Loving life on the shelf

THERE is, no doubt, a widely held view that the Scots have a genetic predisposition toward the gloom, cold and damp of their homeland.

But meeting Woodside Petroleum’s man in charge of the massive North West Shelf oil and gas project – one of four internal Woodside candidates believed to be in the mix to replace retiring boss Don Voelte next year – soon puts paid to that myth.

Hailing from the central Scottish town of Stirling, mid-way between Glasgow and Edinburgh, Kevin Gallagher arrived in Western Australia 12 years ago with a wife and two-year-old son on what was supposed to be a short-term overseas posting.

“We were walking along the Perth foreshore on the afternoon we arrived, in June 1998, with a beautiful blue sky, 21 degrees and pelicans out on the foreshore,” he says, smiling.

“It was absolute paradise as far as we were concerned. We had our shorts and T-shirts on and all the locals were walking past with their fleecies and denims on, thinking we were crazy.

“I’d promised my wife before leaving Scotland that I was only coming for two years, and she turned to me and said: ‘I think we can settle here’. We’ve been here ever since.”

After leaving Mobil’s North Sea business to join a then-tiny Woodside as a senior drilling engineer, Mr Gallagher initially worked on development wells around the NWS.

But within a year he had joined Woodside’s exploration group and had little more to do with the operation until his appointment nine months ago as executive vice-president, North West Shelf.

In that time his rise has mirrored that of Woodside, from well-regarded but modest Australian oil and gas producer to a rapidly growing world power in the international liquefied natural gas market.

In particular, he cites Mr Voelte’s six-year rein as pivotal, resulting in Woodside adopting a more nimble and aggressive growth strategy and giving staff the chance to “do real work, on real projects”.

As the man in charge of a project with an estimated replacement cost around $60 billion, Mr Gallagher says he has plenty to get on with without wondering whether his future might one day include the top seat at Woodside Plaza.

“The reality is this is a massive job, when you think of what we actually produce at the North West Shelf,” he says.”

At current output, the six-partner joint venture produces the equivalent of 730,000 barrels of oil per day, and accounts for more than 1 per cent of the nation’s gross domestic product. It also supplies two thirds of WA’s domestic gas supplies.

“When I hear that sort of stuff, it puts into perspective the size of the job that I’m doing,” Mr Gallagher says.

“The reality is that whatever happens to me in my career going forward, it will happen because of what I do in this role.”

Certainly, he takes on responsibility for the NWS operation at a crucial point in its 26-year history, given it has lost its mantle as Australia’s only LNG producer and a number of rival projects are under way or planned.

And with the shelf’s remaining reserves widely expected to gradually dwindle over the next decade, many outsiders regard it as the sector’s ageing grand-dame.

But such perceptions are misplaced, Mr Gallagher says, noting the $7 billion currently being spent on the North Rankin 2 platform and CWLH field redevelopment, and the expected development of the multi-billion dollar Greater Western Flank project.

At the same time, the first major gas exploration program at the shelf in years will get under way in 2011.

“Between all of that, that should take us well into the next decade ... so I’m dead optimistic about the future of the North West Shelf,” Mr Gallagher says. “There’s enough gas out there for many decades to come.”

He also believes local gas buyers are beginning to understand that the rising cost of developing new and remaining reserves must be reflected in prices.

But equally, Mr Gallagher is confident that currently rising gas prices will lead to a more balanced market in future as additional gas reserves become viable.

“My long-term view is that prices will probably soften as new projects come on-stream,” he says.

That would no doubt make Mr Gallagher a popular local choice for the Woodside helm.