Integrated Gas
Projects in
Australia
Joe Marushack
President, Asia Pacific & Middle East
Cautionary Statement
The following presentation includes forward-looking statements. These
statements relate to future events, such as anticipated revenues,
earnings, business strategies, competitive position or other aspects of our
operations or operating results. Actual outcomes and results may differ
materially from what is expressed or forecast in such forward-looking
statements. These statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions that are difficult
to predict such as oil and gas prices; operational hazards and drilling risks;
potential failure to achieve, and potential delays in achieving expected
reserves or production levels from existing and future oil and gas
development projects; unsuccessful exploratory activities; unexpected
cost increases or technical difficulties in constructing, maintaining or
modifying company facilities; international monetary conditions and
exchange controls; potential liability for remedial actions under existing or
future environmental regulations or from pending or future litigation;
limited access to capital or significantly higher cost of capital related to
illiquidity or uncertainty in the domestic or international financial
markets; general domestic and international economic and political
conditions, as well as changes in tax, environmental and other laws
applicable to ConocoPhillips’ business and other economic, business,
competitive and/or regulatory factors affecting ConocoPhillips’ business
generally as set forth in ConocoPhillips’ filings with the Securities and
Exchange Commission (SEC).
Use of non-GAAP financial information – This presentation may include
non-GAAP financial measures, which help facilitate comparison of
company operating performance across periods and with peer companies.
Any non-GAAP measures included herein will be accompanied by a
reconciliation to the nearest corresponding GAAP measure in an
appendix.
Cautionary Note to U.S. Investors – The SEC permits oil and gas
companies, in their filings with the SEC, to disclose only proved, probable
and possible reserves. We use the term "resource" in this presentation
that the SEC’s guidelines prohibit us from including in filings with the SEC.
U.S. investors are urged to consider closely the oil and gas disclosures in
our Form 10-K and other reports and filings with the SEC. Copies are
available from the SEC and from the ConocoPhillips website.
About ConocoPhillips
 World largest independent exploration and production company
based on production and proved reserves
 Headquartered in Houston, operations and activities in 27 countries
 Approximately 18,400 employees worldwide
 Diverse exploration portfolio: conventional and unconventional
2013 Exploration Focus
3
Integrated Gas Projects in Australia
4
Type
Asset
Stakeholders
Offshore Gas &
Liquids to LNG
Bayu-Undan Field
to Darwin LNG Facility
Regulator of JPDA
Timor-Leste Government
Australian Government
Northern Territory Government
Joint Venture Partners
Coal Seam Gas
to LNG
Australia Pacific LNG
Australian Government
Queensland Government
Joint Venture Partners
Agricultural Interest Groups
Non-government Organizations
Community Partners
Unconventional
Canning Basin
Australian Government
Western Australian Government
Joint Venture Partners
Traditional Owners
Conventional
Exploration
1. Greater Poseidon
2. Barossa-Caldita
3. Greater Sunrise
Australian Government
Timor-Leste Government
Joint Venture Partners
Fishing Interest Groups
ConocoPhillips Australia and Timor-Leste
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Production
•
•
•
•
•
1995: Bayu-Undan discovery
1999: Bayu-Undan FID
2003: Darwin LNG FID
2004: Bayu-Undan first cargo
2006: Darwin LNG first cargo
Development
•
•
•
•
•
2008: Enter Australia Pacific LNG
2011: APLNG Train 1 FID
2012: APLNG Train 2 FID
2015: APLNG Train 1 first cargo
2016: APLNG Train 2 first cargo
Exploration &
Appraisal
•
•
•
•
•
•
2005: Caldita discovery
2006: Barossa discovery
2009: Sunrise appraisal complete
2010: Greater Poseidon discoveries
2012: Enter Canning Basin
2014: Extensive drilling program
FID: Final Investment Decision
Australia’s Advantage
 Stable fiscal and
regulatory regime
 Close to LNG customers
 Skilled and experienced
workforce
 Some existing
infrastructure
 Abundant discovered
and proved resources
Source: WA Department of Mines & Petroleum and EnergyQuest (July 2013)
*Source: EIA World Shale Gas and Oil Resource Assessment 2013
6
Global LNG Market Balance (Source: PFC 2014)
 If all planned & speculative capacity is built, we may see a
potential for LNG oversupply (competitively affecting Australia)
 However, supply is expected to be constrained due to execution
risks and cost pressures
7
Australian Project Cost Challenge (Source: McKinsey 2013)
While Canadian costs seem too low, they are still likely to be lower
than Australian greenfield projects
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Australian Projects Capital Cost Overruns
60
50
US$ billion
40
30
FID Estimate
20
2013 Estimate
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* Pluto began production
30 April 2012
0
QCLNG
GLNG
APLNG
Pluto*
Gorgon
Project
“While the industry, partners and governments have together delivered
more than $160 billion in committed LNG investment in Australia,
another $100 billion-plus in projects hangs in the balance"
Chevron Australia's managing director Roy Krzywosinski
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Global Competitiveness 1997 to 2013
 Australia is ranked 16th, down from its best ranking in 2004
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Has the Tide Turned for Future Mega-Investments?
Source: Wood Mackenzie, November 2013
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Addressing the Cost Challenge: Brownfield Development
 Use of existing infrastructure reduces capital costs
 Leverages operations best practice e.g. experienced operator, skilled
workforce, existing construction and operator relationships
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Examples: Darwin LNG and Australia Pacific LNG
 Darwin LNG
 Cost advantage of tying into
existing infrastructure
 Permitted for 10 MTPA
 Expansion land available
 Australia Pacific LNG
 Cost advantage of tying into existing
infrastructure
 Permitted for 18 MTPA
 Land available for 2 additional trains
 Leverage Operations Best
Practice
 Strong relationships with train
construction companies
 Experienced operator
ConocoPhillips Optimized Cascade©
Process
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Potential to Unlock Stranded Gas
 Complement not replace
existing options
 One Australian project
committed: Shell’s Prelude
 Multiple projects considering
FLNG as a development option
 Opportunity to position
Australia as a global FLNG hub
 Center of excellence for operations,
maintenance, supply chain and
support
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Reserves Do Not Equal Development
 Policy makers must think big
 Stable fiscal regimes attract global
investment
 Sound regulation is vital
 Based on prudent scientific fact
 Remain open to innovative
technology such as FLNG
 Laws should promote investment
 Domestic gas reservation policies may
deter investment
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Reserves Do Not Equal Development
 Industry must act responsibly
 Continuously improve safety and
environmental performance
 Continuously improve technologies,
processes and safeguards
 Better inform stakeholders about
facts and offer scientifically
accurate information
 Genuine engagement with
communities - open, honest and
transparent
 Commitment to local content to
deliver local capacity building and
economic participation
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Summary
 Australia has delivered world class LNG projects
 Australia’s advantage




Close to LNG customers
Existing infrastructure
Highly experienced workforce
Abundant resources
 Challenged to remain cost competitive in a global marketplace
 Addressing challenges
 Brownfield developments
 Innovative technology – FLNG
 Investment decisions need certainty
 Stable fiscal settings
 Sound regulatory policy
 Industry must remain committed to transparency and sustainability
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