contentsAnthropologist Hunting Dragon Gas
You won't catch Chevron career man Gavin Harper pondering what might have been had he gone on with the anthropology career he missed out on, especially given the project he's currently sitting on.
Harper, Executive Chairman of ASX-listed Sino Gas & Energy, completed a degree in anthropology in England but quickly realised the attractions of the earnings to be made in the oil industry at the time: "If you could breathe and walk that was more or less all the qualification you needed to get a job in Aberdeen during its burgeoning oil and gas industry", he related to PESA News Resources.
He started from the ground up, originally as a NDT (non-destructive testing) technician, taking x-rays of ultrasonic tests with a petroleum industry service company. He fairly quickly got into the commercial side, becoming contracts manager for the company before Chevron took him on in the same role and he progressed into project management.
After a particularly successful North Sea project, his career took a major turn when Chevron picked him in an 'A-team' of its project managers from around the world and based them in California, from where he travelled the globe helping set up and advise its major projects, including Gorgon in its early days when it was still under WAPET (West Australian Petroleum).
Harper was centrally involved in several critical decisions Chevron made at the end of 1999: whether to operate in WA as WAPET or as a clear-cut Chevron organisation; whether to develop the Gorgon project with the North West Shelf or go independently; the decision to develop Gorgon on Barrow Island; and the decision about re-injecting CO2 as part of the Gorgon project.
It's well documented that choosing Barrow Island was an exhaustive process, but Harper revealed the true extent of the process: "There were different platform options. Floating LNG was on the list of things to look at, but at that time it was probably not a serious contender - certainly variations of FLNG were considered; sunken 'grounded floaters' were looked at", he said.
"There were several hundred different concepts looked at for developing it – different configurations, different sizes, scales. It's well documented that there were a lot of opinions and views about how appropriate it was to do that. At that time, the role of the team I was part of was to flush out people's perspectives and align the interests of some differing views.
"You can still be an offshore operator and feed your gas into someone else's onshore plant, but I don't think it was ever seriously considered to have anyone but Chevron – or WAPET at the time – as offshore operator.
"With WAPET, it was definitely preferred to have a clear Chevron organisation that followed the Chevron chains of command and applied all the Chevron business practices. Generally speaking, if you're operator you don't completely control things but you've got more influence."
Harper has carried this philosophy forward into his role at Sino. "Being operator is the right thing there. If you're trying to promote a safety culture, good behaviour towards governments and high standards of business ethics and so on, it's much easier if you control the organisation than have a third party doing those things for you", he said.
He has never looked back and regretted the decision to not pursue anthropology.
"It is an interesting subject, but I just did it to get a degree and see where life takes you after that. It would do students well not to worry too much about what they're going to be when they grow up ... they're too young. It's interesting to hear UWA going back to general degrees rather than focused degrees, putting everyone through common arts or science degrees for two years then start to specialise later on. It fully fits my philosophy", he said.
A key lesson he learned over his years 25 years with Chevron is that the whole process of managing major projects can always be improved, measured and can be trained. Sino's new CEO Robert Bearden was also a Chevron career man before leaving to be operations director at Sinopec subsidiary Addax, which has operations in Africa and the Middle East.
"Hopefully one of the things that Sino brings to China – and why the Chinese value us as operators and partners – is applying some good, rigorous project management process, and stakeholder management programs – finding out what each stakeholder wants out of a project, what success looks like for them, what their concerns are", Harper said.
"None of it is rocket science, but taking the time and discipline to apply some of that is important. Putting yourself in the shoes of other people to try to understand how things look from their perspective is a healthy thing to do in life in general."
Harper retired from Chevron in 2006 after a 25-year career that included running Chevron's Korean gas business development operations and a role as Chevron Australia's project implementation manager, including integration of some Australian and Papua New Guinea operations. He also represented Chevron in North West Shelf ALNG marketing efforts for China, Korea and Taiwan.
Barely a month after he retired, he got a call to consult for Sino as the company had just acquired gas exploration assets from Chevron, after Chevron and Texaco China decided their Ordos assets were non-core. However, they were drill-ready on acquisition due to extensive work conducted by Texaco China.
By 2008 Harper joined Sino's Board but was not full-time again until he was appointed Executive Chairman in November last year. Sino listed on the ASX in 2009 and today the majority of its staff of 30 are sub-surface and operations people from Conoco-Phillips, Schlumberger and CNPC (China National Petroleum Corporation).
With Sino expecting first production in mid-2013, Harper said he often gets questions about the length and complexity of the Chinese project approval process . The reality is not all it seems, Harper said.
"The reality is that if you benchmark against any major project in Australia, the Chinese process is pretty damn fast in comparison to Australia", he said. "The Gorgon field was discovered in the 1980s, it'll come on-stream in 2014–15, it's not exactly a super-fast project and having spent several years of my career working hard on getting partners and government aligned and getting environmental issues dealt with, the time it takes to do those things in China is actually relatively short and straightforward compared with the big projects in Australia."
This year Sino will be drilling appraisal wells to drive the Chinese certification process of the reserves. A small-scale pilot gas well will be put on production this year in Q2 in the southern Sanjiaobei permit, followed by a larger-scale pilot in Q4 2012 in the company's Linxing block.
Harper sees enormous benefit – especially for companies like Sino - in China's recent move to link natural gas prices to higher import energy prices, starting immediately with Guangdong and Guangxi provinces and proceeding with a staged roll-out which will eventually reach the Shanxi Province where Sino operates.
Harper calls this "very sound policy" which not only draws investment but irons out distortions, "particularly if you've got cheap coal prices, and power generators have to make decisions of coal versus gas. Those decisions have to be made on true realistic prices that are going to be sustained".
"I don't know why you wouldn't move the local gas price much closer to the international price so that the well-head price that the producer receives should be more or less indifferent to the end user market", Harper said.
"It would probably also drive up local prices so would be politically unpopular ... but at the same time it produces other benefits: you find new producers emerge.
"That's the trouble with a distorted pricing regime is that you're probably suppressing new producers entering the market if the price is low, so who knows what would happen if you open it up to have a competitive regime?
"If energy is subsidised – if a product that has a global price has been sold locally for less than that global price - you're going to get distortion in there.
"You get extreme situations of that in countries where you have subsidised petrol prices which are a fraction of the true cost of producing that oil. Not only does it create a huge disruption to the market because the economics just don't work, but also when you're trying to fix it by saying 'it's time to start paying a reasonable global price', you get huge social unrest and nobody wants to pay the price because they've enjoyed the discounted price for so long.
"My message would be to let free market forces take effect to whatever extent you can. If you don't do that, you'll distort production-supply and probably suppress some creativity that might actually benefit people."
Though he was only retired briefly after leaving Chevron, Harper is relishing his new role, even at age 58. Having worked for a super-major most of his life it is, in some ways, a refreshing change working for a smaller operator.
"Certainly it's much easier to see the impact of some innovation you've put into place in a small company, though you've still got to act responsibly with shareholders, directors, staff etc that rightfully demand proper behaviour", he said.
"You can make quite major decisions which can change the shape of a project based on a cup of coffee with two or three of your colleagues, probably a bit quicker than you can with some of the bigger companies.
"It's just a career progression. I retired from Chevron, so I guess that's what people do when they reach a certain age. But this is like starting a new career."
For Harper, Sino was just a curiosity at first – a way to keep his toe in the water – but it soon became clear that the company was onto something truly intriguing.
"I'd been very loosely aware of the projects because they were former Chevron projects – there were three originally, one was relinquished. All these PSCs have an in built 'high-grading' process – you're continually narrowing down the acreage to preserve the best bits," he said.
"Initially it was just an interesting project to help out with; but by 2011 it was clear that a more full-time, dedicated effort was needed given the transition the company was making. We're halfway through making the transition from junior explorer to mid-cap developer now.
"It's been an interesting journey that's not quite finished yet."
