Welcome to SEAAOC 2008

SEAAOC 2007 broke all record for attendance, making it North Australia and South East Asia's largest and most diverse meeting of offshore oil and gas professionals.

The 2007 speaker line up was the best yet with chief ministers and government officials sitting alongside senior oil and gas executives from all over the region making for a lively and thoroughly entertaining programme.

SEAAOC 2007 was timed to coincide with the APEC Energy Ministers Meeting and the APEC Energy Business Forum, which provided even greater networking opportunities and even more expertise at this year's event.

Programme Highlights included:

	The Hon. Clare Martin MLA Chief Minister Northern Territory Government Keynote Government Address - Australia Australia's Energy - A Regional Asset Clare opened SEAAOC 2007 by highlighting the issue higher prices which have been around for the past few years and the damaging affect it has had on business in the region and whilst this brings potentially greater profits from higher prices this has been eroded by substantial rises in exploration and development costs. She suggested that "the hike in costs is in large part due to the rush to find and develop petroleum resources, combined with a similar trend across a range of mineral commodities the so called commodity 'super cycle' " This has created a very challenging economic environment when combined with 'energy nationalism' and instability and climate change. Clare went on to mention how climate change in particular is no longer merely a government issue as "the business community is also coming out in support of emissions trading as a way of reducing CO2 emissions and its effect on climate change. It's a global problem requiring global solutions and, of course, it's a major issue for petroleum and other energy related companies." The Chief Minister encouragingly explained how the future of he gas industry is looking bright when considering the oil is getting harder to find and discoveries are becoming fewer "Australia's NORTH WEST ENERGY ARC, home to petroleum basins from the North West Shelf to the Timor Sea, has featured on the world stage as a location for giant gas discoveries in recent years. And there's considerable potential for further gas discoveries, with key industry players planning vigorous exploration programs in the near future." Clare enthused on how LNG development in the NT region has become key for customers as they seek out supply of LNG from reliable stable suppliers and went on to outline some of the major of the activity currently happening in the region, these include: - ConocoPhillips and Santos joint offshore ventures are aggressively exploring their Caldita, Barossa and Evans Shoal acreage to prove up sufficient reserves for their next LNG train. - Bayu-Undan's third year of full production and the Sunrise project has taken a significant step forward with the recent treaty ratifications by the Australian and Timor Leste governments. - Strong progression of the Blacktip Gas Project, which will fuel the Territory's power generation. With much of the onshore work due to take place next year, with the first gas planned for January 2009. - Ashmore Cartier area developments: - Puffin = AED Oil has significantly increased its estimated oil reserves and has also identified adjacent exploration potential. The Puffin Field Floating Production Storage and Offtake vessel will be on site mid year and first production is expected soon after. - Montara = Coogee Resources progressing in the region with two satellite discoveries in early 2006. - Crux = Nexus Energy has been conducting appraisal drilling at the field. A liquids stripping project is proposed, with first production in early 2010. The Chief Minister concluded her address by discussing downstream development and the importance of establishing gas based industry in the Territory. She stated that when gas fields are developed for onshore LNG, the proponent should seriously consider the potential for upsizing their offshore development to provide a portion of gas to supply downstream gas industries. "The reality is that governments of other gas endowed nations place great value on the establishment and expansion of these industries. We believe the Australian Government must think and act more strategically in relation to downstream gas industry, particularly in the context of regional development." Click Here to download the full presentation

	Belinda Robinson Chief Executive APPEA APPEA's Industry Strategy - The Petroleum Industry in the NT - Home to Australia's second LNG hub. Belinda's presence at the event was particularly welcome as APPEA's contribution to the development in the region is key. She began by speaking about the initial success of Darwin's LNG plant with 50 shipments of natural gas to its overseas customers already since February 2006. Belinda outlined how 10 new petroleum exploration areas in Commonwealth waters off the Northern Territory and the Territory of Ashmore and Cartier Islands and the positive affect that this will undoubtedly have on the region. She also mentioned other key developments that are occurring in the region including: The Blacktip Gas Project to drive Darwin's gas fired electricity generation by 2009. 95% of prospective onshore acreage taken up, or under application. 10% in 1998. $75M+ planned for onshore exploration during the next five years consisting of ambitious drilling programs using innovative drilling techniques. NT now an ever growing share of Australia's LNG production, up to 2.22mt in 2006 Belinda then introduced ConocoPhillips' Year 10 Energy Challenge - A brand new initiative designed to increase student awareness of the gas and oil industry. The project, which APPEA is supporting, is being piloted in the NT this year. She then presented the various multi-billion dollars investments that are underway in the area including: According to ABARE, $9.2b in oil and gas projects under construction or committed. A further $23b (at least) in projects at a less advanced stage of development. In addition, $386m in coal seam methane projects under construction or committed. A further $35m in projects at a less advanced stage of development. Her presentation was wrapped up with discussion of the Industry Strategy Leaders Report which is a government/industry partnership aimed at securing Australia's oil and gas resources for the Australian people and guaranteeing the longterm sustainability of an Australian oil and gas industry. Click Here to download the full presentation

	James Slutz, Deputy Assistant Secretary, Oil and Natural Gas, U.S. Department of Energy Global Natural Gas Markets, Everyone Wins; Economic Development, Energy Security, and Climate James was the first of this year's international speakers and a most welcome addition to an event dealing with issues of such global significance. James started by outlining the importance of gas imports to the US, particularly following production set backs in the Gulf region, with LNG being the natural choice. With areas such as New England and California desperately requiring additional supplies of gas and the construction of an LNG facility. Mr Slutz was quick to remark on the very public opposition to the proposal of LNG plants in such areas with New York and California being the most publicised of late. Other LNG sites have been rejected elsewhere in the US for reasons other than public opposition including economic reasons and an inability to acquire an LNG supply. So it is clear that whilst the necessity to construct sites is of prime importance, site selection and other management considerations appear to be holding the country back. He mentions how this issue has been alleviated to some extent with the construction of some offshore and non US sites (in bordering nations), yet this will not satisfy the nations ever increasing demand for gas and as such more need to be done. James led the delegation through the DOE's LNG activities aimed at alleviating public safety concerns, regulators security issues and Federal economic considerations which include: DOE LNG Partnership with State Utility Regulators DOE Research on Natural Gas Quality and LNG Interchangeability DOE Sandia National Laboratory - LNG Safety and Security Research Federal/State LNG Forums James finished with an overview of the NPC Study on Oil & Natural Gas which is currently undertaking an in depth report for the US Secretary of Energy. Due for release on July 18th 2007, this study should go some way in producing a platform for the future development of LNG in the US. Click Here to download the full presentation Click Here to hear an exert from the presentation

	The Hon. Raphael P. M. Lotilla Secretary of the Department of Energy The Republic of the Philippines Keynote Government Address - The Republic of the Philippines Energy Cooperation and Private Sector Investment: Key to Meeting the Demand and Challenges for the Asia Pacific Region SEAAOC 2007 was delighted to have The Hon. Raphael P. M. Lotilla present at this year's event. He was the first of our South East Asian representatives and enabled delegates to gain a unique perspective on the ASEAN Regional Community's Plan of Action for Energy Cooperation. Secretary Raphael initially guided us through the vast reserves of ASEAN resources and the significance of the region in a global perspective: ASEAN Resources: 22 billion barrels of oil 227 trillion cubic feet of natural gas 46billion tons of coal 234 gigawatts of hydropower 20 gigawatts of geothermal capacity The Secretary also presented the ASEAN Vision 2020, an initiative to establish interconnecting arrangements for electricity, natural gas and water within the region through the ASEAN Power Grid (APG), Trans-ASEAN Gas Pipeline (TAGP) and Water Pipeline. The plan also promotes energy efficiency and conservation, as well as the development of new and renewable energy resources Mr Lotilla then explained the future benefits of the Cebu Declaration on East Asian Energy Security, where 16 world leaders agreed on a concerted regionwide effort to harness alternative sources of energy. The declaration will ensure continuous energy supply for their growing economies, in the face of dwindling oil reserves. The importance of Natural Gas in Regional Energy Security was the final issue to be tackled by Secretary Raphael. He told of how the Statistical Review of World Energy 2006 stated that natural gas consumption grew by about 2.3 percent in 2005, as opposed to oil consumption which increased by only 1.3 percent. Therefore natural gas is becoming a major contender to oil in the energy demand mix. To this end the Philippines' USD 4.5 billion Malampaya Deep Water Gasto- Power Project has been developed to produce an additional 2,700 MW of power for the island of Luzon resulting in the retirement of some of our oil-based power plants expanding natural gas use to include other demand sectors. Click Here to download the full presentation Click Here to hear an exert from the presentation

	*Chris Hart, Managing Director, MEO Australia* MEO Australia - Focusing on The Development of Gas-To-Liquids Projects Chris Hart's first-hand expertise was on hand at SEAAOC 2007, gained from MEO's extensive involvement in Darwin and the Northern Territories gas developments. He was very upbeat about the region's position as the "new centre for emerging upstream industry". He was able to reveal MEO's future strategies, commencing with their new upstream strategies including their GTL projects. The first 2 wells to test are: - Epenarra: Darwin Fm. 5.6 Tcf of wet, low CO2 gas (LNG production) - Heron North: Plover Fm. 5.5 Tcf of dry, moderate CO2 gas (methanol production) MEO predict that a positive outcomes will accelerate development of GTL projects. Chris outlined their LNG plant substructure Ace platform for LNG process equipment which offers Methanol Substructure and storage in CGS substructure. This advanced system features a radical design allowing for a much decreased above surface height and flat platform working area. Mr Hart then discussed MEO Australia assets approved GTL projects, namely: Timor Sea LNG - Uses low CO2 gas Tassie Shoal Methanol - Uses High CO2 gas (very prevalent in Plover Fm.) He also pointed out NT/P68: Primary gas source for projects with untested gas discovery 11 Tcf GIP (Est.) in two horizons and evidence for high gas liquids and low CO2 in one horizon (Darwin Fm.) With LNG & Methanol Project EIA Approvals, Chris stated how MEO's Focus is confirming gas supply with the primary focus on Epenarra (low Co2 Gas). Drilled in 1972 this gas is suitable for LNG production and MEO has already conducted3D Acquired and Inversion Studies identifying optimum Epenarra fracture zones with up to 3 wells for 2007 appraisal drilling. In summary Chris believes MEO Australia has significant scope for strategic gas and rapid commercialization path via approved GTL projects with first farm-in partner secured. Click Here to download the full presentation Click Here to hear an exert from the presentation

	Peter Cleary, President, North West Shelf Australia LNG Pty Ltd Atlantic LNG - Its Influence on Asian Markets Peter was the perfect speaker to fill the delegation in on the latest developments in the Asian and Atlantic LNG markets and the influencing trend of one on the other. Peter firstly outlined the Asian future market trends including: - Alpha Wave - Short term regional shortfalls 2007- 2010 due to demand surges - Beta Wave - Underlying growth dominated by China and India - Structure - Long term contracts dominate: Security of supply Growing influence of NOCs Lack of fluid regional market Spot supply still only a stop-gap, avg. 3% in 2006. He then remarked on how Atlantic LNG influences the Asia markets. He stated how the increasing Atlantic LNG demand is outstripping local NG supply however the political risk on cross-border pipelines is proving challenging to the region's development. And whilst the emergence of integrated projects suggests some short term supply the drivers for flexibility remain: - Only 3% (growing) of the gas market - Independent markets - Developer preferences seeking arbitrage opportunities. - Regulatory environment - Dominance of Henry Hub Mr Cleary then discussed the supply vs. demand outlook in the Atlantic and the potential for Asia Linkage. This would probably mean the increased development of Qatar (and Iran in the future) with its surplus capacity, geographical ambivalence and value seeking nature. He also stated how the Gorgon will sell to both markets on regional pricing models with global companies having multi-market access at both ends of supply chain. Peter also envisaged the continuance of Oil-based pricing in Asia vs. Natural Gas in Atlantic maintaining arbitrage possibilities. However quality differences remain a hurdle to liquid global trade. In summary Mr Cleary predicted LNG increasingly flowing between the Atlantic and Asian Markets with cycles of over and under-supply regionally bringing arbitrage opportunities. He believes Asia's preference is long term contracts with pricing linked to alternate fuels but for the foreseeable future, "the Atlantic and Asian markets will remain distinct, providing windows of opportunity to both sellers and buyers." Click Here to download the full presentation Click Here to hear an exert from the presentation

	Dr. Fereidun Fesharaki, Chairman & CEO, FACTS Global Energy Group Globalization of LNG Pricing Concepts: Defining A Vision for the Future Dr. Fesharaki was one of our most highly praised speakers at SEAAOC 2007, providing the delegates with an insightful and opinionated overview of the current status of the market with a suitably lively subsequent panel session. He began by providing the delegation with an overview of the Asian LNG market has gone over the last 20 years and identified 3 distinct phases: - Legacy Contract Phase: (before 2000) Heavily linked to oil prices and signed between Japan, Korea, and Taiwan, and key Asian and Middle East suppliers No 'S'-curves, no floors and ceilings Price range: $7.40-13/MMBtu - Low Price Phase:(Post-2000) Post-2000 with very low prices, lower oil linkages and more flexibility for buyers. Price range: $2.53/MMBtu (FOB) - slightly >$3/MMBtu Low prices were thought to be a new trend. Buyers' insistence on even lower prices and resistance to low priced contracts a big mistake! - Tight Energy Market Phase:(Post-2005) Prices well above the 'low price gas' phase with tougher seller attitudes. Some relief will come late 2008/9 but phase will last at least through 2011. Followed by the Switch to a Seller's Market in 2006 where sellers have regained the upside and renegotiated prices. Dr. Fesharaki presented the development of Qatar as a major price setter in the LNG market with some 48 mt directed to the West which can be diverted to the highest paying market. As the country holds most of the LNG available before 2012/2013, he discussed how it will continue to be a price setter, imposing prices at or above crude oil parity. However whilst the future of LNG looks strong, he did warn that current high LNG prices are not sustainable, with term contract prices of $10-11/MMBtu for 7-20 years being way too high. Fereidun went on to state how he predicts the Eastern vs. Western Pricing Strategy for LNG will see Asian prices offering more reliable and absolutely higher prices than HH due to a number of factors including crude oil performing stronger than HH and the imponderable supply situation of gas in the US. Dr. Fereidun Fesharaki finished with a prediction that most sellers will opt for a mixed portfolio of sales to East and West with some LNG to be offered 15-20% lower for term buyers within the next few years. Click Here to download the full presentation Click Here to hear an exert from the presentation

	Brian Cann Assistant Director, Gas Industries, Department of the Chief Minister Northern Territory Government NT Government Perspective on Downstream Gas Industry Swimming Downstream, Against the Current Brian returned to SEAAOC this year with a much anticipated review of the Northern Territory Government's perspective on the downstream gas industry and future outlook. LNG expansion was the first of Brian's topics with the talk of continued growth following the successful launch of the region's LNG plant last year and further development of several world class gas fields in the Timor Sea. He admitted however that downstream gas manufacturing industries have yet to prove as successful. This is a result of a turn around in the global LNG market over the past few years with prices up, long term contracts readily available, the technology being mature and upstream companies keen to access a profitable means of monetising their reserves. Brian then analysed a number of recent reports of significance to the region's LNG development including: ACIL Tasman Report Modeled the impact of an LNG only development with LNG plus a mix of gas industry development. Nexant Report Analysed over twenty gas and condensate industries, selecting five integrated multi-industry projects for in-depth analysis and budgeting. Key points from the Nexant study were: - That a mixed feedstock olefins cracker plus derivatives is the prime investment opportunity. - That incorporating an aromatics plant reduced profitability although processing condensate on a larger scale might offset any impediment. - That a methanol and ammonia/urea complex is attractive based on Nexant's projected product and feedstock prices. - That estimated cash costs of production at Darwin are competitive within the Asia region. Brian also discussed the GTL synthetic fuel investment opportunities in NT, claiming that GTL could be a massive gas consumer when it does become an attractive investment. "Just 350 000 barrels per day of liquid GTL fuel production would consume all of 1 trillion cubic feet of natural gas per year." Brian wrapped up a comprehensive discussion by confirming the Northern Territory Government's commitment to attracting investment in downstream gas manufacturing industry and LNG projects. He mentioned how the NT Government will be continuing work to lobby the Australian Government and industry organisations to provide a more attractive investment environment for gas manufacturing industries. "The Territory will continue to invest in research and analysis to inform our lobbying and investment attraction efforts. And we will continue to plan and invest in land and infrastructure development to enhance the Territory as a location for gas industry." Click Here to download the full presentation Click Here to hear an exert from the presentation

	Somchai Sintharapantorn Executive Vice President - Natural Gas Supply & Trading PTT Public Company Limited, Thailand Thailand's Dynamic Gas Industry - Present and Future Trends Mr Sintharapantorn kindly agreed to speak at SEAAOC 2007 and addressed the delegation with comment on the increasing role of Natural Gas in Thailand's energy consumption in the midst of high oil price environment. He commenced by advocating strong support for natural gas claiming it to be the energy choice for power generation. Somchai discussed how the last 10 years has seen Thailand's oil consumption decreases while Natural Gas increased significantly from 19% to 33% in a Decade. He then went on to forecast how gas will continue to grow and become the largest energy source in Thailand reaching 42% of total market share by 2015. Mr Sintharapantorn explained Thailand's thirst for natural gas demand with power sector accounting for 74% with other demand coming from petrochemical feedstock and industry/transportation through combined cycle, NGV, cogeneration, and district cooling technology He believes that LNG is an attractive complement to domestic and regional gas supplies in the long term and as such the Thai government has approved an LNG terminal to be located on the Eastern Seaboard due to start operation in 2011 He concluded by confirming his belief that natural gas has become the world's 21st century fuel of choice in many markets including Thailand yet stated the importance of searching for supply diversity with both LNG and pipeline gas being an essential component in bridging the supply gap in the longer term. Click Here to download the full presentation Click Here to hear an exert from the presentation

	Tetsu Hashimoto Executive Officer General Manager Fuel Department Tokyo Electric Power Company (TEPCO) Future Requirement For LNG: Will It Grow Further? With Japan accounting for 40% of the world's LNG trade in 2006 (including major imports from ConocoPhillips's Darwin LNG plant) it was vital that the nation be represented at SEAAOC 2007. Tetsu Hashimoto was able to provide us with a first hand summary of Japan's future fuel strategy. Mr Hashimoto outlined Japan's predicted growth of nuclear and natural gas and concurrent decrease in oil and coal will decrease. "This change will occur due to a combination of factors: the sustained construction of nuclear power plants by the power industry, including TEPCO, and a switch in energy use from oil to natural gas by industrial customers. These cost sensitive customers choose their energy sources based to a large extent on relative prices and to a lesser extent on their commitment to the requirements of the Kyoto Protocol." Tetsu stated how Japanese power companies had committed to build several new nuclear power plants in the coming decade, which emit no global warming gases. However despite the image of LNG as being the clean fuel choice of the future he controversially pointed out that LNG liquefaction plants are known to be the single largest emitters of such gases on the planet. He also highlighted that "pricing of LNG compared to the price of oil in particular is critical for the future growth of LNG demand in Japan. I argue that the current import prices of LNG to Japan, which have a traditional "S-curve" arrangement in the LNG pricing formulae, have historically been more or less at the same level as European gas prices." Mr Hashimoto mentioned that Japanese LNG buyers are searching for new long-term LNG supplies in the Asian Pacific countries to supplement their future demand, with Australia being a prime choice due to its proximity, business friendly legal and taxation systems, and political stability. He concluded by saying that: "Future growth of LNG use in Japan may depend on the relative prices of LNG compared to oil, coal, and power. As we see several current LNG supply contracts expire in the next decade, the potential for new long-term LNG supplies from the Asian Pacific countries to Japanese buyers will be substantial." Click Here to download the full presentation Click Here to hear an exert from the presentation

The Hon. Clare Martin MLA Chief Minister Northern Territory Government

Belinda Robinson Chief Executive APPEA

James Slutz, Deputy Assistant Secretary, Oil and Natural Gas, U.S. Department of Energy

The Hon. Raphael P. M. Lotilla Secretary of the Department of Energy The Republic of the Philippines

**Chris Hart, Managing Director, MEO Australia**

Peter Cleary, President, North West Shelf Australia LNG Pty Ltd

Dr. Fereidun Fesharaki, Chairman & CEO, FACTS Global Energy Group

Brian Cann Assistant Director, Gas Industries, Department of the Chief Minister Northern Territory Government

Somchai Sintharapantorn Executive Vice President - Natural Gas Supply & Trading PTT Public Company Limited, Thailand

Tetsu Hashimoto Executive Officer General Manager Fuel Department Tokyo Electric Power Company (TEPCO)