CEDA member profile: APA




Mick McCormack, Managing Director and Chief Executive Officer, APA

Can you tell me a bit about APA?

APA is Australia’s number one gas infrastructure business. We’ve been connecting Australian energy since 2000. From small beginnings, we’ve become a top 50 Australian Securities Exchange (ASX) listed company, owning and operating approximately $20 billion of energy infrastructure assets across Australia.

We deliver smart, reliable and safe solutions through our deep industry knowledge and interconnected infrastructure.

What is your role with the company and what have been key accomplishments you’ve had since starting?

The company has grown significantly in the last 16 years – market capitalisation has gone from $488 million to nearly $9 billion; our staff has grown from six to nearly 3000, including contractors; and our total (book) assets of around of $1.4 billion have grown to $15 billion.

I am proud of everything we have achieved. We have come from having little more than a single pipeline to call our own, to having a national footprint across gas transmission, gas storage, gas and renewable generation, and infrastructure management, providing us with opportunities and options to grow even further. We have strong and mutually beneficial relationships with our customers, many of them long-standing.

All of these are my legacies, but the single biggest “thing” to date would have to be the creation of the East Coast Grid, which is a 7500km interconnected pipeline network spanning the east coast. It has changed the way our customers manage their gas portfolios.

Looking at your career history, how have you come to your current role?

After completing a degree in applied science in the mid-1980s, I started in an entry level position with the Moonie Oil Company as a pipeline patroller. I had to drive up and down providing surveillance to pipelines. In fact, my first job was manually digging holes for the signposts that mark the location of the underground pipeline.

I was very fortunate to gain experience in the field on the Moonie Oil Field after leaving university.

That couple of years I really had any delusions of grandeur knocked out of me. I learnt very quickly a lesson that has stood me in very good stead – and indeed is probably the reason why I am sitting here today in this office – how to get on with people.

After my time in the field out at Moonie, I subsequently did further tertiary study in both engineering and management. And, as they say, the rest is history.

Can you take me through any highlights in your career?

Over my 30 years in the industry, I have had many highlights. One that seemed like a lowlight at the time was being appointed as General Manager Commercial for Australian Pipeline Trust. This was a few months before the company was floated on ASX, on 13 June 2000. I was told at the time that I only had a job for two years. Because APA was simply an asset owner and not an operator, it was thought that once the business was up and running it would only take someone with accounting skills to run it.

I also felt more than a bit scared facing a move from a big secure employer to be part of something new with an unknown future. That said, the move subsequently has certainly proved exciting.

It’s interesting how things turn out. In 2005, when then CEO Jim McDonald decided to retire, I was appointed as APA's Chief Executive Officer on 1 July, and, in 2006, as Managing Director. Those were definitely highlights.

One of the things that I am proudest of is seeing my vision of the East Coast Gas Grid become a reality.

I firmly believe that gas plays an important role in Australia’s transition to a cleaner energy future and APA’s innovation and investment in gas infrastructure will support this transition.

Have you had any mentors during your career?

I wouldn’t say I’ve had mentors as such, but I’ve benefited from working with some of the industry’s legends, and two come immediately to mind. Stephen Ohl and the late Jim McDonald have both had a huge impact on my career. I, along with a number of current industry leaders, have achieved what we have in the industry in no small part due to our interactions with Stephen and Jim.

Over the years, they have always given of their time freely, on both a personal and a professional level, to help people in the industry and to advance the industry and what is now the Australian Pipelines and Gas Association (then Australian Pipeline Industry Association).

What are APA’s top priorities for the coming year?

Our priorities will continue to be about investing in nation-building energy infrastructure and supporting a cleaner energy future for the Australian economy. We see continued growth in demand for gas as a transition fuel and this underpins our strategy of investing and innovating to deliver safe, reliable and world-class gas transmission services to our customers.

We also see good opportunities to invest and enhance our services and expertise in the renewable energy space, using the same principles that have brought our success to date, which is to invest in energy infrastructure, underwritten by long-term contracts with highly creditworthy counterparties.

How have you seen the gas industry change?

The commissioning of the multiple export liquefied natural gas (LNG) facilities at Gladstone has resulted in a tripling of the volume of gas moving around the east coast of Australia. This fundamental change in gas flows, and linkage to international gas prices, represents a once-in-a-generation phenomenon with wide-ranging implications.

With APA’s interconnected East Coast Gas Grid, we have been able to facilitate the commissioning of these world-scale LNG export facilities without any interruption to local gas supplies. The East Coast Grid will continue to be critical in meeting gas supply needs in eastern Australia as issues around supply become increasingly urgent for this part of the country.

Partly as a result of these changing market fundamentals, the Coalition of Australian Governments (CoAG) asked both the Australian Energy Market Commission (AEMC) and the Australian Competition and Consumer Commission (ACCC) to undertake detailed reviews into the east coast gas market.

These reports were considered by the CoAG Energy Council, which appointed Dr Michael Vertigan to lead the Gas Market Reform Group. In December, the CoAG met and endorsed Dr Vertigan’s recommendations. The decision to maintain the National Gas Law coverage test in its current form confirmed the robustness of the existing test for Australia’s dynamic gas market, and has provided certainty for the industry to move forward from the review process.

APA’s focus has always been on working with our customers and providing solutions to help grow and develop Australia’s energy industry for the benefit of all Australians. We believe that commercial solutions should continue to incentivise investment and innovation.

Infrastructure builds nations and there is general consensus that infrastructure development is an economic imperative. Private investment in infrastructure helps the Australian economy grow without the need for taxpayer funding. We’re here to invest so long as the returns are appropriate for the risks that we are taking in that investment.

Have you noticed any current industry trends? What do you expect to happen over the next 12 months?

We believe there is a need for a combined national energy and climate change policy that prioritises reliability, efficiency, security, and affordability across the whole national energy system while also recognising the need to meet our global emission reduction commitments. It is essential that this energy and climate change policy has bipartisan support at a federal level. It is also important that there is agreement with the states on what the national renewable energy target should be, and the roadmap to get us there.

The most challenging issue that Australia faces is the lack of a national energy and climate change policy as the country moves towards a more sustainable and cleaner energy future. This continues to have repercussions for energy market participants and consumers as we have seen on a number of occasions in 2016.

For the gas market in particular, the lack of a national policy is most evident in the differing state policies on the exploration and development of unconventional gas, including policies specific to fracking.

How does CEDA help the company understand and meet the challenges and opportunities you or your clients face?

CEDA supports APA via access to resources, information and audiences by developing forums for information gathering and generating valuable conversations with key industry and government representatives about relevant issues that impact our business.

APA recognises and values CEDA’s thought leadership, informed discussions and rigorous research that seeks to influence good public policy for Australia's economic and social development