design life while resources 

remain to be extracted. This is occurring in both the mining and oil and gas industries. Substantial 

research is being undertaken into ways of extending the life of these ageing assets to enable safe 

and efficient operations to continue without the need to invest in new and potentially cost prohibitive 

equipment or to close the facility while resources remain untapped. 

Such projects result in the development of new guidelines and alternate strategies for the ongoing use of 

these ageing facilities, and include numerous Joint Industry Projects (JIP) which are being conducted to 

identify and address various challenges faced by ageing assets. 

CASE STUDY 

Innovation precinct for coal remote operating centres 

The Remote Operating Centre (ROC) provides a central location for coal operators to coordinate and 

increase value across the complete coal supply value chain. BHPBilliton, University of Queensland and 

NERA have collaborated to start an innovation precinct aimed toward improving remote operating 

centres. Coal operators need to extract more value from the ROC operating model and believe additional 

collaboration with innovative research partners will speed value generation and enhance the Australian 

economy. The potential value of this initiative is increased sector exports and improved performance, 

commercialisation of new technology and reduced debottlenecking of capital cost for operators. 

The first step in this collaboration will be an alignment of strategic themes across ROC controlled value 

chains, providing an early opportunity to consolidate and align research work effort. For example, a highspeed 

value trial to build and deploy a cyber-physical fleet control system conducted in a collaboration 

hub could transform this technology and develop a new knowledge base. A multi-objective optimisation 

of open-pit trucking operations could consider factors including energy efficiency, change in demand 

signals and downstream process performance. This one collaboration idea alone would yield: 

• Considerable value chain benefit; 

• A new commercialised product; 

• Increased innovation; and 

• Seamless innovation integration between academia and industry. 

The learnings from this innovation precinct could be more broadly applied across other industry 

remote operating centres. 



143

Regulatory 

Environment 

9. REGULATORY FRAMEWORK OPTIMISATION 

Harmonising regulations across the States, Territories and Commonwealth and between Commonwealth 

regulations, together with the establishment of outcomes-based regulatory frameworks, would remove 

duplication, inconsistencies and inefficient complexity. It would ensure best practice regulation that 

supports the Australian economy by supporting industry, innovation and flexibility whilst providing the 

Australian community with confidence in the independent, transparent and objective oversight of industry 

activities and environmental impacts. 

Regulations which currently act as barriers to industry innovation, or inhibit Australia’s ability to access 

new resources or develop technology for export markets should be identified and streamlined, but within 

the context of maintaining consistency and stability and reducing sovereign risk for investment decisions. 

The development of regulations and adoption of standards governing the energy resources sector can 

be a protracted undertaking and, if prescriptive in approach, will often be out of date before enacted. 

Prescriptive regulation stifles innovation and flexibility, so when coupled with long timelines, creates 

further barriers to the deployment of new technologies that might deliver improved performance and 

better outcomes. The focus needs to be on risk based and outcome focussed regulation which requires 

strong demonstration of performance but allows for changing environments. 


REGULATORY ENVIRONMENT 

Encouraging sensible regulatory frameworks to allow ongoing exploration 

Across Australia a number of states are currently imposing highly restrictive regulations around energy 

resource activities, and in some cases moratoria on exploration. These restrictions are impeding the industry’s 

ability to identify, access and develop new prospects. This is placing the long-term future of the Australian 

energy resources sector and Australia’s energy security in jeopardy. The identification and assessment of 

new reserves is necessary to maintain production by existing facilities as well as for new projects. There is an 

urgent need for the industry and governments across Australia to work cooperatively to address community 

concerns, and to establish a sensible and broadly acceptable regulatory framework under which 

unnecessary restrictions are removed and exploration can proceed with the support of the community. 

Harmonisation of standards 

The energy resources sector is a global industry. Organisations at all levels are required to navigate multiple 

local, national and international standards. These differing standards impact on productivity and create 

difficulties in moving personnel and material around the world, and inhibit access to global export markets 

for Australia’s energy resources technologies. The harmonisation of domestic and international standards 

to a single globally acceptable standard is a critical step, one that is needed for the energy resources 

sector to continue to improve productivity and access new global expert markets for the supply chain. 

Review of industry self-imposed regulations 

While the external regulatory framework establishes a large number of limitations and restrictions on 

businesses, it is important also to review self-imposed regulations that may inhibit productivity. In its 2014 

report 114 , Deloitte estimated that self-imposed rules and regulations cost business up to $21 billion per year 

to administer, and a further $134 billion a year in compliance costs. While this same research found that 

the overall compliance requirements in the mining sector (of which the energy resources sector is a sub set), 

was relatively low at around eight per cent, they also found that the rate of growth of these self-imposed 

requirements was the highest in the country, at around 17 per cent between 2006 and 2011. Many of the 

new regulations are in respect of workplace safety improvements and, are very important, but other selfimposed 

regulations are simply administrative in nature and unnecessarily add to the cost of business. 

Industrial relations and workplace reform 

Issues in respect of industrial relations and workplace reform are recognised as a major point of interest 

for all members of the energy resources sector, and a prudent and equitable industrial relations landscape 

is vital to the viability of the industry. However, such issues do not form part of NERA’s charter nor are 

they part of the scope of this SCP. 

Resource management reform and review of the existing permitting 

systems 

Many areas of potential activity by the Australian offshore oil and gas industry are currently constrained 

by the current permit and retention lease system which is based on a historical ‘permit by permit’ 

approach. At present, an operator making a discovery must decide whether they can commercially 

develop their find or apply for a retention lease. Too often they apply for retention leases which 

provide generous timeframes to develop the commerciality of the project. However, a combination of 

factors could enable earlier development of a field if an operator was able to gain access to existing 

infrastructure and processing capacity. These include: the manner in which the regulations covering 

permitting operate; the Joint Authority (JA) of the relevant Australian Government Minister and state/ 

Northern Territory Government Minister or their delegates; and the incumbent operators holding titles to 

adjacent areas where they may already be operating existing facilities and infrastructure. 

It is recommended that the Australian regulators and offshore oil and gas industry review the current 

resource management framework to determine whether the adoption of a process similar to that set 

out in the Maximising Economic Recovery strategy (MER) 115 in place in the United Kingdom sector of 

the North Sea may be appropriate, and whether such a policy could serve to unlock current offshore 

discoveries through the sharing of appropriate infrastructure. 



145


Initiatives to support the optimisation of the regulatory frameworks 

Many areas of the Australian energy resources sector are currently heavily constrained by state and federal 

regulations that limit exploration to provide new supply and underpin long-term sector viability, restricting 

operational development and stifling innovation. For the sector to be able to deliver the value of its full 

potential to the economy and community it is critical that the regulatory framework is reviewed. Regulation 

needs to be flexible and outcome focussed, and provide a more stable and predictable policy environment. 

Exploration can then proceed in a safe and sustainable manner, and potential new projects can be planned 

and initiated without sudden policy changes being imposed. 

One example of where additional focussed research is needed to support and underpin regulation and 

secure community acceptance is understanding the scope, scale, sources and impact of fugitive emissions, 

particularly in the unconventional gas industry. In the natural gas industry, fugitive emissions are considered 

to include all greenhouse gas emissions from exploration, production, processing, transport and distribution 

of natural gas, except those from fuel combustion 116 . However, certain combustion processes like flaring 

and waste gas incineration are also counted as fugitive emissions. One of the key drivers of increased 

demand for gas is that greenhouse gas emissions from gas utilisation are usually lower than other fossil 

fuels 117 . However, because of the much higher global warming potential of methane compared to CO 2 

, even 

relatively small proportions of fugitive methane released during the production, processing and distribution 

of natural gas can reduce this advantage relative to other fuels 118, 119 . 

At present, the debate in Australia around fugitive emissions is largely driven by sentiment, supposition 

and inferral from other jurisdictions such as the United States. There is currently limited Australian data or 

research that specifically addresses Australia’s industry activities and environmental conditions and this is 

limiting the ability for informed debate and decisions. As the natural gas industry grows there is a need 

for clear, data driven and scientific evidence to improve understanding of the scope of fugitive emissions, 

so that the broader society can be provided with independent peer reviewed science based information, 

regulators can manage compliance and reporting in a transparent and meaningful manner, government 

can make fully informed decisions, the operators of the facilities can monitor and address any issues in a 

planned and organised manner and, potentially, Australian technology companies can engage to develop 

technologies that reduce or eliminate fugitive sources on facilities. This should include extending the 

recent work undertaken by CSIRO on field measurements of fugitive emissions from equipment and well 

casings in Australia’s coal seam gas production facilities 120 . 

Adopt and harmonise international standards 

An area of focus to achieve greater alignment is for Australia to adopt trusted international standards 

and review regulations to remove references to local bespoke standards. Regulations may need to bridge 

any gaps between international standards and standards required for genuinely local conditions, such as 

environmental issues. The energy resources industries operate within a global supply chain and the issue 

of international standards is a critical one. The industry uses standards to enhance technical integrity, 

improve safety, enable cost reductions and reduce the environmental and health impacts of operations 

worldwide. Aligning with international standards would facilitate local industry to compete in an 

international market, and enhance performance. 

This initiative is likely to reduce unnecessary and inefficient regulatory burden, duplication of health, 

safety and training requirements, and ultimately drive down cost. Standardisation is recognised as a key 

factor in the Australian Government’s Innovation and Competitiveness Agenda released in 2014 121 , with 

alignment to international standards set to deliver significant competitiveness, productivity and efficiency 

gains to the Australian supply chain. 

Standardisation will support the mobility of personnel both within Australia and globally, helping grow 

the local supply chain and enabling Australia SMEs and tier one companies to compete globally whilst 

achieving greater local workforce participation. The international oil and gas sector has estimated 

productivity gains in the order of 20 per cent for service sector procurement on the basis of applying a 

more consistent set of standards and requirements across the industry and service sector. 



Regulatory reform to support ongoing sector growth 

To avoid energy supply disruptions such as those experienced in South Australia during 2016, and those 

predicted for much of Australia’s eastern seaboard in the later part of this decade, it is important that 

government look to harmonise regulations across the states and territories and with the Commonwealth 122 . 

Such harmonisation would allow the sector to plan its future in a more structured manner and to supply the 

energy needs of the community and manufacturing industries in a stable and economically sensible manner. 

Considerable work has been undertaken at each jurisdictional level to streamline regulation and identify 

best practice approaches. However, Australia still suffers from duplicative, inconsistent and complex 

regulations across and within multiple jurisdictions which cause confusion and result in duplication, 

extended and costly timelines, and waste of government(s) resources in activities such as the granting of 

approvals. This ultimately impacts the attractiveness of Australia as an investment location. Governments 

in Australia should work together to harmonise and simplify regulation. Priorities for reform include 

adoption of trusted international standards across all jurisdictions, adoption of outcomes based 

regulation that facilitates innovation and early adoption of new technology, and reform of regulations 

to promote exploration and development of new supplies of energy resources for Australia. 

One specific area to pursue is the harmonisation, alignment and rationalisation of state and federal 

regulations in the uranium industry, giving clarity to developers of new and identified resources, and 

ensuring the safe export of product through Australian ports, with a view to developing an optimised and 

consistent national regulatory framework. 

Review the regulatory frameworks 

The Australian energy resources sector must conduct a comprehensive, overarching review of the national 

and state regulatory frameworks that govern the industry, and their interaction. The goal should be to 

streamline and simplify. Many of the current regulations are extremely onerous and duplicative or have 

the consequence of preventing the movement of plant and equipment across borders or impeding the 

movement of skilled personnel between states, as illustrated by the emerging requirement for state by 

state registration of engineers, led by the introduction of the Queensland registration scheme 123 . 

Regulations are placing a disproportionate level of expense on operators before they are able to 

determine the extent of potential reserves. 

In the area of approvals, work by the Mineral Council of Australia 124 found that in the thermal coal 

industry, the average Australian project experiences an additional 1.3 years of delay due to the regulatory 

regime, as compared to other jurisdictions. This confirms that regulations are hampering the sector’s 

ability to bring new capacity on line in a cost effective manner, and are pushing international businesses 

to look to other jurisdictions in which to invest. 

The situation is made more difficult by the imposition of moratoria on development of potential new coal 

seam gas assets in several states including New South Wales 125 and the Northern Territory 126 . Victoria has 

imposed a permanent ban on all future unconventional gas developments 127 . The banning of shipment of 

uranium through various Australian ports 128 , is forcing producers to transport the yellow cake thousands 

of kilometres overland to other ports, severely limiting their ability to export their products in a cost 

effective manner. 

National performance or outcomes-based regulatory frameworks should be established across the energy 

resources sector, ensuring fit-for-purpose regulation that facilitates innovation and high standards, clear 

pathways to compliance and reduces regulatory overlap. 



147

Creating opportunities for 

Australia’s energy resources sector 

to become globally competitive, 

innovative, sustainable and diverse. 


Glossary 

DEFINITIONS 

For the purpose of this document, the following definitions will be used: 

Collaboration is defined as a joint effort, which involves pooling of resources and information, by two 

or more organisations (companies, universities, training institutes) in the sector towards a well-defined 

goal to improve sector competitiveness. 

Competitiveness is defined as the ability of the sector to produce and sell energy commodities and 

related services competitively in comparison to other similar sectors world-wide. 

Competitiveness plan is defined as a structured and evolutionary plan to progressively work to identify 

and implement mechanisms to improve the global competitiveness and sustainability of, in this case, 

the Australian energy resource sector. This competitiveness plan will continually evolve as the issues and 

solutions change, and will be characterised by the focussed identification and pursuit of specific projects. 

Industry refers to the sub components of the sector e.g. oil and gas, coal and uranium. 

Knowledge priority is defined as an inadequacy in the depth and/or breadth of knowledge relating to 

an aspect of an industry or industries of the Australian energy resources sector. Addressing these will help 

improve the competitiveness of the sector, or one or more of its industries. 

NERA is an independent, third party, incorporated entity with a mandate to assist the energy resources 

sector achieve sector wide improvements in competitiveness and to help secure a sustainable future for 

the sector. NERA provides an independent and neutral setting where individuals and organisations from 

across the energy resources sector can participate directly or indirectly to consider, discuss and resolve 

issues that are currently restraining the sector from achieving global competitiveness and sustainability. 

Sector is defined as the energy resources sector comprising the oil and gas industry including both 

conventional onshore and offshore oil and gas, coal seam gas and shale oil and gas, the coal industry 

and the uranium industry, and related services. 

SMEs are defined as small to medium sized firms which employ up to 250 employees. 

STAKEHOLDER CONSULTATION PROCESS 

An extensive consultation process involving key stakeholders has been undertaken across the country 

during the development of the Sector Competitiveness Plan. These stakeholders included: 

• Producers and explorers; 

• Service providers; 

• Research institutions; 

• Industry associations; 

• Government agencies. 


149

ACRONYMS 

ACALET Australian Coal Association Low Emissions Technology 

ACARP Australian Coal Industry’s Research Program 

ACCC Australian Competition and Consumer Commission 

APGA Australian Pipelines and Gas Association 

ANLEC Australian National Low Emissions Coal 

ANSTO Australian Nuclear Science and Technology Organisation 

APPEA Australian Petroleum Production & Exploration Association 

ASEAN Association of Southeast Asian Nations 

AUD Australian Dollar 

BOM Bureau of Meteorology 

Bt Billion tonnes 

CCS Carbon Capture and Storage 

CNG Compressed Natural Gas 

CSG Coal Seam Gas 

CO 2 

Carbon dioxide 

COAG Council of Australian Governments 

COAL21 Fund based on a voluntary levy on coal production 

COP21 2015 Paris Climate Conference 

CRI Commercial Readiness Index 

CSIRO Commonwealth Scientific and Industrial Research Organisation 

EPCRC Energy Pipelines Cooperative Research Centre 

FOB Free On Board 

GDP Gross Domestic Product 

GJ Gigajoule 

HELE High Efficiency Low Emission technology 

ICA Industry Competitiveness Assessment 

ICF Industry Competitiveness Framework 

ICS Industry Competitiveness Score 

IEA International Energy Agency 

IOT Internet of Things 

JIP Joint Industry Project 

KPI Key Performance Indicator 

LNG Liquefied Natural Gas 

LPG Liquefied Petroleum Gas 

MARPOL International Maritime Organisation 

MM Million 

Mt Million tonnes 

Mtoe Million tonnes of oil equivalent 

NOx Nitrous Oxide 

PCC Post-combustion carbon dioxide capture 

RITC Resources Industry Training Council 

ROC Remote Operating Centre 

SOx Sulphur Oxide 

STEM Science, Technology, Mathematics and Engineering 

Tcf Trillions of cubic feet 

TRL Technology Readiness Level 

TSBE Toowoomba and Surat Basin Enterprise 

USD United States Dollar 

VDT Value Driver Trees 


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153

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109 ARENA, “Technology Readiness Levels for Renewable Energy Sectors,” February 2014. [Online]. Available: http://arena.gov.au/ 

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110 Cooperative Research Centres Association, [Online]. Available: http://crca.asn.au. 

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NERA wishes to thank all of the businesses, organisations and individuals 

who have contributed their time, knowledge, experience and foresight to 

the preparation of this plan through the consultation workshops, individual 

meetings, discussions and provision of input material. 

Registered office: 

Australian Resources Research Centre 

Level 3, 26 Dick Perry Avenue 

Kensington WA 6151 

ABN 24 609 540 285 

T: (08) 6555 8040 

E: contact@nera.org.au 

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@NERAnetwork 

NERA – National Energy Resources Australia 

www.nera.org.au

NERA Sector Competitiveness Plan 2017

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