|
|
The head of New Zealand’s largest energy company generally keeps a low public profile, but Rob Jager, country chair of Shell New Zealand, talks to LINDSAY CLARK about the company’s 30 years of operation here.
Jager started on the bottom rung of the project carrying a toolbox for fitters building the Maui production station on the Taranaki coast where the gas would later come ashore. “I remember working deep inside a 24 inch pipe crawling behind a fitter looking after cables and handing him tools – it was quite an experience – the Maui production station was then just a big sandpit,” he recalls. In 1978 Jager joined as an engineering cadet what is now called Shell Todd Oil Services (STOS), the company that runs the operation of the Maui and Kapuni gas fields and a year later the first Maui gas first began to flow through the big pipes at the production station. Thirty years on, and Rob Jager has risen to the top of Shell’s New Zealand operations and since 2005 he has been general manager of STOS, the New Plymouth-based company, owned 50:50 with Todd Energy, responsible for day-to-day operations of New Zealand’s three biggest gas fields. These are the new Pohokura field which now supplies 40 percent of the country’s gas, Maui, now producing 30 percent of our gas (down from a previous 70 percent or more), and the 40 year old Kapuni onshore field which still supplies 12 percent of the country’s gas. Jager’s second management hat is as head of Shell’s exploration and production arm, the most profitable part of Shell’s business in New Zealand, and his third role, which he took over two years ago, is that of Shell New Zealand’s country chair – the company’s title for the person who is ultimately responsible for all of its business interests in the individual countries that it operates in. It has been a long way up from carrying around tools on the sandy Maui construction site. As a young man beginning his career in the oil industry he went on to the University of Auckland where he graduated with a Bachelor of Mechanical Engineering degree with honours. He returned to STOS in New Plymouth where he carried out a number of roles operating and maintaining the equipment that keeps the Maui and Kapuni gas fields running. In 1999 Jager left New Zealand to join Shell’s regional business directorate for Australasia and the Far East. In 2003 he became Shell Asia Pacific’s manager of exploration and production maintenance and engineering based in Malaysia, but by 2005 he was back in New Plymouth to take up the leadership role at STOS. This time Jager was in charge, not only of keeping his old friends Maui and Kapuni running, but of seeing through the completion of the new $1 billion Pohokura gas condensate field near New Plymouth. Unlike Maui, Pohokura operations are totally unmanned with production station and offshore platform operations watched with computers and cameras from a control room in the STOS building in New Plymouth. Jager claims Pohokura has the largest oil reserves of any New Zealand field. The condensate, or light oil, which is stripped from the gas after it comes to the surface, is estimated to contain a remaining reserve of 55 million barrels. However, he concedes that OMV’s Maari crude oil field to the south of Maui, which holds 50 million barrels, could have larger reserves the additional wells announced recently. Jager was in Wellington this year for the celebration of the official end of the 30-year historic Maui gas sales contract. The Maui contract partners were Shell (holding a substantial 83 percent interest), OMV (10 percent), Todd (6 percent), the Government, and the ultimate users (recently Contact Energy, Vector and Methanex). The contract was to have expired in June 2009, or when the users took the last of a tranche of cheap ‘legacy’ gas. The latter ultimately came first, with the last legacy gas delivered on May 21. Maui gas became relatively cheaper over time as the original contract indexed the price to a maximum of approximately half the inflation rate. Cheap Maui gas helped power the economy through the past three decades, but its low price also dissuaded explorers from investing in more exploration to find replacement resources. The Maui contract was renegotiated a few years ago as gas output began to fall. This arrangement set aside a block of gas to be sold at cheap prices under the original contract, while all remaining Maui gas, or any new gas found, could be sold at market prices. The price of natural gas has steadily risen throughout the industry since the Maui renegotiation, encouraging gas producers like Shell to invest in more production. Jager says that currently the Maui partners are carrying out a $60 million maintenance programme on the Maui B part of the field that will include drilling three sidetracks off declining wells into other pockets of gas. He says a similar maintenance programme may be carried out at Maui A. “Maui has had tremendous longevity, and has more than delivered for New Zealand. Now after more than three decades of sustained production the field has entered its twilight years. “Production may end in five to 10 years, depending on the success or otherwise of current and planned initiatives to unlock various as yet untapped reserves. In the meantime we remain committed to making the most of late field life opportunities for Maui,” he says. The Maui partners are also looking further afield taking out an exploration permit along the south eastern border of the Maui field. However, Jager says this Ruru prospect was a separate opportunity to Maui in the Cape Egmont faults. The only other exploration permit in which Shell has an interest lies close to the Pohokura field. Jager says that Shell’s decision earlier this year to put up for sale its retail outlets and other downstream assets came as result as a result of a portfolio review. “A review of the downstream business is consistent with our global strategy of ‘more upstream, profitable downstream’.” The downstream assets include Shell’s 230 petrol stations, aviation and marine fuel, bitumen, chemical, supply and distribution businesses. “The downstream business is looking to simplify and focus the portfolio to those areas that give us the best returns and allow us to use capital to invest in growth markets.” In the world oil industry there has been a recent trend for a number of the big oil companies to get out of the competitive, low-margin retail gasoline business, turning over their branded stations to local companies familiar with the markets. Shell’s larger upstream exploration and production business continues to perform well on paper, making up a significant proportion of the company’s profit in New Zealand. In 2007, it was reported that exploration and production business profit was $281million while retail business profit was $38 million. “New Zealand is an important part of Shell’s upstream portfolio,” Jager iterates. Asked about the perception in much of the industry that Shell seemed to have largely withdrawn from New Zealand exploration, Jager says that Shell looked very seriously at exploration in the Great South Basin. “There are still a lot of opportunities here for exploration. We’re actively looking at where we might make new investments, while also continuing to invest in the existing fields that remain the cornerstone of New Zealand’s oil and gas sector.” New Zealand is a great place to do business, he adds.
Energy NZ No.10 Spring 2009 |
It is not surpising Rob Jager (pictured) knows the Maui field inside and out From its beginnings; his first summer job at the age of 17 was in construction of the Maui facilities after arriving in New Plymouth with his family from schooling in Holland.