SEAAOC

Blog migration

2011-08-17T14:59:00.000+10:00

Hi everyone

We have decided to consolidate this SEAAOC blog into the IIR Gas Series umbrella.

All new posts will be posted in the new IIR Gas Series' blog (under the SEAAOC category) and this blog will no longer be updated.

Many thanks for your readership and support on this blog through the years.

We looking forward to your continuing readership at our new blog home.

Thank you.
IIR's SEAAOC team

Ferguson confident about Ichthys’ chances

2011-08-11T08:44:00.002+10:00

FEDERAL Resources and Energy Minister Martin Ferguson is confident that Inpex’s planned Ichthys liquefied natural gas project, offshore northwestern Australia, will go ahead.

“I think we’ll see an investment,” Ferguson told reporters at the sidelines of the 2011 APPEA National Oil and Gas Safety Conference.

Inpex this week awarded a key $250 million contract to a Clough-Doris Engineering joint venture to provide offshore integrated project management support services for the Ichthys project, which received environmental approval from federal Environment Minister Tony Burke in June.

The 8.4 million tonne per annum project now needs to sew up its customers and financing before Inpex makes a final investment decision, expected before the end of this year.

Ferguson said while there were economic challenges in North America and Europe, his recent visits to Asia had confirmed there was still growth there and demand for Australian commodities.

He said while there would be some impact from the turmoil, Australia’s economic fundamentals remained sound and were the envy of many other countries.

He said the government would manage Australia through this time of economic worries as it did during the global financial crisis.

“We've done it in the past and we'll do it again,” he said.

Meanwhile, Ferguson said the opposition to the planned LNG hub at James Price Point was led by locals who were relatively well off while those who supported it were those that welcomed the investment and the benefits it would bring.

“You find that a lot of those people opposing James Price Point are the more privileged people in the community – people who have well paying jobs and are, in many ways, economically emancipated,” he said.

Woodside Petroleum, which is planning to locate the liquefaction facilities for its Browse LNG project at James Price Point, reached a native title agreement in late June that provides a $1.5 billion package of benefits and initiatives for indigenous people in the Kimberley.

These include the implementation of ongoing education, training and employment initiatives, indigenous job targets, support for indigenous businesses, cultural initiatives and payments upon project milestones, including a final investment decision, being met.

The Western Australian government will also provide $256 million in funding over 30 years for housing, education, economic development, promotion and protection of cultural heritage and a Kimberley enhancement scheme, which will invest in indigenous social programs.

Wednesday, 10 August 2011
www.energynewspremium.net

Ichthys moves closer to FID

2011-08-11T08:44:00.001+10:00

THE Ichthys LNG joint venture has awarded a key $250 million contract as it moves towards a final investment decision later this year.

A joint venture between Clough and French offshore engineering specialists Doris Engineering won the contract to provide offshore integrated project management support services for the project.

The contract is subject to joint venture partners Inpex and Total reaching FID on the project. It will include detailed engineering design, procurement, fabrication, at-shore commissioning, towing to site, and offshore hook up of the central processing facility and floating production, storage and offload vessel for the project.

Ichthys received conditional environmental approval from federal Environment Minister Tony Burke in June, and now just needs to sew up its customers and financing before it makes FID.

The project is planned to deliver 8.4 million tonnes per annum of LNG and 1.6MMtpa of liquefied petroleum gas, as well as 100,000 barrels of condensate per day at peak. First gas is expected in 2016.

Inpex has a 76% stake in the project, although the company could be willing to sell down a stake, with managing executive officer Masahiro Murayama saying last month that the company had received strong interest for stakes in the project.

“The size of any stakes would be decided in negotiations,” Reuters quoted him as saying.

Inpex and Total have already reached agreements to sell 2.52MMtpa to Chubu Electric Power, Toho Gas and Taiwan’s CPC.

Tuesday, 9 August 2011
energynewspremium.net

Australian Santos prefers carbon trading to planned tax: CEO Knox

2011-08-11T08:43:00.002+10:00

Emerging Australian LNG producer Santos would prefer Australia's carbon pricing mechanism to be an emissions trading scheme, rather than the flat tax that has been proposed by the federal government, CEO David Knox said in Sydney Thursday.

"Santos is a supporter of having a price for carbon in the economy," Knox told a business lunch hosted by the American Chamber of Commerce.

"Myself, I think a trading scheme is far superior to a tax-based scheme. But we are now moving forward ... to work with the scheme we've got," he added.

The Australian government on July 10 unveiled the long-awaited outline of its carbon pricing package, which is still to be passed into legislation. The government has pegged the tax, to be paid by the country's 500 biggest emitters, at an initial A$23 ($24.71)/mt, but softened the blow for LNG producers with a 50% concession.

The tax is set to rise by 2.5% a year in real terms until July 1, 2015, when the mechanism would transition to an emissions trading scheme under which the price of carbon would be determined by the market.

Santos is already an LNG producer in Australia, through its 11.5% stake in the ConocoPhillips-operated 3.6 million mt/year plant in Darwin. The company is also the operator and 30% owner of the $16 billion Gladstone LNG project on Curtis Island in Queensland, which was sanctioned in January.

The coalseam gas-based GLNG project is due to start producing 7.8 million mt/year from 2015. The project is a joint venture with Malaysia's state-owned Petronas, France's Total and Korea Gas Corporation.

"It's hard to say whether [the carbon tax] is neutral or slightly negative [for Santos], because in a world where we do have a carbon price it's likely there will be more gas-fired ... power generation in Australia so there will be more demand for our gas domestically, which we would welcome," Knox said.

"On the other side of the equation, we are unable through our LNG contracts which we've signed with Petronas and Kogas, to pass through the carbon tax. It's something that we have to include onto our cost base."

Knox added that the transition period Australia is in as it moves toward a carbon trading scheme was important, "in the hope that others overseas catch up." He was also "quite concerned" about the timing, "just because as everyone knows in the market situation and the world economy, it's not a time of great confidence, we're all feeling that."

4 Aug 2011
Platts

Qatar LNG to Southeast Asia

2011-08-11T08:43:00.001+10:00

QATARGAS, the world’s largest LNG producer, sent tremors through the analyst community last month when it announced its first long-term contract to supply gas to the Southeast Asian market. Qatargas and Petronas of Malaysia announced a contract for the delivery of 1.5 million tonnes per annum of LNG to Malaysia’s domestic market for a period of at least 20 years, starting in 2013.

Malaysia’s domestic market is a foundation customer for the Santos-operated Gladstone LNG project, which is supplying 3.5MMtpa from 2014.

Could Qatargas be muscling into the backyard of Australia’s east coast LNG projects?

Graeme Bethune, chief executive of energy advisory firm, EnergyQuest, says the sale is no cause for alarm.

“It’s really a story about opportunities in the new and expanding regional market of Southeast Asia, rather than fierce competition.”

He said Southeast Asia, which had traditionally been an exporter of gas, was now an importer thanks to a number of factors.

“It’s a quite a turnaround. Malaysia, which of course is home to Petronas, is almost synonymous with LNG exporting.

“But the region can no longer supply its own needs and has great potential as an expanding new market for Australian LNG projects.”

Bethune, who is part of an International Gas Union study group that is compiling a report on gas markets in Asia, said a number of factors were behind the rapid switch in the supply/demand in South East Asia.

“Most of the big gas fields in the region are mature, and exploration has been suppressed by regulated gas prices.

“These constraints on domestic supply have begun to bite when demand is rising strongly.

“The outlook for demand is for continued strong growth as standards of living rise in countries such as Malaysia and Thailand.”

Wood Mackenzie head of Australasia upstream research Craig McMahon agreed that Australian projects need not be that concerned by the Qatargas contract with Malaysia, noting that it called for deliveries before any of the new Australian projects shipped their first cargoes.

Malaysia’s need for LNG imports reflects some unusual geography and market forces.

It is the world’s second largest exporter of gas after Qatar, but the country has been caught without sufficient reserves for its own needs in a situation that echoes the domestic market in Western Australia.

Malaysia’s three LNG plants are located at Bintulu in Borneo. Gas feedstock is provided by a cluster of fields about 200 kilometres offshore in the South China Sea and is entirely committed under LNG contracts with customers Japan, Korea and Taiwan.

Even if Malaysia could spare gas from some of these fields for the domestic market there is no pipeline connection with the Malaysian Peninsula, where almost three quarters of the country’s 28 million people reside. Smaller gas fields offshore from the Malaysian Peninsula are rapidly depleting.

To fill the growing shortfall in domestic supply, Petronas is constructing a floating LNG import terminal, with capacity of 3.8MMtpa, off the cost from Malacca, south of Kuala Lumpur. Imports are expected to begin in 2012, two years before Gladstone LNG will be able to ship its first cargoes.

Petronas recently announced plans for second import terminal as part of a new petrochemical complex at Pengerang in southern Johor.

Qatargas said last month domestic gas demand in Malaysia was growing at a rate of 6% per year. It said the 1.5MMtpa of LNG supplied under the new deal with Petronas was equivalent to around 5% of Malaysia’s current annual average demand.

Indonesia and Singapore are other Southeast Asian markets that are opening up for Australian LNG projects.

Indonesia is the world’s third largest exporter of LNG, but like Malaysia faces a rising shortfall of domestic supplies. Government officials were recently reported as stating the country could import up to 4.5MMtpa as early as 2013. Three floating import terminals are under construction, in Java’s north western province of Banten, in North Sumatra and in East Java.

Singapore’s first LNG re-gasification terminal is due to open in 2013. The initial import capacity of 3.5MMtpa will be expanded to 6.0MMtpa in 2014. This will exceed the island nation’s domestic needs and is expected to become the basis of a regional LNG trading hub.

BG-owned QCLNG was an early mover into the Singapore market, winning a contract in 2010 to supply 1.5MMtpa for 20 years. BG was appointed by Singapore’s Energy Market Authority in 2008 to aggregate the supply of 3 MMtpa of LNG for the next 20 years.

LNG projects in Australia will have the capacity to capitalise on these opportunities.

By contrast, Qatar has already contracted its entire export capacity of about 77 MMtpa, according to recent research by energy consultancy Wood Mackenzie. Export capacity made surplus to US customer requirements by the shale gas revolution has been taken by Japan in the wake of the Fukashima disaster and by China.

The Asia Pacific region is conspicuously short of new LNG projects outside Australia and Papua New Guinea, which is another reason for local operators to be optimistic about seizing new opportunities in South East Asia. All they need do now is find the skills and materials to build all the projects on the drawing board.

Thursday, 4 August 2011
energynewspremium.net

Japan's Inpex may sell part of Ichthys LNG project

2011-08-11T08:40:00.000+10:00

Inpex Corp , Japan's top oil and gas explorer, is considering selling stakes in Australia's Ichthys liquefied natural gas project to firms that buy LNG from the field, a senior company official said on Wednesday.

"We are facing strong demand (from LNG buyers) to sell them stakes," Inpex Managing Executive Officer Masahiro Murayama said, acknowledging that talks have started. "The size of any stakes would be decided in negotiations."

Japan's top LNG buyers, including Tokyo Electric Power and Chubu Electric Power , have recently become more aggressive in taking upstream stakes in LNG projects, as they look to gain first-hand knowledge of projects and to secure stable supplies.

Inpex also said it expects to sign contracts to sell Ichthys LNG to five firms by late August.

The company said in June that it and project partner Total had reached agreements to sell 2.52 million tonnes of LNG a year to three firms, Chubu Electric Power Co , Toho Gas Co and Taiwan's CPC, and that it was close to finalising deals to sell to another five Japanese buyers.

"We have already reached basic agreements with the five firms and we are waiting for the contracts to be signed," Murayama said. "We expect that to be done by the end of this month."

He also said that the company has been discussing project financing with export credit agencies.

"We are considering financing most of the Ichthys scheme through project finance," he said. "We have also asked Japan's top three megabanks for financing."

Inpex aims to develop the Ichthys field in the Browse Basin off northwest Australia to produce 8.4 million tonnes of LNG, liquefied petroleum gas and condensate each year. Production is set to start in the fourth quarter of 2016.

The project is 76 percent owned by Inpex with the rest held by Total.

Wed Aug 3, 2011
Reuters

FEED for Browse drilling rig begins

2011-06-15T14:07:00.001+10:00

KCA Deutag has marked its entry into Australia, selected as one of two drilling contractors to carry out front-end engineering and design work for a modular platform drilling rig for Woodside Petroleum’s Browse liquefied natural gas project.

FEED work for the 3000 horsepower MPDR, which can be transferred between dry tree units and be capable of drilling large bore gas wells up to 9000 metres, has already begun and is expected to take six months to complete.

KCA Deutag business development and commercial director Neil Stevenson said the contract provided a major breakthrough for the company into the expanding Australian onshore and offshore drilling market and built upon its established presence in Southeast Asia.

“The award is very much aligned with our strategy of seeking involvement in new projects from the very early conceptual and front end stages and then being retained and accountable for the drilling performance of the rig during the operations phase,” he said.

US-based Parker Drilling is the other company also selected to carry out FEED for the MPDR.

Woodside started front-end engineering and design work for the Browse project in February with the award to the competing consortiums of KBR, Leighton Contractors and John Holland, and Chiyoda partnered with Saipem and CB&I for the development of three 4 million tonne per annum LNG trains, associated infrastructure, accommodation and marine facilities

Aker Solutions and Modec have been selected to provide competing designs for the dry tree units at the Calliance and Brecknock fields along with an option for a third tree at Torosa.

Wood Group Kenny will provide subsea and pipelines FEED for the project and is also
also participating in the riser FEED work along with supporting Aker Solutions in delivering design and engineering solutions for the steel catenary risers.

Fluor Australia is carrying out the central processing facility FEED and has teamed with McDermott International to design the steel jackets and float-over installation.

The proposed Browse development at James Price Point in Western Australia’s Kimberley region includes the Torosa, Brecknock and Calliance discoveries, located offshore around 425 kilometres north of Broome.

The fields contain a combined contingent resource of about 14 trillion cubic feet of dry gas and 370 million barrels of condensate.

A final investment decision for the development is targeted for mid-2012 while first gas is planned to start by 2017.

Wednesday, 8 June 2011
energynewspremium.net
http://www.energynewspremium.net/StoryView.asp?StoryID=2392589
Document Actions

Month in Review: May – LNG

2011-06-15T14:05:00.002+10:00

SAILING into the limelight this May was floating liquefied natural gas, as Shell’s decision to go ahead with the potentially game-changing technology stole the show. Prelude powers ahead

While hardly unexpected, Shell’s final investment decision for the Prelude FLNG project marks the first time it will operate an upstream project in Australia and also paves the way for previously stranded gas fields to be developed.

It also gives Shell a distinct first-mover advantage over other FLNG proponents and sets the stage for the supermajor to sign up more developers to use its technology.

Bloomberg quoted an analyst at Citigroup as saying Japanese major Inpex could be considering FLNG as a development option for its Abadi project in Indonesia, while ConocoPhillips and Karoon Gas may eventually rely on Shell expertise to develop resources in the Browse Basin.

The analyst added Shell’s FLNG technology was further advanced than its competitors, a point the company – pointing to its 15 years of research, development and testing – obviously supported.

Shell upstream international executive director Malcolm Brinded said in a press conference on May 20 FLNG was more than just “taking an onshore plant and slapping it on an offshore platform”.

“You actually really have to focus on the operability, how we are going to do work with the LNG in the tanks sloshing from side to side, how it is going to survive in the storm, how it is going to bring the LNG tankers up, the loading arms with two vessels moving side by side.

“All of that we have proven, we have done modelling tests with very large scale replicas of FLNG to be sure of the motion characteristics and the survival in actual storm conditions that are 30-40% higher wind speeds than a category 5 cyclone.”

Besides the obvious economic benefits of a new LNG project, Australia is also expected to benefit by becoming home to the first FLNG training centre in the world.

The centre, a joint venture between Shell and Curtin University, will provide FLNG-focused research at PhD level to enhance the long-term development of the new technology as well as professional leadership, management and technical education relevant to the FLNG industry.

Shell Australia boss Ann Pickard said the skill set for working on an FLNG project did not yet exist and the agreement was “a real big opportunity for Australia”.

Work on the Prelude FLNG barge – capable of producing 3.6 million tonnes of LNG per annum, 1.3MMtpa of condensate and 400,000tpa of liquefied petroleum gas – has already started with Technip carrying out detailed design of the vessel, while Samsung Heavy Industries’ shipyard in Geoje, Korea, will build the vessel for delivery in 2016.

In the meantime, Shell will drill eight subsea production wells from 2013 that will then be tied back to the subsea manifolds before being connected to the FLNG facility via flowlines.

FLNG installation and hook-up is expected to take about six months with commissioning in 2015 before first gas in 2016.

The vessel will stay moored at the Prelude gas field for 25 years and in later development phases should produce from other fields in the area where Shell has an interest.

... as competitors start their motors

While Shell proceeds at its own clip towards first gas at Prelude, other FLNG proponents are keen to steal the wind out of Shell’s sails by becoming the first out of the gate with an LNG cargo from an FLNG project.

Flex LNG is racing to meet its objective of having the first ever FLNG facility in operation in 2014 and has started field specific front-end engineering and design for a project in Papua New Guinea.

This will complement the company’s generic FEED work that was completed in 2009 and will be instrumental in a FID for the project with InterOil, Pacific LNG, Liquid Niugini Gas and Samsung Heavy Industries.

While the planned facility is nowhere near as large as Shell’s design, it would still be capable of producing close to 2MMtpa of LNG.

Meanwhile, Norway’s Hoegh LNG, which is in a joint venture with Daewoo Shipbuilding & Marine Engineering and Papua New Guinea national resources company Petromin to develop an FLNG project in PNG, said Shell’s announcement was an overall positive for FLNG.

The Hoegh JV has targeted first gas in 2014 though it is unclear if this remains the case.

Gorgon fourth train gathers steam

Meanwhile, Chevron Australia is looking beyond the initial three trains at its Gorgon LNG project with its application for environmental approval for a fourth train, just months after saying it had found enough gas for it.

Services giant KBR also noted it was exclusively engaged on some early work for a potential fourth train at the project and expected pre-FEED work to start in the near term.

Chevron has long considered possible expansion plans at Gorgon, which was originally a two train project, and has said it was designed with space for up to five trains.

Besides the LNG train, Chevron is seeking approval for its associated infrastructure which consists of a gas pipeline system and horizontal directional drilling shore crossing, and offshore subsea production infrastructure that could include between 38 and 63 producing wells, with construction starting in 2014.

The company said the fields most likely to be considered for the expansion included Yellowglen, Chandon, Satyr, Achilles, Maenad, Orthrus, Geryon, Dionysus, Dionysus North, Chrysaor and West Tryal Rocks.

BG eyes third train at QCLNG

Meanwhile, BG Group is also considering an expansion to its Queensland Curtis LNG project with a decision expected by the middle of next year.

BG chief executive officer Frank Chapman said the company had 18 months from the sanction of the two initial trains to make the decision on train three and the company was already busy marketing its gas.

However, he warned the company had to do a lot of work to make up for the delays caused by the Queensland floods.

“We’ve got to prepare wellsites in areas that we can access, we have to indeed think about accelerating the drilling program by using more rigs and so on.”

BG sanctioned the $US15 billion two train, 8.5MMtpa QCLNG project on Curtis Island near Gladstone last October.

First LNG exports from QCLNG are planned to start in 2014. Along with Japan, China, Chile and Singapore are earmarked to receive LNG cargoes.

Pluto puzzle coming together

Woodside Petroleum is also playing the expansion game with the success of the Xeres-1 well all but ensuring its confidence in ordering long-lead items for Pluto train two.

The well, drilled by the Maersk Discoverer semi-submersible drilling rig to a total depth of 3285 metres, intersected 51m of gas pay in the Triassic target.

A gas pressure gradient was also established, along with the recovery of gas samples to the surface.

Meanwhile, in early June, Woodside extended its accommodation contract with Fleetwood for the Searipple Village in Karratha, adding more fuel to speculation the company would commit to the second train soon.

Woodside works out first phase of GWF, pushing ahead at Browse

Pluto is not the only plank of Woodside’s ongoing developments.

In May the company, as operator of the North West Shelf, unveiled plans for a five well subsea development as the first phase of the NWS Greater Western Flank.

The wells will tap the Goodwyn H and Tidepole natural gas fields, which will be tied back through a 16 kilometre pipeline to the existing Goodwyn A production platform.

The Greater Western Flank project, which covers 14 fields and will access about 3 trillion cubic feet of gas and about 100 million barrels of condensate, will go a long way towards extending the NWS project’s life.

Woodside is also looking to shoot 3D seismic over the southern portion of the Torosa gas field as part of an extensive appraisal, exploration and development program for the Browse LNG project.

The 120 day survey would cover WA-30-6 and TR/5 and ingress into two vacant graticular blocks north of WA-30-6 to provide a better understanding of the southern portion of the Torosa gas field, which lies partly beneath Scott Reef.

NT green light for Ichthys

Inpex is now waiting on the federal government to give environmental approval for its Ichthys LNG project, though Environment Minister Tony Burke in early June extended the time needed for him to make a decision.

In May the Japanese company received environmental approval from the Northern Territory government, which said the impacts from the project could be managed by delivering the commitments made in the company’s final environmental impact statement, and the recommendations and management plans and strategies in its assessment.

This included recommending the company carry out studies and implement monitoring programs and mitigation measures.

Thursday, 9 June 2011
energynewspremium.net
http://www.energynewspremium.net/StoryView.asp?StoryID=2392603

Santos aims for bullseye with Winchester farm-in

2011-06-15T14:04:00.002+10:00

SANTOS has acquired a 75% interest in two Octanex-held permits in the offshore Carnarvon Basin that host the Winchester prospect, which has a geological setting similar to the recent Zola gas discovery.

Santos vice president WA & NT John Anderson said the farm-in to WA-323-P and WA-330-P presented a considerable growth opportunity for Santos in Western Australia.

He said the company was planning a 3D seismic survey later this year.

“Under the arrangement with Octanex we have three years in which to drill a well, but we interpret Winchester as a robust prospect so we are considering bringing that forward, possibly by the end of next year,” he added.

“It’s an attractive prospect in shallow water and, if successful, is well located for a variety of development options.”

Octanex, which retains a 25% stake in both permits, will be free-carried through the 3D survey, the first well and other exploration costs.

Winchester is a Parker/Webley faulted horst structure that Octanex has previously said could hold prospective resources of about 1.12 trillion cubic feet of gas and 49 million barrels of condensate.

Friday, 10 June 2011
energynewspremium.net
http://www.energynewspremium.net/StoryView.asp?StoryID=2392729

MEO secures new Bonaparte block

2011-06-15T14:04:00.001+10:00

MEO Australia has secured another permit in the Bonaparte Basin, off Western Australia, that is near the Petrel, Tern and Frigate fields being considered for development via a floating liquefied natural gas project.

The WA-454-P block, which was released in the 2008 Offshore Acreage Release Round, has been awarded for a term of six years and covers an area of 4320 square kilometres.

It contains the 2007 Marina gas and condensate tight discovery made by ExxonMobil and Drillsearch. The well recorded hydrocarbons in at least five zones, but analysis of wireline logs and pressure data indicated the reservoir was tight over those intervals.

The block neighbours the Petrel, Tern and Frigate fields where Santos and GDF Suez are currently investigating the feasibility of developing a FLNG project.

Pre-front end engineering and design contracts for the FLNG development were awarded earlier this year, while a final investment decision for the 2 million tonne per annum project is expected in 2014. First production is scheduled to start four years later in 2018.

The block is also adjacent to ENI’s Blacktip gas field that provides gas for the Darwin market.

The permit work program includes recording 2D and 3D seismic in the first three years, while one exploration wells needs to be drilled before the end of 2016.

Meo holds 100% of WA-454-P.

Tuesday, 14 June 2011
energynewspremium.net
http://www.energynewspremium.net/StoryView.asp?StoryID=2392845

NWS accused of breaking supply agreement

2011-03-17T09:01:00.002+11:00

WESTERN Australia power utility Verve Energy has accused the North West Shelf joint venture of unlawfully charging exorbitant prices for domestic gas after the June 2008 Varanus Island explosion.

Verve claims the partners had breached a gas supply agreement by refusing to provide 30 terajoules of gas per day after the explosion on June 3, which cut WA’s gas supplies by 30% for months.

The utility claimed this forced it to pay “significantly higher” prices for gas from June 3 until September 2008.

The Australian quoted Verve lawyer Noel Hutley as saying the NWS partners had failed to meet their obligations under the supply agreement.

He claimed Verve was told a day after the explosion that its 30TJ of gas would not be supplied for at least a month and this then changed to no supplies until the end of September.

Hutley added this forced the utility to buy gas at a higher rate, costing it $800,000 a day.

The NWS partners have yet to make their opening address to the Supreme Court of Western Australia.

Wednesday, 16 March 2011
EnergyNewsPremium.net

Chevron plans fourth Gorgon train

2011-03-17T09:01:00.001+11:00

Chevron is moving forward with plans to build a fourth train at its giant $37 billion Gorgon liquefied natural gas project off the coast of Western Australia.

Reuters reported that company executives announced the decision at an analyst meeting in New York overnight, adding the US supermajor also expected to make a final investment decision on the expansion in 2013.

The news agency quoted Chevron’s executive vice president of technology and services, Jim Blackwell, as saying the company could have enough gas consider a fifth train.

"At the end of 2010, our estimated total resource is almost 60 trillion cubic feet,” Blackwell said.

“We found enough gas for this expansion and plan to enter FEED in 2012. And we also have space for a potential fifth train."

He added that the Wheatstone project was also well positioned for train three and further expansion.

Tuesday 15 March 2011
Upstream

MEO moves step closer to getting Heron aloft

2011-03-17T09:00:00.002+11:00

MEO Australia has accepted a conditional offer from an unnamed preferred “farminee” for its NT/P68 Timor Sea permit which contains the potential 5 trillion cubic feet Heron gas discovery.

The company, which launched a farm-out of its Heron discovery last October, said negotiations were underway to convert the offer from the preferred farminee into binding agreements that will only be subject to Australian regulatory approvals.

However, MEO noted that while it was confident the transaction would be finalised, it could not guarantee the outcome or timing of completion of the transaction.

The company currently holds 100% of the 5900 square kilometre NT/P68 permit, which contains both the Heron and Blackwood gas discoveries.

MEO has offered up to 50% equity in the permit, including the Heron discovery, and will retain a 100% interest in the Blackwood discovery.

Last year the company said the potential partner would help it drill two appraisal wells, one on the Heron North structure and the other on the Heron South structure, to determine whether Greater Heron hosts a gas resource big enough to underpin a liquefied natural gas development.

MEO has already secured environmental approvals and completed the preliminary design for an LNG development at Tassie Shoal just 75 kilometres away.

Tuesday, 15 March 2011
EnergyNewsPremium.net

LNG to fuel Chevron ambitions

2011-03-17T09:00:00.001+11:00

Chevron is banking on its big Australian liquefied natural gas schemes to drive future growth, while also aiming to bring online new projects and make acreage acquisitions.

The US supermajor, which aims to boost output by 1% this year, is generating record operating cash flow from the improved performance of existing producing assets and the profitability of recent project start-ups to help bankroll its growth ambitions.

Chief executive John Watson told an annual meeting with analysts in New York that the company’s main focus over the next few years will be on completing its major gas development projects in Australia - Gorgon and Wheatstone - that “will deliver Chevron's next wave of significant growth”.

The $37 billion Gorgon LNG project, which the company is developing together with Exxon Mobil and Shell , is on target to produce 450,000 barrels of oil equivalent per day starting in 2014.

The final investment decision at Wheatstone, a project 100 kilometres to the south on the west coast of Australia that will add another 260,000 boepd, will be made in the second half of this year, ahead of a planned 2016 start-up.

"Once online, these projects will generate significant cash flow, and soften our decline rate for decades," Watson said, according to Reuters.

Half of Chevron's natural gas resources are in Asia-Pacific, where demand will grow far faster than elsewhere over the next quarter of a decade, he added.

Chevron is targeting average production of 2.79 million boepd in 2011, an 1% increase on last year, and has previously said annual growth will pick up to between 4% and 5% after 2014.

The company has set a $26 billion spending budget for 2011, of which 40% will go toward natural gas, according to chief financial officer Pat Yarrington.

Chevron’s vice president Upstream & Gas George Kirkland implied the company also has its eyes on further acreage acquisitions, following additions to its asset portfolio last year.

"Longer term, our early, low-cost entries into new acreage will generate opportunities for further organic growth,” he said.

Monday 14 March 2011
Upstream

SEAAOC 2010 - Jeremy Coules of Katch Kan Ltd

2011-02-11T15:22:00.000+11:00

Jeremy Coules, Marketing Leader of Katch Kan Ltd gave a presentation on proactive solutions to increasing rig safety and minimising environmental footprint.

SEAAOC 2010 - Jurgen Hendrich of MEO

2011-02-11T08:44:00.000+11:00

Jurgen Hendrich, CEO and Managing Director of MEO gave a presentation on operational case studies.

What are your thoughts?

SEAAOC 2010 - Interview with ENI Australia

2011-02-10T09:19:00.002+11:00

We had the opportunity to interview Andris Blankenburgs, Manager of ENI Australia in regards to their latest development strategy and their plans for the next 12 months.

For more information, go to www.seaaoc.com or you can also call +61 2 9080 4090.

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NT Resources Week - The Sponsorship and Exhibition Experience

2011-02-09T11:53:00.001+11:00

SEAAOC is the region's largest and longest established petroleum conference.

SEAAOC features interactive conference formats and social networking breaks to enable you to meet key targets in a relaxed environment.

With over 650 leading resources professionals and over 100 exhibitors, attend SEAAOC and meet clients & new prospects, catch up with peers & old friends, and make your business development activities a pleasure rather than a chore!

For more information, go to www.seaaoc.com or www.ntresourcesweek.com.au

APLNG hit by delays

2010-12-23T12:03:00.004+11:00

Regulatory delays have pushed back the final investment decision for the ConocoPhillips and Origin Energy-owned Australia Pacific Liquefied Natural Gas (APLNG) project in Queensland until next year.

Origin said it had been advised by Federal Environment Minister Tony Burke that he had extended the deadline for his assessment of the project's environmental impact statement (EIS) by two months.

Burke was due to give a final decision on the A$35 billion (US$34.8 billion) coalbed methane project on 21 December but has now extended the deadline until 22 February.

Origin said the minister had advised it the additional time was required because of the scale and complexity of the project.

APLNG project director Page Maxson said the joint venture could not make a final investment decision on the project until it had gained Commonwealth approval.

“The project will not be able to proceed to a final investment decision until, at least, such time as the EIS approval process is complete,” he said.

The ministry's delay was unrelated to the recent discovery of traces of a carcinogenic toxin in some of project's exploration wells this year, a spokeswoman for Origin said.

Origin has said that an investigation found there was no significant risk to the environment or human health from the toxin, which was found in tiny amounts.

The final investment decision on the project was expected to be made by the end of this year, with the first gas expected to be exported in late 2014. It will have an initial capacity of 4.5 million tonnes per annum, eventually ramping up to 18 million tpa.

Wednesday 15 December 2010
Upstream

Oz LNG shortfall as cost overruns and delays hit

2010-12-23T12:03:00.003+11:00

EVEN with more than a dozen LNG export projects planned in the Asia-Pacific region, there is likely to be a LNG shortage in the medium term as projects face delays and cost blowouts.

It is projected that while LNG demand is expected to double by 2015, capacity expansion is likely to grow only by 30% or less than a third of demand.

“When you are going to see the crunch is in 2013 or 2014, but sentiment will run faster than actual shortfall,” Tony Regan, principal consultant at Tri-Zen told PNN adding that prices could firm up as early as the second half of next year.

Industry experts point out that the current round of LNG expansion has primarily been located in Qatar, Yemen, Peru and Russia’s Sakhalin development.

“But another rush to bring in additional LNG in 2014-2015 is not just happening,” Regan said.

He pointed out that of the 10 leading projects in Australia, including coal seam gas-to-LNG projects in Queensland, only the project proposed by British Gas has reached the final investment decision stage.

It is expected that Santos-led Gladstone LNG project could get the final investment nod after having already obtained federal environmental approval.

Industry experts note that most of the other projects, including APLNG and Shell’s Prelude floating LNG project that were expected to make a FID by the end of this year, have already been delayed.

“Only two will reach FIDs. Others may come in but at a lot slower pace. Both Shell’s Prelude and Chevron’s Wheatstone have slipped to 2016. So you’ll see another peak of supplies coming onstream in 2016,” Regan said.

While regional LNG supplies are likely to remain limited, demand is likely to outpace supply.

“On the demand side, LNG is replacing pipeline gas especially in North East Asia, in Japan and Korea,” Regan said.

Other experts also believe that while growth in Chinese demand is well documented and focused on, India is likely to come up as a wildcard consumer.

Already there have been serious interruptions to domestic supplies especially from the Krishna-Godaveri Basin, and the country has been looking for imports of LNG.

In addition to the projected South Asian demand, industry analysts point to the emerging demand from the Middle East with buyers such as Dubai and Bahrain adding LNG import terminal capacity, which analysts note will increase premiums of LNG spot cargoes.

Industry executives also said the disconnect in natural gas prices between the North American market and Asia is likely to persist with the US largely unable to take advantage of the arbitrage between the two regions.

Natural gas prices in the US have been hovering at the $4-5 per million Btu (British thermal unit) mark, largely due the advent of the game-changing shale gas sources.

This has led to many companies that were previously looking to develop LNG import infrastructure now planning to convert these into export facilities.

Already, Freeport LNG in Texas has teamed up with Macquarie Bank to invest in converting its import terminal into an export one.

But sources said the viability of LNG exports rested on pricing and, as long as the North American gas prices were pegged to Henry Hub prices, investments in export infrastructure would be limited.

“[Investments] really depends on how it is priced and how do you manage pricing exposure. If it is pegged to Henry Hub, gas from Trinidad is already much more competitive,” Regan said.

Analysts believe that export prices linked to Henry Hub make it unlikely that buyers would be willing to get into long-term contracts. And if domestic natural gas prices were to go up significantly, then a lot of US gas would be diverted for domestic consumption, leaving billions of dollars as stranded investments in export infrastructure.

“There is already competition from Nigeria and Chinese buyers are the least likely option. You can’t bet on that [the Chinese being the buyers]. So these export projects aren’t financeable and banks aren’t willing to put in money,” Regan said.

Even though there is likely to be a shortage of LNG in the medium term, supplies are likely to be adequate longer term, with a second round of investments in export infrastructure likely by 2017-18 and projects coming online in 2020-25.

“These will primarily be in Australia and Papua New Guinea,” Regan said pointing out that difficulty in getting costumer buy-in will delay projects like ConocoPhillips-Origin’s APLNG proposal.

“A tightening market could signal need for additional investments. Browse is a difficult one; location is more of an issue because of environmental opposition. And with Sunrise, there is too much of an impasse at the moment with both Timor Leste and Woodside having an entrenched position,” Regan said.

Industry sources expect the second round of investments to be primarily centred around possibly Browse, with Woodside looking to float Pluto 2 and marketing the gas for the second train, and ExxonMobil developing the third train in the PNG project.

Friday, 17 December 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=2379939

Total takes GLNG bite

2010-12-23T12:03:00.001+11:00

France's Total will take a 7.5% stake in Australia's Gladstone Liquefied Natural Gas (GLNG) project as South Korea's Kogas takes 15% and signs a 20 year import deal with Santos this week.

Santos will sell an equivalent 7.5% stake in the project to Kogas for $A665 million (US$658.8 million), subject to the approval of Australia's Foreign Investment Review Board.

Malaysia's Petronas would also sell 7.5% interest to Kogas, Santos said in an announcement, leaving Santos with 30% of the project, Kogas with 15% and Petronas and Total with 27.5% each.

Santos also confirmed it would sell 3.5 million tonnes of LNG per year from the Gladstone project to Kogas for 15 years, with an option for five more.

Combined with its existing deal with Petronas, the agreements are estimated to be worth over $120 billion at market consensus oil prices.

Santos chief executive David Knox said the deal was a landmark agreement for the industry.

“With 7 mtpa of LNG off-take now secured by binding agreements, GLNG is well and truly ready to go and the partners are working through the logistics for a final investment decision to be taken before the end of January,” he said.

Santos is planning a $A500 million capital raising to secure additional funds for the project, while reducing its final dividend to 15 cents per share, and its annual dividend to 30 cents per share.

The company will also cancel its earlier 1.5 million tonnes per year off-take deal with Total following the Kogas sale.

Thursday 16 December 2010
Upsatream

Santos close to LNG start

2010-12-23T12:02:00.000+11:00

THE Stars are aligning for a second LNG project to be kick started in January with Santos poised to make a final decision on the Gladstone liquefied natural gas (GLNG) project, after selling a stake in the project and signing a $US120 billion sales off-take deal.

Santos has also flagged a $500 million equity raising to help pay for its share of the $US16 billion project, which will be among the first to utilise Queensland’s massive coal seam gas reserves, piping it from the Surat Basin through the Banana Shire to the port city.

The gas giant said it had sold a 7.5% stake in GLNG to Korean Gas Corp (KOGAS) and another 7.5% to French company Total for a combined $665 million.

KOGAS, the largest LNG buyer in the world, will also purchase 3.5 million tonnes per annum (mtpa) of gas from the project over 20 years, worth more than $US120 billion at consensus oil prices, Santos says. Santos chief executive David Knox said the agreements paved the way for the GLNG partners to make a final investment decision on two gas trains, rather than one.

"The stars have really aligned for GLNG in recent weeks and today’s agreements with KOGAS and Total mean that we can make the final investment decision (FID) in January,"

Mr Knox said in a teleconference from Seoul, where the deals with KOGAS were signed.

An earlier announcement by Santos of a $16 billion agreement with KOGAS and Total put Queensland within a hair’s breadth of a second huge LNG project, according to resources industry chief Michael Roche.

"This deal means that Santos now has agreements for the sale of 7 million tonnes per annum (mtpa) of its planned 7.8mtpa two train Gladstone Liquefied Natural Gas (GLNG) project," said Mr Roche, chief executive of the Queensland Resources Council.

"The combined output of LNG from BG Group’s already committed QCLNG project and the GLNG project at more than 16 million tonnes will be greater than the output from the much-vaunted Gorgon project in Western Australia."

Tuesday 21 December 2010
Central Telegraph

LNG powers ahead

2010-12-13T09:01:00.000+11:00

LIQUEFIED natural gas exports led the way for Australian resource exports in the September quarter with a 37% increase, or $738 million, to $2.8 billion over the June quarter.

This was due to the increase in capacity utilisation at the North West Shelf where output rose by 13% to 4.3 million tonnes, bringing total LNG production to 4.95MMt.

Crude oil production remained largely unchanged from the June quarter as production affected by flooding in the Cooper Basin oil province was offset by the Pyrenees and Van Gogh fields producing at near full capacity.

However, the value of crude exports was down 4% to $2.9 billion due to lower oil prices.

Natural gas production also increased by 11% to 466.14 billion cubic feet of gas due in large part to higher production from the Gippsland and Otway basins.

Out of this, coal seam gas accounted for 56.5Bcf of gas production, a 22% increase over the previous quarter due to the ramp-up in Talinga production.

Thursday, 9 December 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1587571

PNG LNG provides confidence to Papua New Guinea

2010-12-08T08:55:00.003+11:00

PNG LNG is a "marathon" project that has provided confidence in Papua New Guinea as a nation able to host a world-class oil and gas project, Oil Search executive general manager LNG Phil Bainbridge told the Papua New Guinea Mining and Petroleum Investment Conference in Sydney yesterday.

He said the company would continue to invest in Papua New Guinea and had four new licenses that would leave it with a 35% equity position post farm-in.

“PNG LNG is a wonderful opportunity,” he said. “It's a world-class project.

“Its ongoing success depends on the ongoing relationship between developers and the communities.”

The PNG LNG Project is an integrated upstream natural gas and LNG development, operated by ExxonMobil.

The project has a common ownership structure across the value chain which includes upstream facilities, comprising 12 well pads at the Hides, Angore and Juha fields, production wells, gathering systems and processing plants at Hides and subsequently Juha in the PNG Highlands.

It also includes associated gas facilities at Kutubu, Moran and Gobe Main, a LNG liquefaction plant, storage and loading facilities located at State Portion 152, near Port Moresby and a gas pipeline from the main upstream processing plant in the PNG Highlands to the LNG plant near Port Moresby.

Discovered gas reserves committed to the project exceed 9 trillion cubic feet. About 80% of the gas supply will come from the Hides, Angore and Juha gas fields, with the main gas processing plant located at Hides.

The remainder of the gas supply will come from the Kutubu, Moran and Gobe Main producing oil fields, operated by Oil Search.

Total reserves will support a production plateau of 14-15 years based on proved reserves and more than 20 years based on proved and probable reserves.

PNG LNG will utilise the existing liquids export pipeline from the PNG Highlands to the coast and the oil-loading terminal owned by the PL 2 joint venture group.

The construction of the project is based on well established and proven gas infrastructure and plant engineering and design, which mitigates the risk of cost overrun and delay.

The liquefaction process being utilised is Air Products C3/Multi-Refrigerant, which is in use in a range of LNG plants globally.

LNG from the project is fully contracted to four key buyers, comprising TEPCO and Osaka Gas from Japan, CPC from Taiwan and Sinopec from China.

The LNG has been jointly marketed, with ExxonMobil acting as marketing representative on behalf of the project participants.

"The funds generated should be used in a transparent way for the landowners and for all Papua New Guinea citizens," Bainbridge said.

"It's time to operationalise these principles."

In 2014 and 2015, PNG LNG production is expected to come online, providing a large boost to GDP growth.

As of January 2011, Oil Search will be cooperating with Rockwell Energy and Hillsborough energy on a new licence focusing on deeper targets.

Tuesday, 7 December 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1587455

PNG LNG industry will face rivals

2010-12-08T08:55:00.001+11:00

PAPUA New Guinea's nascent LNG industry could face competition in the region by the development of unconventional gas around the world and the redirection of exports away from the US to Southeast Asia by Qatari producers.

The key to ensuring optimum supply and secured price levels is to establish reliability credentials and to ensure customers are locked in before any change in marketing strategy by Qatar, the world's biggest and most cost-efficient LNG producer, Facts Inc chairman Fereidun Fesharaki told the Papua New Guinea Mining and Investment Conference in Sydney.

"You have to be aware that the Qatari shadow is there," he said.

"You have to lock up your customers as soon as possible. It is not possible to compete with the Qataris on economics.

"You cannot remain comfortable."

There is also expected to be energy competition coming from Canada's shale gas industry, which is expected to produce approximately 20 million tonnes per annum of LNG within seven years, Fesharaki said.

Once a solid relationship with customers is established, he said it should be possible to enjoy good growth, as the use of gas for energy needs has been found to be "addictive".

"Oil is like dating and gas is like getting married," Fesharaki said.

Fesharaki said China and India were also developing their own shale gas industries which would create and meet supply in the interior of those nations.

Within the region Japan would remain the dominant buyer in the future decade, despite being eclipsed as the world’s second-largest economy by China.

Prices for LNG are more likely to track the price of oil, which will almost certainly rise in the future because of shortages created by geotechnical and geopolitical reasons, he said.

Australia will emerge as a major supplier of LNG, but other regional suppliers such as Brunei will drop off their supply, making room for the PNG LNG industry to maintain its presence in the region, Fesharaki said.

Tuesday, 7 December 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1587459

Woodside Petroleum's Pluto LNG Venture May Begin in August, Citigroup Says

2010-11-30T14:43:00.003+11:00

Woodside Petroleum Ltd. may delay the start of the A$13 billion ($12.7 billion) Pluto liquefied natural gas project in Western Australia until August 2011 and increase its cost estimate for the venture, Citigroup Inc. said.

Australia’s second-largest oil and gas producer is evaluating Pluto’s spending and schedule and plans to give an update by the end of this month, the company said in October. Perth-based Woodside said previously that Pluto was expected to start by the end of February, and export gas before April.

The Pluto LNG venture may now begin in the middle of the third quarter of next year, Mark Greenwood, an analyst at Citigroup in Sydney, wrote in a report dated yesterday.

Pluto, one of more than a dozen proposed Australian LNG projects targeting Asian demand, is expected to become the fastest venture of its kind built, with the initial discovery of the field as recent as 2005, Woodside has said. Labor disputes have disrupted construction at the Pluto site in Karratha, about 1,600 kilometers (994 miles) north of Perth.

Woodside rose 0.4 percent to A$40.72 at 4:01 p.m. in Sydney. The benchmark S&P/ASX 200 Index declined 0.1 percent.

The producer said last year Pluto expenses would rise by as much as A$1.1 billion.

The company also said last month it was dismantling parts of towers used to burn off excess gas before the cyclone season because they fell short of design specifications.

Purchase Cargoes

The announcement of the cost review prompted analysts at firms such as JPMorgan Chase & Co., Deutsche Bank, UBS AG and Citigroup to predict delays to Pluto LNG production. Xavier Grunauer, an analyst at Nomura Holdings Inc. in Sydney, said in a note today that he expects first deliveries in July 2011.

Roger Martin, a spokesman for Woodside in Perth, declined in an e-mail late yesterday to comment on the schedule.

Woodside is obligated to deliver LNG cargoes to customers starting in early 2011, Citigroup’s Greenwood wrote. If Pluto hasn’t begun producing the gas, the company must get the cargoes from elsewhere in the market, he said. Woodside said in February it formed a plan to rely on other suppliers to fulfill commitments to buyers if the project faced delays.

Wednesday 24 Nov, 2010
Bloomberg

PNG budget powered by LNG

2010-11-30T14:43:00.001+11:00

THE Papua New Guinea government will be placing a large degree of faith in the huge Exxon-Mobil liquefied natural gas project and a continuing demand for commodities in 2011, according to its just-released Budget Strategy Paper.

PNG Treasury and Finance Minister Peter O’Neill pointed out that “domestically, the construction of the PNG LNG project will have a big impact on the PNG economy” in announcing the country’s biggest ever budget expenditure, which is expected to be 9382.1 million kina ($A3.7 million).

This was K1083.6 higher than the revised 2010 estimate.

“The International Monetary Fund anticipates that global recovery will be underpinned by growth of 4.5 per cent in 2010, easing to 4.25 per cent in 2011. This is expected to support the continuation of above-average commodity prices in 2011 and higher mineral revenue,” the minister said.

“Construction of the PNG LNG project is expected to drive high rates of economic growth in 2010 and 2011. Real economic growth is forecast to increase by a strong 6 per cent in 2011 following forecast economic growth of 7.5 per cent in 2010.

“This slight moderation in economic growth in 2011 compared to 2010 reflects the expectation that constructions activity on the PNG LNG project will ramp up in the second half of 2010 and continue to grow at a slower rate but from a higher base in 2011.”

However, the minister gave a word of warning that any significant delay in the project could see forecast growth transferred from 2010 to 2011 while growth would also be affected by the Ramu nickel mine, which is expected to operate at only half capacity this year compared to last year’s budget estimates.

Global accountancy firm Deloitte Touche Tohmatsu described the PNG budget as a “steady as she goes” budget which builds on previous planning and takes advantage of the increased revenue stream expected to be available in 2011.

In an executive summary on the budget the company had a note of warning: “While the government seems to be taking some steps towards improving the accountability of the trust funds set up to handle windfall mineral revenue, they do remain a serious concern.”

Deloitte said the budget was framed against a background of strong domestic growth due to the commencement of the LNG project and increased production from the mining sector as well as an emerging global economic recovery.

The company pointed to the $15 billion LNG project, a second substantial gas project proposed by InterOil Corporation, Merrill Lynch Commodities, Pacific LNG Operations and Petromin and Talisman Energy’s major investment in exploration acreage as the likely triggers for growth in the country’s oil and gas sector.

Wednesday, 24 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1586970

Woodside finds more Pluto gas

2010-11-30T14:42:00.003+11:00

WOODSIDE Petroleum has had some welcome news for its Pluto liquefied natural gas project expansion with a new gas discovery in WA-404-P of the Carnarvon Basin.

The Remy-1 well intersected 33 metres and 39m of gross gas over two separate zones within the Triassic target with wireline logging being carried out to obtain pressure and gas samples.

“To date, the upper 33-metre zone has yielded gas samples and a gas gradient has been identified,” the company said in a statement.

Remy-1 was drilled to a depth of 4555m with the Ocean America semi-submersible and successfully appraised the Martell gas discovery 500m away. The Martell well confirmed a gross gas column of about 110m and the presence of a gas-water contact last year.

Both wells are in WA-404-P in which Woodside recently secured full control after buying Hess Corporation’s 50% stake in the permit for an undisclosed sum.

Woodside has so far made five discoveries in WA-404-P – Martell, Noblige, Larsen and Larsenn Deep – as part of an ongoing exploration program to secure enough gas reserves to serve as feedstock for trains 2 and 3.

The company has been working hard to prove up additional gas reserves to serve as feedstock for trains 2 and 3 so it can meet a 2011 final investment decision target.

Besides its own exploration program, Woodside has been in talks to secure third-party supplies to support the expansion.

The gas discovery is welcome news for the company which is expected to announce a delay and cost blowout on the Pluto foundation project when it gives an update on the project by the end of the month.

Shares in Woodside ended the day 12c weaker at $40.65.

Friday, 26 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1587077

Nexus buys more time for Crux

2010-11-30T14:42:00.001+11:00

NEXUS has signed an agreement with Shell which gives it the opportunity to enjoy a full 10-year production term from its planned Crux liquids project off Western Australia.

Under the agreement, Nexus will pay Shell an option fee of $US675,000 ($A686,497) on execution of the option to extend the gas rights handover date from December 31, 2020 to December 31, 2023.

Nexus will also pay an exercise fee of $US34.325 million on final investment decision before the end of 2011 and pay Shell an overriding royalty payment of 3.5% throughout the project production life.

“The Shell extension is a significant step towards the development of Crux. Whilst we still have a lot of work to do to bring Crux into production, the extension is necessary to allow sufficient time to recover the liquids and meet the conditions for financing,” Nexus chairman Michael Fowler said.

Nexus managing director Richard Cottee added the deal was an important first step in realising the inherent wealth of the Crux field.

On execution of the option, Shell will now have a 100% interest in the gas rights from 2023 and may potentially tie Crux into its Prelude floating liquefied natural gas project.

Thursday, 25 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1587021

Pluto pushed back to August

2010-11-30T14:41:00.003+11:00

WOODSIDE Petroleum has announced an expected delay in the start-up of its Pluto liquefied natural gas project by six months to August 2011, with costs increasing by 6.9% to $14 billion.

The company said the delay was due to the failure of the project’s flare tower contractor to take into account the specified wind loading requirement of the flare towers.

Woodside added it had chosen to replace the flare towers after considering several remedial options, and would put up a temporary flare tower to assist during commissioning.

While estimates of the delay have ranged from one to six months, hints of how long Woodside expected it to be could be seen in its extension of Fleetwood Corporation’s accommodation services agreement for the Searipple Village by six months starting January 1, 2011, while retaining its option for further extension.

The company said in October it was dismantling sections of the flare towers in preparation for the approaching cyclone season, which runs from November to April.

Meanwhile, Woodside said it had completed front-end engineering design for two expansion trains at Pluto and planned to order long-lead items in 2011.

It added that due to its recent acquisition of Hess’ interest in WA-404-P, it expected its equity in one of the expansion trains to be about 90-95%.

This could imply its recent exploration successes have proved up enough gas resources for it to be close to committing to at least one additional train at Pluto.

Woodside also said it had completed the basis of design for the Browse LNG project and was on track to enter FEED in early 2011 and be in position to make a final investment decision in mid-2012.

The company has already awarded the first pre-FEED contract for the central processing facility and is on track to place contracts for the subsea and pipeline, dry tree units and downstream packages before the end of the year.

Production for 2011 (excluding Pluto) is expected to range from 63 to 66 million barrels of oil equivalent while Pluto should contribute an additional 5-9MMboe.

Shares in Woodside were relatively unchanged this morning at $41.80.

Tuesday, 30 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1587181

Karoon increases Browse slice

2010-11-30T14:41:00.001+11:00

Australian explorer Karoon Gas Australia has executed an agreement with ConocoPhillips to acquire an additional 50% participating interest in permit WA-314-P, located in the Browse basin, off north-west Australia

Under the agreement Karoon will now have the right to determine the final location, depth and target for the commitment well to be drilled on the permit, with ConocoPhillips having the option to buy back a 10% interest after the well is drilled.

Karoon said it had assessed seven leads and prospects within the permit and believed the permit could contain over 10 trillion cubic feet of gas and 150 million barrels of condensate.

It added the Grace prospect alone had 3.3 trillion cubic feet of gas and 45 million barrels prospective resource potential, which did not include the portion of the prospect which lied outside the permit boundary.

WA-314-P is located to the north of permits WA-315-P and WA-398-P which contain the Poseidon gas discovery.

Following the completion of the deal ConocoPhillips will remain operator of WA-314-P, but its interest will be reduced to 10%, with Karoon increasing its stake to 90%.

Monday 29 November 2010
Upstream

Large-scale consolidation not on BG’s agenda

2010-11-11T16:05:00.005+11:00

BG Group’s sanction of its Queensland Curtis LNG project could trigger a new wave of consolidation in the coal seam gas industry; however, the British giant has all but ruled out any large-scale amalgamation.

Speaking at a webcast of the company’s third quarter results, chief executive officer Frank Chapman said the company wasn’t working on any large-scale mergers.

“Once you get a big piece of infrastructure like this away, one is always looking for the optimisations around that, and I believe those opportunities are many, although we are not working on anything at the moment aside from the expansion of phase-train three,” he said.

“We’re making good progress with resources, we’re out in the market and marketing further volumes and our primary objective right now is to bring that forward as soon as we can.

“It may be that some of the feedstock for train three is third-party gas. I don’t know, I mean there are various possibilities but in terms of large scale, putting two big projects together, we’re not working on anything like that at the moment.

“We’ve got all the resources we need, we’ve got the customer base we need, we’ve got the financial firepower we need and we know what we’re doing, so I think that formula has worked really quite well for us to date and we intend to plough our own furrow certainly for a while in getting this all away,” he said.

Talk of consolidation in the CSG sector is not new, with the consensus that amalgamation would take place to save costs.

However, with BG’s FID decision on Sunday and Santos and the Australia Pacific LNG joint venture expected to make FID on their projects by the end of the year, large-scale consolidation may be out of the picture for now.

Earlier this year, Santos chief executive David Knox said that while consolidation was a sensible thing to do, the window of opportunity for consolidation before the company built its first train and potentially second train was gone.

“Perhaps we can consolidate on future LNG trains,” he said. “We have a five-train site so we have a 20 million tonne site; we have plans to build 7.2 million tonnes so there is opportunity for others to join our side if they choose to do so.”

His comments were also mirrored by Origin Energy managing director Grant King, who said that with a number of projects close to FID, any potential collaboration could be like its deal to sell around 190 petajoules of gas to the QCLNG project.

BG made a $US15 billion final investment decision on the two-train, 8.5 million tonne per annum project on Curtis Island near Gladstone on Sunday.

Work on the project, which is targeting first LNG in 2014, will start immediately.

Chapman also said the company would “ideally” like to roll over the construction team from the first phase of the project to Train 3 and was working hard on proving up reserves for the additional Train.

“We’ll be working hard on our exploration; we’re drilling about 40 wells this year … in the Bowen Basin looking at further resource opportunities,” he said.

“We’ll see how we get on but we have already, as you might have read, an environmental permit for the third train and, therefore, it will enjoy quite some benefits from leveraging off all of the work we’ve done to get to the sanction we announced over the weekend.”

Thursday, 4 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1542160

New bid to break Sunrise deadlock

2010-11-11T16:05:00.003+11:00

Australian player Woodside Petroleum is planning to lodge details of three separate development concepts for the Greater Sunrise field with the Timor-Leste authorities.

In a statement released today, Dili said Woodside and its joint venture partners "have now indicated their plans to present to the National Petroleum Authority (ANP) the three separate development concepts as required within the terms of the production sharing contracts" for the field.

The Australian giant has been at loggerheads with Dili over its preferred concept, which involved a floating liquefied natural gas vessel and a terminal in Darwin. The Timorese authorities have pushed for an LNG terminal near Dili.

Meanwhile, Italian giant Eni and India's Reliance Energy are preparing to get to work off Timor-Leste.

The Timorese government is currently considering applications lodged by both companies for operations in the Timor-Leste Exclusive Area (TLEA).

Eni has submitted documents including an environmental impact assessment and environmental management plan for the Cova-1 well, to be spud in Block C.

The Dili authorities added that Eni is also hoping to spud further wells in Block C.

Reliance has applied for approval to drill a number of wells in Block K.

Both players need approval from the ANP and the National Directorate for the Environment (DNMA) before work can begin.

Wednesday 3 Nov, 2010
Upstream

Chevron looking into FLNG

2010-11-11T16:05:00.001+11:00

THE interest in floating liquefied natural gas as an option to develop stranded offshore gas discoveries is growing, with Chevron the latest to consider a FLNG option off Western Australia.

The company, which has begun exploring in the deeper water of the Exmouth Plateau, is reportedly considering FLNG to develop the Exmouth lease holdings.

“Floating LNG would certainly be an option there,” Chevron Asia-Pacific exploration and production president Jim Blackwell told The Australian.

“But that is going to compete with the economics of bringing it onshore to a conventional plant.”

Chevron has made two discoveries in the Exmouth Plateau area with the Brederode-1 exploration well earlier this year and the Kentish Knock-1 discovery last year.

The discoveries were made in 50%-owned WA-364-P. Shell, which is leading the FLNG charge in WA with plans to develop the Prelude FLNG project, owns the remaining 50%.

Shell expects to make a final investment decision on the Prelude project early next year, with first gas expected in 2016.

Other FLNG projects on the cards in Australia include Woodside’s Sunrise project, GDF Suez and Santos’s Bonaparte LNG project and the development of PTTEP’s Timor Sea assets.

Metgasco has also recently said it was considering FLNG as a possible option to monetise gas from its Clarence Moreton acreage in New South Wales.

Wednesday, 3 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1542116

Conoco, Karoon prepare for Browse drilling

2010-11-11T16:04:00.001+11:00

CONOCOPHILLIPS and partner Karoon Gas plan to resume their Browse Basin quest with a two-year multi-well drilling campaign starting in March to firm up reserves that could lead to an Australian LNG project.

Operator Conoco has applied for environmental approval for the multi-well campaign which would consist of drilling 5-8 wells over a two-year period in WA-314-P, WA-315-P and WA-398-P.

The wells are part of the joint venture’s campaign to define the size and deliverability of the greater Poseidon structure.

Earlier this year, the JV wrapped up the phase one Browse drilling campaign and is evaluating the positive results from three wells – Poesidon-1, Poseidon-2 and Kronos-1 – and the Poseidon 3D seismic data to identify further appraisal and exploration well locations for drilling.

In May, Karoon said it believed future production wells had the potential to flow at commercial rates after the Kronos-1 well sustained a maximum constrained test flow rate of 26MMcfd.

Karoon company Secretary Scott Hosking had then told PNN that if the contingent resource was large enough, at least one stand-alone development was the preferred option.

The multi-well campaign is expected to start in March once Conoco secures a drilling rig.

ConocoPhillips holds a 60% interest in WA-314-P, WA-315-P, and WA-398-P with Karoon holding the remaining 40%.

Wednesday, 3 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1542113

Ichthys tendering begins

2010-11-11T16:03:00.005+11:00

INPEX and partner Total have taken another step towards making the final investment decision for the Ichthys liquefied natural gas project with the release of invitations to tender for the project’s key offshore facilities.

The joint venture released the ITT for the semi-submersible central processing facility (CPF) for the project in the Timor Sea on Monday.

The CPF will be one of the largest semi-submersible platforms in the world and the first in the Australian petroleum industry. It will remove water and raw liquids, including condensate, from the Ichthys gas.

The remaining ITTs for the major offshore engineering, procurement and construction contracts will be released before the end of the year.

These include the floating production storage and offloading vessel which will have a condensate storage capacity of 1.14 million tonnes, umbilical, risers and flowlines, subsea production system and the gas export pipeline which will transport gas from the field to Darwin.

Inpex Australia president Seiya Ito said the release of the ITT for the CPF was a significant step toward delivering the 8.4 million tonne per annum LNG project.

“The release of the ITTs demonstrates our commitment to delivering our flagship Ichthys project and to the long-term growth of the company, and confirms we are moving forward toward a final investment decision as scheduled for the fourth quarter of 2011.”

Ito added that a significant number of leading engineering and construction companies had prequalified for the ITTs.

Under the Ichthys project’s Australian industry participation plan, bidding companies have a commitment to creating full, fair and reasonable opportunities for Australian suppliers.

The commitment provides opportunities for Australian fabrication yards, equipment suppliers and manufacturers to bid for work from the project’s sub-packages.

Tuesday, 2 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=2335856

CSG-LNG industry takes a big leap

2010-11-11T16:03:00.003+11:00

AFTER three years, BG Group’s Queensland Curtis liquefied natural gas project has moved a step closer to reality with the company taking the lead in the race to establish the world’s first coal seam gas to LNG project.

Yesterday, the British giant made a $US15 billion ($A15.2 million) final investment decision on the two-train, 8.5 million tonne per annum project on Curtis Island near Gladstone.

Over the next four years, QGC, BG’s Australian subsidiary, will construct the liquefaction plant, field facilities and a 540-kilometre underground pipeline network linking its CSG fields in the Surat Basin to the LNG plant on Curtis Island.

“This is the single-biggest investment ever undertaken by BG Group,” QGC managing director Catherine Tanna said.

“Three years ago when BG Group set up in Australia we had an idea. Today, we have a project.”

Federal Resources Minister Martin Ferguson, who was in Brisbane along with Treasurer Wayne Swan for the announcement, said the decision was an important and exciting leap ahead in the development of Australia’s vast CSG reserves.

“It is a new history for Australia in terms of export opportunities,” he said. “It is a first.

“Only now we’re going to see a flurry of activity following the leadership of BG from other competitors in terms of actually delivering similar projects.”

BG has been regarded as the leader of the pack in the Queensland CSG-LNG industry and was tipped to be the first to cross the line.

Santos, which is planning to develop the Gladstone LNG project, and Origin Energy and ConocoPhillips, which are working on the APLNG project, expect to announce FID before the end of the year.

Treasurer Wayne Swan said the project would not only deliver a huge boost to the Queensland economy but also to the Australian economy.

“It will provide vital support to jobs, to small business, to future investment and, if we do that within a framework of environmental protection and the protection of agricultural production, it will also bring a very substantial boost to Australian exports.

“The plant will be half the size of the whole North West Shelf project and that will go in place in four years,” he said.

“The North West Shelf was put in place over 20 years and it will produce a third of Australia’s LNG, and that’s just stage one.”

QCLNG is estimated to create 5000 construction jobs over the next four years and from 2014, 1000 jobs in operations.

“We estimate that the project will increase economic activity in Queensland by $31 billion over the project’s first decade, or $2.6 billion a year,” Tanna said.

“We also expect to pay about $1 billion a year in federal taxes and a further $300 million or so each year in royalties to the Queensland government.”

The Australian Petroleum Production and Exploration Association said the $US15 billion commitment was a watershed moment for Australia’s oil and gas industry.

“Today’s announcement makes Australia’s east coast LNG province a reality and places Australia as the world leader in the coal seam gas-based LNG industry,” APPEA chief executive Belinda Robinson said.

“Queensland is now home to the world’s first LNG industry to use coal seam gas and the economic and employment benefits to Queensland and Australia of this new industry will be profound.”

Robinson added that the environmental gains would be just as significant.

“When Australian LNG is used in place of coal to generate electricity in customer countries, up to nine tonnes of greenhouse gas emissions are avoided for every tonne produced in the production, liquefaction and export process,” she said.

“This is because gas-fired power stations emit up to 70 per cent less greenhouse gas emissions than coal-burning plants.

“The further development of Australia’s gas export industry represents Australia’s best opportunity to assist the largest and fastest-growing economies of Asia to move to a less carbon intensive energy future by substituting some of their coal-fired power generation with Australian natural gas.”

Queensland Resources Council chief executive Michael Roche welcomed the decision and said the rise of Queensland’s CSG industry over the past 15 years was a “phenomenal achievement”.

“Queensland has never seen a financial investment and technology uptake of the magnitude surrounding the birth of this new export pillar for Australia's future,” he said.

“A coal seam gas-based export industry has moved literally from pipedream to economic reality in less than a decade, but with all the built-in safeguards that the community expects from a 21st century industry.”

First LNG exports from QCLNG are planned to start in 2014, underpinned by agreements in Chile, China, Japan and Singapore for the purchase of up to 9.5MMtpa of LNG.

In March, the company signed an agreement with China National Offshore Oil Corporation for the supply of 3.6MMtpa of LNG for 20 years.

This was followed by a 1.2MMtpa agreement with Tokyo Gas and, just on Friday, the company reached an agreement for the supply of 120 cargoes with Chubu Electric Power over a 20-year term, starting in 2014.

A fully termed LNG sale and purchase agreement is expected to be signed in the first half of 2011.

Monday, 1 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1542016

Australia set to be third biggest gas producer

2010-11-11T16:03:00.001+11:00

Australia is poised to overtake Norway to become the third largest gas producer among OECD nations by 2035, driven mainly by the booming liquefied natural gas sector.

The International Energy Agency's annual world energy outlook report forecasts Australian gas production ranking third among Organisation for Economic Co-operation and Development countries towards the end of the projection period, which is 2035.

By this stage, Australia's gas output will only be surpassed by the US and Canada, according to the report.

Australia's gas output was expected to eclipse Malaysia's by 2020 and Indonesia's by 2025.

The two nations are currently the biggest gas producers in the Asia Pacific region and major LNG exporters.

Graeme Bethune, chief executive of Adelaide-based energy advisory and research company Energy Quest, said Australian gas production was set to more than triple over the projection period, reported AAP.

It would be driven mainly by LNG export projects fed by coalbed methane gas in Queensland, he said.

He said Australian gas production was projected to grow at an average rate of 4.2% per annum until 2035, making it one of the fastest growing sectors in the world.

Wednesday 10 November 2010
Upstream

Ichthys investment boost

2010-11-11T16:02:00.003+11:00

NORTHERN Territory Deputy Chief Minister and Treasurer Delia Lawrie says investor interest in the proposed Ichthys gas field development is strengthening.

Lawrie today met with Mizuho Corporate Bank managing executive Shuichi Honda and said Japanese financial institutions today confirmed their support for the proposed INPEX Ichthys LNG project.

“The Mizuho Financial Group is one of the largest financial institutions in the world and is a significant prospective financier in the INPEX Ichthys project,” Lawrie said.

“During today’s meeting Mr Honda highlighted the symbolic importance of the proposed Ichthys development for the relationship between Australia, the Territory and Japan.

“Investor interest in the Ichthys project continues to strengthen with a recent INPEX investor roadshow promoting the development raising $6.6 billion in capital with the share offer over-subscribed by six times than was offered.”

Lawrie also met with officials from the Japanese Ministry of Economy, Trade and Industry (METI) which has an 18% holding in INPEX to discuss strategic research and exploration by Japanese businesses in the Northern Territory.

“METI is a key Japanese government agency responsible for energy security,” she said.

“The meeting today with the Director General, Mr Masaaki Kimura, was crucial in further outlining how the Territory and its resources will help to meet Japan’s future energy needs.”

Ms Lawrie also today met with the JGC group, a joint venture partner in the front-end engineering design of the proposed LNG plant.

“I emphasised the importance of our local industry participation plan to ensure local Territory businesses will benefit from the construction of the Ichthys processing plant,” she said.

“I also encouraged JGC to establish an office in Darwin to foster links with Territory businesses for future engineering projects associated with the INPEX Ichthys project.”

Monday, 8 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1542274

PNG LNG pushing ahead

2010-11-11T16:02:00.001+11:00

THE ExxonMobil-led $US15 billion PNG LNG project is moving ahead with the arrival of the first shipments of pipes that will transport gas from the highlands to the two-train LNG facility near Port Moresby.

The PNG LNG project consists of an 850-kilometre onshore and offshore pipeline that will transport gas from the Hides, Angore and Juha fields, as well as associated gas from the operating Kutubu, Agogo, Gobe and Moran oil fields in the Southern Highlands and the Western provinces.

The gas will be treated at a plant at Hides before being piped to the liquefaction plant near Port Moresby.

PNG Public Enterprises Minister Arthur Somare said the arrival of the first shipment of pipes was an important occasion in the development and progress of the 6.6 million tonne per annum project.

He added that even though the project was in the early stages of execution, the country was benefiting from the investment with 3000 PNG citizens employed in early works activity.

PNG LNG is scheduled to start producing from 2014 and is expected to deliver more than 9 trillion cubic feet of gas over its 30-year life.

Partners in the project are operator ExxonMobil (33.2%), Oil Search (29%), IPBC (16.6%), Santos (13.5%), Nippon Oil (4.7%), MRDC (2.8%) and Petromin (0.2%).

Tuesday, 9 November 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1542356

Woodside evaluating Pluto schedule

2010-10-29T10:25:00.003+11:00

WORRIES about the February start-up of Woodside’s $13 billion Pluto liquefied natural gas project have been raised after the company said it was experiencing hiccups with the flare tower designs.

In its third quarterly report, Woodside said it was carrying out a comprehensive periodic cost and schedule evaluation of the 4.3 million tonne per annum project and would announce the details next month.

The company said that while the project was 94% complete, it discovered the onshore flare tower designs did not comply with Woodside’s wind loading specifications.

“The flare towers were managed by the engineering, procurement and construction management contractor via a flare design and fabrication specialist,” Woodside said.

“Some sections of the flare towers are being dismantled in preparation for the approaching cyclone season and corrective action.”

The cyclone season in the northwest runs from November to April.

Meanwhile, the project continues to transition from construction to commissioning with the final key heavy lifts completed in August and commissioning of the emergency diesel generators during the quarter.

The two LNG storage tanks have also been completed and are under nitrogen purge.

Offshore commissioning is also progressing with the platform team completing hook-up and completion work in July.

The two 20-inch flowlines have been dewatered ready for the introduction of hydrocarbons, and preparations are well underway to dewater the 180-kilometre trunkline and Mono-Ethylene Glycol (MEG) line during the fourth quarter.

On the Pluto expansion, Woodside said front-end engineering studies for train 2 and 3 have been completed and the contractor selection processes are underway.

The exploration campaign to support the expansion has been ongoing with the company drilling five wells during the quarter.

Two of the wells, Alaric-1 and Larsen Deep-1, were discoveries while the Tiberius-1 and Camus-1 were dry holes.

The Moyet-1 well was spudded on September 6 but only the top hole section was drilled due to rig logistics. The well will be re-entered in the fourth quarter.

Other wells to be drilled in the Greater Pluto area in the fourth quarter include the Remy-1, and Well-9.

Woodside has been working hard to prove up additional gas reserves to serve as feedstock for trains 2 and 3 so it can meet a 2011 final investment decision target.

The company also has been continuing discussions to secure third-party supplies to support the expansion.

Friday, 22 October 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1541685

Cooper gas slated for GLNG

2010-10-29T10:25:00.001+11:00

BEACH Energy is poised to capitalise on its Cooper Basin assets with the South Australian Cooper Basin joint venture signing a deal to supply 750 petajoules of gas to Santos’s Gladstone liquefied natural gas project.

Under the agreement, the SACB JV in which Beach, Origin and Santos are participants, could supply 750PJ of uncontracted gas under an oil-linked pricing structure from the Cooper to the Wallumbilla gas hub in Queensland, starting in 2014.

Beach’s 20.21% share of this gas supply volume would be about 152PJ.

The gas will be supplied over a 15-year period and is conditional on a final investment decision on GLNG train 2.

Beach managing director Reg Nelson said the significant additional demand for gas heralded a new era for the Cooper Basin.

“This proposal brings a new large scale consumer with export market opportunities,” he said.

“If consummated, the deal will set the foundation for ongoing growth and optimisation of the Cooper Basin for the next 20 years and beyond.”

Santos chief executive officer David Knox said the agreement opened an export channel for Cooper Gas and gave the GLNG project a significant strategic advantage in being able to execute the most capital efficient ramp-up of gas supply for trains one and two.

“In combination with Roma underground gas storage, supply of unconventional Santos portfolio gas will enable GLNG to optimise both CSG field development and LNG ramp-up,” he said.

“These levers provide GLNG with a significant strategic advantage.”

The deal could also help Santos secure buyers for GLNG, making an LNG supply deal more appealing because of the potentially higher calorific content compared with LNG sourced from coal seam gas.

Santos vice-president Eastern Australia James Baulderstone said the GLNG supply deal, along with Cooper domestic gas contracts valued at more than $400 million gross already agreed or pending this year, highlighted the long-term importance of the existing Moomba facilities in eastern Australia’s gas infrastructure.

No material capital expenditure will be required before 2014 to deliver the gas, with firm pipeline capacity to transport the gas from the Moomba to the Wallumbilla gas hub in Queensland available to Santos via Epic Energy.

Santos has a 66.6% interest in the SACB JV with Beach holding 20.21% and Origin Energy 13.19%

Cooper Basin landscape
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1541705

BG still tipped to be first across the line

2010-10-29T10:24:00.003+11:00

WITH the initial elation over environmental approval for their respective projects over, BG Group and Santos are now considering the conditions set by federal Environment Minister Tony Burke, though BG could still approve its project this week.

The 300-plus conditions include detailed planning and monitoring to protect groundwater resources; management plans for aquifers, groundwater and surface water; ensuring reinjected water is of suitable quality; rehabilitating large areas of land; and cooperating with other coal seam gas players and the Queensland Water Commission to develop a regional model for the ongoing assessment of the impacts on ground-water activity.

Additionally, BG will be limited to 6000 wells for its 8.3 million tonne per annum Queensland Curtis Liquefied Natural Gas project and Santos limited to 2650 wells for its initial 3.6MMtpa Gladstone LNG project.

While accounting for these conditions could take some time, BG has been ready to give approval for QCLNG since the first half of this year and is expected to be the first to make a final investment decision, which could come early this week, while Santos still needs to finalise its funding arrangements, The Australian reported.

The green light from Burke is also heartening for Origin Energy’s Australia Pacific LNG joint venture with ConocoPhillips, which is now expecting the Queensland state government to approve its project and could secure federal government approval faster as well.

APLNG general manager Paul Zealand told The Australian the project remained on track to have all relevant information to the Origin and Conoco boards in time for them to make a decision by the end of the year.

He added the recent discovery of small traces of benzene, toluene, ethylbenzene and xylene was not affecting the timetable, calling it “an isolated incident we don’t yet understand”.

Zealand said fears BTEX would be released into the head of the Murray-Darling River system were not justified, as water released from CSG wells would go through strict tests in order to pick up the compound before being discharged.

“It is drinking-water standard being discharged from the osmosis plant into the river,” he added.

Meanwhile, reactions to the environmental approval were clearly in-line with the split between project proponents and environmentalists.

The Queensland Resource Council was noticeably upbeat, saying that Queensland could look forward to the creation of about 10,000 construction phase jobs and almost 2000 operational jobs.

“Together, these projects will announce Queensland as a serious player in the global gas market, with the Asia-Pacific region forecast to dominate energy demand growth for decades to come,” QRC chief executive Michael Roche said.

He added the exhaustive government approval conditions combined with a host of new environmental and water management laws and rules would make Queensland’s CSG-LNG export operations the most highly regulated resource projects in the state’s history.

“The regulatory protections for the environment and for host communities are comprehensive and appropriate but it’s likely they will never satisfy trenchant resource sector opponents,” Roche said.

“However, the Queensland community can be assured that these projects are set to deliver substantial benefits in new investment, jobs, export income and a new stream of royalty revenue for taxpayers, while operating under strict government regulation and supervision.”

This mirrored APPEA’s earlier statement welcoming the approval and saying it presented unparalleled economic and environmental opportunity.

On the other side of the fence, Friends of the Earth spokesman Drew Hutton told the AAP the conditions failed to offer real protection for the Great Artesian Basin and the Condamine alluvium.

“The government should have instead put off limits any areas of the basin where drilling could result in massive draw downs in the water table,” Hutton said.

Meanwhile, Capricorn Conservation Council spokesman Ian Herbert said no amount of conditions could stop the project having a major and irreversible effect on the environment.

He said the projects would deplete the amount of groundwater available to farmers in the Western Darling Downs region, while dredging of Gladstone Harbour would threaten the habitat of turtles, dolphins and other marine life.

Herbert also criticised the job creation benefits claimed by project proponents, saying it was a temporary measure.

“In 20 to 30 years time we're going to be left with these plants and at some stage in the future it will all be no longer required once the gas has been pumped out.”

Both QCLNG and GLNG, located at Gladstone, are scheduled to start production in 2014.

Monday, 25 October 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1541704

Australia's Santos to supply gas to Gladstone LNG

2010-10-29T10:24:00.001+11:00

Australian energy firm Santos said on Monday it agreed to supply 750 petajoules of gas to the Gladstone LNG project, putting the venture a step closer to a final investment decision.

Santos will supply about 12 percent of the $15 billion Gladstone LNG project's gas needs from uncontracted reserves at its south Australian Cooper Basin joint venture.

Santos holds a 66.6 percent interest in the Cooper Basin venture, while Beach Energy and Origin Energy hoRld the remaining shares.

Santos expects to make a final investment decision on the 7.2 million tonne a year Gladstone LNG plant near the port city of Gladstone in Queensland state before the end of the year. The project was given the federal environmental go-ahead on Friday.

Gladstone LNG is 45 percent owned by Santos while Malaysia's Petronas holds 35 percent and France's Total holds 20 percent. State-run Korea Gas Corp (KOGAS) is in talks with Santos to become a gas buyer and investor in Gladstone LNG, according to sources.

The government's approval of GLNG came with more than 300 conditions to protect the environment, particularly water supplies, but Santos has said it will go ahead with the project.

"We are committed to meeting the stringent conditions of the Federal and Queensland government environmental approvals," Santos Chief Executive Officer David Knox said.

The additional conditions will increase costs, a company spokesman said on Monday, but declined to comment on how much costs could rise.

Mon Oct 25, 2010
Reuters

BG, Santos LNG Development Costs May Rise on Australia Environmental Terms

2010-10-29T10:23:00.000+11:00

BG Group Plc and Santos Ltd. may have to pay more to develop their proposed Queensland liquefied natural gas projects because of the more than 300 environmental conditions imposed by the Australian government, analysts said.

“This represents more conditions than even the Gorgon” LNG development led by Chevron Corp., Bank of America Merrill Lynch’s Sydney-based analyst James Bullen wrote in a report yesterday. He kept his projection of spending on a Santos project with two gas processing units at A$20 billion ($19 billion), saying he would wait for estimates from the company.

The cost of Santos’s Gladstone LNG venture with two production units may be as much as 16 percent higher than previously forecast, John Hirjee, a Melbourne-based analyst at Deutsche Bank, wrote in an Oct. 22 report. He expects the project, which includes Paris-based Total SA and Kuala Lumpur- based Petroliam Nasional Bhd., to cost as much as A$19 billion, compared with A$16.4 billion previously.

BG and Adelaide-based Santos on Oct. 22 won Australian government approval to develop the first projects in the world that will liquefy gas extracted from coal seams for shipment to overseas customers. Environment Minister Tony Burke said the companies must comply with “tough conditions” to protect underground water supplies. Both companies aim to commit to their projects by the end of this year.

Investment Decision

Matthew Doman, a Santos spokesman, declined to comment on costs, saying that the company has “always allowed for the highest environmental standards” in developing its projects. “We are assessing the conditions and intend to complete our evaluation - and conclude discussions on a final investment decision - this year,” BG’s Australian unit said in an e-mail.

The A$43 billion Gorgon LNG project, the nation’s largest resources investment, is being built on Barrow Island, a nature reserve off northwestern Australia. Environmental groups and farmers have said they are concerned that the Santos development and BG’s Queensland Curtis LNG venture may threaten water sources.

Under the conditions, the government will limit the amount of water Santos and BG can draw, the number of wells they can drill, and require them to detail the chemicals they use to extract gas. The minister will establish a panel of scientific advisers to evaluate the projects, the Environment Department’s website shows.

Great Barrier Reef

Santos, Australia’s third-largest oil and gas producer, and Reading, U.K.-based BG also must contribute at least A$4 million each to the management of the Great Barrier Reef World Heritage Area, the government said.

The “conditions are numerous, but it does not appear they will significantly impact capex” or the timing of a final investment decision, JPMorgan Chase & Co.’s Sydney-based analyst Benjamin Wilson wrote in a report yesterday.

Coal-seam gas is mostly methane found on the surface of coal. The water pumped out to release the gas contains varying amounts of salt, which must be managed to protect the environment, the Queensland government says on its website.

BG’s venture may represent an investment of A$12 billion to A$15 billion by the U.K.’s third-largest oil and gas company, Australian Resources Minister Martin Ferguson said in June.

Tuesday 26 October, 2010
Bloomberg

Planets aligning for the high CO2 fields of Timor Sea

2010-09-09T09:05:00.000+10:00

THE high-CO2 gas fields of the Timor Sea, including Evans Shoal, Caldita and Barossa, could be racing into development contention thanks to some unfolding corporate plays.

The undeveloped gas fields of the region came back into focus in March with the news that Santos had agreed to sell Magellan Petroleum its 40% interest in the 6.6 trillion cubic feet Evans Shoal field in NT/P48.

Under the deal, Magellan is seeking to replace Santos as operator for all stakeholders in the permit, which includes Petronas (25%), Shell (25%) and Osaka Gas (10%).

Evans Shoal is the second-largest offshore gas field in Australian waters without an approved development plan, behind only the 8Tcf Scarborough field.

Various proposals have been mooted over the past decade, including an innovative methanol project on Tassie Shoal by MEO.

The methanol component effectively sequesters the high CO2 content of Evans Shoal gas, at about 26%.

MEO’s project was well advanced before the global financial crisis hit in 2008. The company has all environmental and government approvals for a 3 million tonne per annum LNG plant and two 1.75MMtpa methanol plants, built on concrete gravity structures moored in the 14-metre deep waters of Tassie Shoal, immediately south of the Evans Shoal field.

However, MEO has been unable to secure a supply agreement with Santos and the other Evans Shoal partners.

A new board was installed two years ago and a new executive team under managing director Jurgen Hendrich has been seeking alternative supply options to finally secure gas for Tassie Shoal.

The company’s focus has been on proving up its own gas discoveries – Heron and Blackwood in the 100%-owned NT/P68 permit immediately southwest of Evans Shoal.

Magellan has announced its own plans to develop Evans Shoal as a methanol project with an unnamed partner.

Speculation about the partner’s identity is focused on Methanex of North America, which in the past decade conducted feasibility studies for world-scale methanol projects on the Burrup Peninsula and in Darwin.

Neither project was developed, and Australia’s only methanol production continues to be a small research plant at Laverton, Victoria.

The acquisition of a 40% interest in Evans Shoal is a large transaction for Magellan, which is still seeking funds for the $100 million deal and has yet to settle the transaction almost six months after it was announced.

Hendrich would not comment on whether this left the door ajar for MEO, but he did tell PetroleumnNews.net a number of opportunities were emerging to acquire gas for Tassie Shoal.

A number of equity holders in the Timor Sea have shifted their attention to LNG from CSG in Queensland, including Santos, Shell, Petronas and ConocoPhillips, which is currently conducting a global asset sale.

ConocoPhillips is operator of the Caldita and Barossa gas fields, discovered in 2006 and 2007 as part of an aggressive exploration campaign to secure additional gas for Darwin LNG.

Both fields also have significant CO2 content, at between 13% and 16%, and would fit well with MEO’s LNG/methanol plans for Tassie Shoal.

Hendrich said tougher government policy on retention leases will enhance the appeal of Tassie Shoal as a viable development option for stranded gas in the region.

“Our Tassie Shoal development proposal addresses the key elements that currently compromise the economic development of the regional stranded gas fields, including remoteness from land-based infrastructure, dealing with the high CO2 and overcoming high build costs by importing single, completed modules,” he said.

“Added to that, environmental approvals are in place such that once gas supply is confirmed, the FEED process can commence almost immediately.

“The Tassie Shoal projects have been granted major project facilitation (MPF) status and have the support of the Resources Minister Martin Ferguson and the Shadow Resources Minister Ian MacFarlane.”

Hendrich said MEO was now in a position to consider acquisitions after recently farming out a 50% interest in WA-360-P in the Carnarvon Basin to Petrobras.

The deal included a cash component of $US39 million with the potential for an additional $US31.5 million cash payment in the event of success at Artemis-1.

Drilling is scheduled for November this year and Artemis-1 is targeting a 12Tcf gas prospect close to existing and planned LNG infrastructure. MEO will be free carried through this well up to a capped well cost of $US41 million.

The farm-out to Petrobras will boost MEO’s cash reserves to more than $75 million. MEO farmed its interest down to 20%, but has since boosted that to 25%. Other equity holders are Cue Energy (15%) and Moby Oil & Gas (10%).

Another positive factor for the high CO2 fields of the Timor Sea is the robust global market for methanol, which is most commonly used as a chemical feedstock in manufacturing products such as adhesives for medium-density fibre (MDF) and plywood, paints and synthetic textiles.

Methanol is also in increasing demand as a clean fuel with zero-sulfur that can be economically burned in gas turbines to generate electricity, and as an octane enhancer in petrol.

Leo Wirawan, a Singapore-based consultant with Methanol Market Services Asia (MMSA) – in partnership with Jim Jordan & Associates (JJ&A) – said the market outlook for methanol was bright.

He said the methanol market was driven by an interesting combination of factors in “traditional” chemical applications and alternative energy usages, such as methanol-gasoline blending and feedstock for dimethyl ether (DME) production, which in turn can be mixed with LPG for domestic cooking and heating applications.

“In addition, there are a number of new developments that could further revolutionise the role of this material. The good progress in commercial scale methanol-to-olefins (MTO) technology is one good example.”

Wirawan said Chinese demand for methanol in all fuel-related applications had grown remarkably in recent years.

“Although we expect the rate of growth to slow over the next five years, it will still provide a sizeable physical demand growth. In addition, we expect higher demand from traditional end-users of methanol in China, such as the furniture and auto manufacturing industries.”

Globally, MMSA forecasts compound annual growth in methanol demand of 4.9% over the next five years. This is only marginally below the actual compound annual rate of 5.2% over the past five years.

He said Australia’s proximity to Asia, which is expected to be biggest source of growth in global demand for methanol, could provide a significant competitive advantage.

Of course, there’s no part of Australia closer to Asia than the Timor Sea. With a revitalised MEO and now possibly Magellan pushing ahead with development proposals, Australia may yet finally emerge as a methanol producer of global scale.

MEO and Magellan are presenting at the SEAAOC conference in Darwin, September 22-2.

Friday, 3 September 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1139838

Kimberley hub faces new challenges

2010-09-09T09:04:00.001+10:00

OPPOSITION continues to build against the planned Kimberley liquefied natural gas hub with an international shareholder campaign and the loss of support from traditional owners emerging as the latest threats.

Environmental groups are reported to be planning an international shareholder campaign targeting Woodside Petroleum, Chevron, Shell, BHP Billiton and BP to stop their planned Browse LNG development, which will be sited at the Kimberley hub.

The campaign, similar to the campaign that stalled Gunns’ proposed pulp mill in Tasmania, has won the support of Telstra director Geoffrey Cousins who also played a role in the Gunns campaign.

“The idea of big corporations being involved in a process that involves them being beneficiaries of land that is compulsorily acquired from native people is an issue that's likely to resonate around the world,” The Age quoted Cousins as saying.

“This is a world issue. The Kimberley is one of the last great wilderness areas of the world.”

Meanwhile, the Kimberley Land Council, which had initially supported the project as a way of bringing jobs and essential services to the region, said there was a chance it would withdraw its support.

“There's going to be a big meeting next week and I kind of think we're on the knife edge of splitting either way,” KLC chief executive officer Wayne Bergmann said.

He added he had calls from traditional owners who were upset about Western Australia Premier Colin Barnett’s decision to start formal compulsory acquisition proceedings for the land where the hub would be located.

Greens Member for Mining and Pastoral Robin Chapple blasted Barnett’s decision, saying it was inappropriate for the premier to override the interests of the indigenous people in the area when they did not agree with him, or failed to comply with his ultimatum.

“His actions will only put more pressure on an already disadvantaged sector of the community. Some would call that a bullying tactic,” Chapple said.

“Likewise, it is unacceptable for the premier to put at risk the environment and local tourism industry, thereby riding roughshod over the concerns of conservationists, local tourism operators and the Broome Shire Council.”

Monday, 6 September 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1139889

Shell quashes Woodside bid talk

2010-09-09T09:00:00.004+10:00

Anglo-Dutch supermajor Shell today denied talk it was preparing a second takeover bid for Woodside Petroleum, and warned that Australia's "gas renaissance" may be short-lived if "above-ground risks", including tax changes, changed the country's investment climate.

Shell's warning came as the Australian Labor Party sealed a deal with two independent MPs, effectively giving it a majority in the country's federal parliament.

"We are not getting ready to buy (Woodside) again," Ann Pickard, vice president of the Upstream Australia unit of Shell told a business briefing in Perth, Australian Associated Press reported.

Shell, which has a 34% stake in Woodside, failed to gain full control of the company in 2001 after the Australian government blocked the move, citing national interest concerns.

Media reports had suggested that Shell had teamed up with Australian mining giant BHP Billiton and were preparing to launch a joint bid for Woodside.

Meanwhile, Pickard said Shell expects to make a decision on whether to proceed with its Prelude floating liquefied natural gas project off Western Australia within months.

The Prelude field, which lies 475 kilometres north-north-east of Broome, is set to be the world’s first floating LNG development when it begins production in 2016.

Pickard also said Shell would look to non-traditional sources for labour for Prelude, amid expectations Chevron’s massive Gorgon LNG project will hog skilled workers.

Gorgon, which is 25% cent held by Shell, is expected to start production in 2014 and create 10,000 direct and indirect employment opportunities at peak construction.

‘‘I see Roy (Krzywosinski, managing director of Chevron Australia) and my good friends from Chevron were at one of our refineries the other day recruiting for Gorgon,’’ she joked during the presentation.

‘‘Gorgon is running a couple of years ahead of us, so I think they’ll get a (processing) train up and we’ll get them back.

‘‘While we’re competitors, we’re also colleagues ... and I think that is a really good challenge.

‘‘We will be going into Australia to non-traditional (sources), say the mines and refining industries and the other trades, to look for operators.’’

She said Shell would over the next five years send 200 people to LNG plants around the world, along with deep-water plants and marine institutions to gain the necessary skills.

Pickard added Australia was poised to take the lead with new generation oil and gas developments, but warned that the country was not as stable a jurisdiction as perceived by some.

‘‘The stars may have aligned for Australia,’’ she said. ‘‘The gas was discovered decades ago but the combination of one, the technology and two, the market being available, have come together to provide the opportunity for Australia to move into the forefront.’’

But Australia’s gas renaissance may not happen if ‘‘above-ground risks’’ such as tax regime changes scare off the industry.

Pickard said Nigeria, one of Shell’s prime investment destinations, tried to introduce a new tax code and lost about $100 billion worth of oil and gas investment over the past five years.

She said ‘‘above-ground risks’’ in WA included petroleum retention licence issues, unions and changing fiscal regimes.

However, customers would queue up for Australian gas to diversify their gas sources from the other two majors suppliers, the Middle East and Russia.

‘‘They like to not have all their eggs in one basket,’’ she added.

Pickard also played down the potential for mergers to occur between rival liquefied natural gas projects being built in Queensland.

She said that co-operation between the four rival projects on some infrastructure and construction activities, such as river crossings and dredging, should occur but "consolidation is less needed and it may or may not happen".

Acknowledging that her predecessor Russell Caplan was very clear that he thought consolidation should occur, Pickard said: "I think at this point in time, what will drive consolidation is probably more the market than the actual activities (of the ventures)."

Pickard assumed her role from Caplan on 1 August.

"I don't have a driver to (merge) because I've got my LNG sold," she said.

Shell is developing a project with partner PetroChina, which has agreed to buy some LNG from the development. Rival projects are being built by BG Group, a joint venture between Santos and Petronas, and a joint venture between Origin Energy and ConocoPhillips.

Tuesday 7 September 2010
Upstream
http://www.upstreamonline.com/live/article228684.ece

Month in Petroleum: August 2010 – LNG

2010-09-09T09:00:00.003+10:00

LIQUEFIED natural gas continues to be a central theme of the Australian petroleum industry and while some of the attention continues to be focused on coal seam gas-to-LNG, the work being carried out in northwestern Australia is reaching near-titanic levels.

Clash of the titans

August saw Woodside Petroleum and Chevron make a series of announcements regarding gas discoveries for their respective LNG projects in Australia’s northwest.

Chevron continued its string of success with the successful Bredeorde-1 and Acme-1 wells which intersected 15m and 273m of net pay respectively.

The company said Acme-1 was one of the most significant natural gas discoveries it had made in Australia while its Asia Pacific exploration and production president Jim Blackwell noted the finds would underpin expansion opportunities for its LNG projects.

With these discoveries and several others before it, it is unsurprising that Chevron is confident it has enough gas for a fourth LNG train at its $43 billion Gorgon project.

While Gorgon is currently planned as a three-train project capable of producing 15 million tonnes of LNG per annum, the partners have said there is sufficient space at the development for two additional trains.

Having more trains at Gorgon had been on Chevron’s cards for some time though its executive vice-president global upstream and gas George Kirkland said it was focused on getting the first three trains up and running.

Meanwhile, Woodside has also made headway in its drive to secure enough gas to commit to expansion plans for its Pluto LNG project after finding gas at the Larsen Deep-1 and Alaric-1 wells.

Larsen Deep-1 intersected 50m of gross gas over several zones within the Triassic target while Alaric-1 intersected about 185m of gross gas over several zones with initial analysis suggesting the gas could be liquids-rich.

The Australian LNG producer no doubt welcomes both finds as it has been struggling to find enough gas to support an expansion of Pluto.

Despite this, the company pushed back its internal timetable for making a final investment decision for Pluto Train 2 and Train 3 with chief executive officer Don Voelte saying the delay was due to slower-than-expected progress at the rival Gorgon project and its own exploration campaign.

Voelte added that discussions to secure third-party gas were continuing and could be concluded by the end of this year.

Shell focus on Australia

Meanwhile, supermajor Shell revealed it was planning to invest up to $50 billion in Australia over the next 10 years.

This would be invested into projects such as its CS CSG joint venture with PetroChina as well as its Prelude floating LNG development and stakes in the Gorgon and Sunrise projects.

This is in line with Shell Australia chairman Ann Pickard’s comments in May that Shell was planning to add around 15MMtpa of LNG capacity by 2020, most of that focused in Australia.

She also flagged the possibility of additional FLNG projects and noted the company was confident of finding a market for LNG sourced from its coal seam gas assets through PetroChina.

Floating future

Meanwhile, Flex LNG and Saipem have swelled the ranks of companies planning FLNG projects in Australia.

The two companies signed a memorandum of understanding to form a joint project team to manage the pre-front end engineering and design studies and FEED work for a FLNG project with an Asian national oil company operating here.

The team will also cooperate after final investment decision for the overall management of the project to ensure successful implementation of the engineering, procurement, construction, integration and commissioning phase.

While the duo did not reveal which company they were planning to work with, it is known that Thailand’s PTTEP has plans to use FLNG to develop its Timor Sea assets such as Jabiru and Challis.

LNG Ltd moving on

Liquefied Natural Gas Limited appears to have recovered from the disappointment of having its Fisherman’s Landing deal with Arrow Energy scuttled by Shell and PetroChina.

The company signed a deal with Oil Basins to jointly investigate using conventional and unconventional gas contained within the Canning Basin for a potential LNG development in the Kimberley region.

Such a project could be sited at the proposed Kimberley LNG hub.

LNG Ltd said the proposal would benefit from the advanced development work it had carried out at Fisherman’s Landing, adding the company would now work to ensure it was “fully integrated” with the gas resource for its proposed LNG projects to manage development risks.

The company added it continued to research three locations – of which the Kimberley is one – around Australia where the potential exists for LNG.

Meanwhile, Bow Energy confirmed early in August it was talks with LNG Ltd on a number of potential commercial arrangements though no other information has arisen to date.

LNG Ltd had said earlier it was as little as a month away from securing gas for Fisherman’s Landing.

Tuesday, 7 September 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1139977

Demand fuels Australian LNG production

2010-09-09T09:00:00.001+10:00

GROWING international demand for Australian liquefied natural gas has resulted in record production in the 2010 financial year according to energy economics group EnergyQuest.

The increasing global demand led to a 7.5% increase in LNG production from 17.4 million tonnes per annum in FY2009 to 18.7MMtpa, with exports expected to further increase over the next 12 months as Woodside’s 4.3MMtpa Pluto project comes on stream.

EnergyQuest chief executive officer Graeme Bethune said the growth in LNG production was driven by growing demand in Japan, China and Taiwan.

“Japan continues to be Australia’s biggest LNG customer, taking two-thirds of Australia’s exports in 2009-10,” he said.

“Australia supplies 18 percent of Japan’s LNG, and is moving up from being the third to the second biggest supplier, overtaking Indonesia.

“China is also becoming increasingly important, taking 20 percent of Australian exports in 2009-10.”

Although export volumes increased, the value of LNG exports declined, dropping from $10 billion to $7.8 billion, reflecting average export prices of $7.60 per gigajoule, down from $10.50/GJ in FY 2009.

Australian domestic gas production was up by 3.3% compared to the previous year, when production was affected by the Varanus Island interruption.

East coast production remained flat for the year, but coal seam gas production continued to grow, reaching a record 195 petajoules.

Production of oil and natural gas liquids (condensate and LPG) fell from 181 million barrels of oil equivalent to 176MMboe, however oil production received a boost in the June quarter due to the new Pyrenees and Van Gogh oil fields and good performances from the Vincent and Enfield oil fields.

Wednesday, 8 September 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1140021

Aussie LNG output hits record high

2010-09-09T08:59:00.000+10:00

Australia's liquefied natural gas production hit a record high for the 2009 to 2010 financial year, boosted by rising demand in north Asia.

LNG production increased by 7.5% last year to 18.7 million tonnes per annum (Mtpa), up from 17.4 Mtpa, Australia-based energy advisory company EnergyQuest said in its report today.

"The growth in LNG production was driven by growing demand for Australian LNG in Japan, China and Taiwan," EnergyQuest chief executive Graeme Bethune said in a statement.

Japan, Australia's biggest LNG customer, imported two-thirds of Australia's LNG exports in 2009-2010, while China imported 20%.

Exports could ramp up even further in the next year when Woodside Petroleum's 4.3 Mtpa Pluto project in Western Australia is due to come online, the report said.

Despite increased export volumes, falling prices meant that the value of Australia LNG exports dropped from $10.0 billion in 2008-09 to $7.8 billion in 2009-10.

Average export prices slipped as lower oil prices, which are linked to Australian LNG prices, pulled prices down, reported

Wednesday 8 September 2010
Upstream
http://www.upstreamonline.com/live/article228727.ece

Inpex Gas Project May Add $3.1 Billion a Year to Australian GDP

2010-07-19T14:56:00.001+10:00

Inpex Corp., operator of the proposed Ichthys natural gas project in northern Australia, said it expects the venture to contribute A$3.5 billion ($3.1 billion) a year to the nation’s gross domestic product.

Construction of the $20 billion development will last five to six years once Inpex and partner Total SA decide to proceed with the plan, Japan’s largest energy explorer said in an environmental impact statement today.

Ichthys, among more than a dozen planned liquefied natural gas projects in Australia aimed at tapping growing Asian demand for cleaner-burning fuel, is designed to produce 8.4 million metric tons of LNG a year, Inpex said. The Tokyo-based company in May delayed a final investment decision until as late as the fourth quarter of 2011, without giving a reason.

Inpex intends a $6.6 billion share sale to finance the project, it said this month. Inpex fell to a record low in Tokyo after announcing the plan.

A public comment period for the environmental impact statement closes Sept. 10, according to the documents released today. Approvals from both Australian and Northern Territory regulators are needed before the venture can go ahead.

The Australian government has deferred by three months until October decisions on whether to approve LNG projects proposed by Santos Ltd. and BG Group Plc. While Queensland state cleared the ventures, it raised concerns about their environmental impact.

Thursday 15 July, 2010
Bloomberg
Direct link to article here.

Inpex, Total release Ichthys draft EIS

2010-07-15T15:26:00.000+10:00

INPEX and Total E&P have, as expected, released the draft environmental impact statement for their Ichthys liquefied natural gas project in northwestern Australia.

Impression of the Ichthys LNG plant in Darwin

The draft EIS applies to all aspects of the proposed project including the offshore processing facilities at the Ichthys field in the Browse Basin, the subsea gas pipeline to Darwin, and the onshore LNG plant in Darwin.

Inpex Browse managing director Seiya Ito said the statement demonstrated that the project could be developed in an environmentally and socially sustainable manner while delivering economic benefits to the Australian and Northern Territory communities.

“Economic modelling for the Ichthys project indicates the Australian economy will benefit by an estimated $A3.5 billion annually. This includes an expansion of the Northern Territory economy by an average of nearly 18% annually,” he said.

Ito also called on the community to get involved in the eight-week review process saying it could only improve the quality and integrity of the assessment process.

The draft EIS, which caps several years of surveys and studies, covers marine ecological studies in Darwin Harbour, along the pipeline route and at the field, ecological studies of potentially affected areas near Blaydin Point, air and water quality monitoring, wastewater discharge and emissions modelling, as well as socio-economic impact and growth assessments.

A final investment decision on the $US20 billion ($A22.7 billion) Ichthys project is scheduled for the fourth quarter of next year.

FID was expected sometime this year but was ruled out in May with no reasons given for the decision.

The Ichthys projects includes plans for what could be the world’s largest floating processing platform, capable of stripping out 100,000 barrels of condensate per day, along with a subsea pipeline of more than 850 kilometres long to the onshore LNG plant at Blaydin Point in Darwin.

Ichthys will have an initial output of 8.4 million tonnes per annum of LNG from two trains. It also will produce about 1.6MMtpa of liquefied petroleum gas. First gas is expected in 2016.

Inpex holds a 76% stake in Ichthys while Total has the remaining 24%.

Story courtesy of Petroleum News.

Labor made an error on RSPT: Ferguson

2010-07-12T14:17:00.002+10:00

FEDERAL Resources Minister Martin Ferguson has admitted the Labor government had make a mistake with the resources super-profits tax, though a Western Australia law firm has warned the petroleum resource rent tax is not perfect either.

“I think we can agree that with any proposed changes like this in the future, we must make sure there's a detailed process of consultation,” the minister told resource executives at a breakfast gathering in Perth yesterday.

Executives from mid-tier and small resource companies expressed their discontent over the Gillard government’s announcement of a new minerals resource rent tax and the extension of the PRRT after discussions with mining giants last week.

One source told PetroleumNews.net that a tax was a tax, no matter what it was called.
Ferguson added he might consider reintroducing the $1.1 billion exploration rebate that was included in the RSPT but axed from last week's package.

“Industry was more concerned with killing the whole tax, not trying to save the resources exploration rebate,” he said.

Meanwhile, Lavan Legal said in a statement that while the PRRT been around for many years, it was far from perfect and should not be seen as the ultimate solution.

“Serious consideration should be given as to whether the overall PRRT system should be modified to reduce the disincentives to develop the oil and gas sectors further, and to provide greater international competitiveness against key market players such as Qatar,” the company said.

Planned Australian liquefied natural gas projects are competing with those in Qatar for customers in Asia.

Lavan added there would no doubt be losers with the move to extend the PRRT as projects that are currently exempted would be taxed under the new announcements, such as the North West Shelf project.

However, it noted that depending on the final tax design, the use of market value as a starting base could potentially have the effect of deferring the starting time for when tax would be payable, making it conceivable some projects could achieve tax neutrality.

Tuesday, 6 July 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1137517

Chevron scores hat trick

2010-07-12T14:17:00.001+10:00

CHEVRON has made another discovery in Western Australia’s Carnarvon Basin that will help the company underpin expansion opportunities for the Wheatstone liquefied natural gas project.

The company said the Clio-3 discovery well in WA-205-P, which was drilled with the giant Ensco 7500 semi-submersible rig, penetrated 79m of net gas pay and is the third consecutive discovery on the Clio structure.

Last August, the Clio-2 well discovered 115m of net gas pay while the Clio-1 well, drilled in 2006, intersected 190m of net gas pay.

Clio-3 is situated in 971m of water and was drilled to a depth of 4309m.
More tests are being carried out on data from the discovery well while additional work will be required to determine the extent and commercial viability of the discovery.

Chevron president for Asia Pacific exploration and production Jim Blackwell said the company expected the discovery, together with its previous discoveries in the permit, to underpin expansion opportunities at the Wheatstone LNG hub.

He added that Chevron was beginning to realise the opportunities it has as a leading lease holderin the Carnarvon Basin.

“Western Australia will play a key role in our long-term plans to build a leading natural gas business to supply energy safely and reliably to Australia and the Asia-Pacific.”

Chevron vice president George Kirkland said the company was continuing to invest in a significant exploration program to underpin the long-term growth of its Australian business.

Chevron is operator and holds a 66.66% interest in WA-205-P while Shell Development Australia holds the remaining interest.

The company is planning to develop the Wheatstone LNG project which will take gas from its wholly owned Wheatstone field which straddles WA-17-R and WA-253-P as well as the Iago field that spans WA-17-R andWA-16-R, in which Shell Development owns one-third.

The project also will take gas from Apache Energy and Kufpec Australia’s Julimar and Brunello fields under a deal that gives the two companies a 16.25% and 8.75% equity stake in the Wheatstone facilities respectively.

The initial phase of the project includes facilities with capacity to process 8.6 million tonnes per annum of LNG and a domestic gas plant at Ashburton North, south of Onslow.

A final investment decision on Wheatstone is expected in 2011.

Wednesday, 7 July 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1137562

Prelude named in Shell offtake deal

2010-07-12T14:16:00.002+10:00

SHELL’S Prelude floating liquefied natural gas project off Western Australia has taken a significant step forward after the company struck its first supply deal for the project.

Yesterday, the super-major announced it had signed a binding sale and purchase agreement for the long-term supply of LNG to Japan’s Osaka Gas.

Under the deal, Shell will supply 800,000 tonnes of LNG per annum sourced from its global portfolio for 25 years, starting April 2012.

A Shell spokesperson said the deal would include gas from Prelude and the Gorgon project once they come onstream, adding that it was the first time Prelude had been part of a Shell supply deal.

The Prelude FLNG project includes developing the Prelude and Concerto fields in Shell’s wholly owned WA-371-P permit.

Prelude has estimated reserves of about 2.5-3.0 trillion cubic feet of gas and about 120 million barrels of condensate, while the super-major has yet to announce reserves for the Concerto find.

A final investment decision for the project is scheduled for early next year with first gas expected in 2016.

The 15MMtpa Gorgon project on Barrow Island, in which Shell has a 25% stake, is planned to come onstream in 2014.

Shell International LNG supply vice president David Wells said the agreement with Osaka represented another milestone in the company’s growth of LNG supplies into Japan.

“Japan is a key market for Shell and we are committed to help secure the energy the country needs, now and in the future.”

Shell did not disclose the value of the deal.

Thursday, 8 July 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1137615

Inpex cashes up for Ichthys

2010-07-12T14:16:00.001+10:00

Japan’s Inpex Corporation said today it plans to raise up to $6.7 billion through a global share offering to finance its giant Ichthys liquefied natural gas project in Australia.

Inpex will issue 1.22 million new shares in Japan and abroad, boosting its shares outstanding by 52%. Nomura Securities and Goldman Sachs International will work as joint global coordinators for the issue.

Inpex also plans to issue an additional 84,000 shares if demand is strong.

Inpex has said it sees production from the Ichthys project, owned 76% by Inpex and the rest by France's Total, starting in the fourth quarter of 2016, pushing back a initial start date of 2015.

Inpex plans to spend as much as 4 trillion yen ($45.6 billion) in large gas and oil projects in Australia, Indonesia and other countries in the seven years starting in 2010.

The Ichthys project will account for half of its total planned investment, Inpex said.

Thursday 8 July 2010
Upstream

Public to have say on impact of Inpex project

2010-07-12T14:15:00.000+10:00

Northern Territory residents will soon be able to have their say on an environmental impact statement prepared by the company planning to build a gas plant in Darwin.
Japanese company Inpex wants to pipe gas almost 900 kilometres from the Ichthys field off Western Australia to an LNG processing plant in Darwin Harbour.

The $12 billion project would be built at Blaydin Point and it is estimated it would be operational for 40 years.

Next week Inpex will release its draft environmental impact statement.

The company's Sean Kildare says Inpex is committed to demonstrating that the project will not have a significant detrimental impact on the environment.

The statement will be open for public comment for eight weeks.

Approval from both the Territory and Federal Governments is needed for the project to go ahead.

Friday 9 Jul, 2010
ABC News

Who else is speaking at SEAAOC 2010?

2010-07-12T14:09:00.004+10:00

Click to watch the interview.

William Hastings, President & CEO, Magellan Petroleum is speaking at IIR's SEAAOC - South East Asia Australia Offshore Conference 2010 on the 22--24 September 2010 in Darwin.
1. How have the challenging global economic conditions affected Megellan in recent times?
2. Can you provide me with an update on Magellan's projects within Australia?
3. What are the key opportunities for Magellan's future development plans in the Northern Territory?
4. How are Magellan's projects benefiting the communities within which they operate?
5. You are speaking at IIR's SEAAOC Conference 2010 22--24 September 2010 in Darwin, what will you be addressing in your presentation?
6. What do you hope that delegates will gain from attending SEAAOC?

Click to watch the interview.

Sean Kildare, General Manager Darwin, INPEX, is a speaker at IIR's SEAAOC - South East Asia Australia Offshore Conference 2010, 22--24 September 2010 in Darwin.
1. Can you provide an update on the progress of INPEX's Ichthys Project?
2. What do you believe to be the major opportunities facing the LNG industry in Australia?
3. You are speaking at IIR's SEAAOC Conference 2010 22--24 September 2010 in Darwin, what will you be addressing in your presentation?
4. How important are events like this for the industry?

If you'd like more information, go to www.seaaoc.com

PRRT rises from ashes of RSPT

2010-07-05T09:05:00.001+10:00

PRIME Minister Julia Gillard has dropped the resources super-profits tax and has, in its place, extended the Petroleum Resource Rent Tax to cover all onshore oil and gas projects.

This includes the coal seam gas-to-liquefied natural gas projects and the North West Shelf, which would otherwise have come under the RSPT.

Companies may elect to use market value as the starting base for project assets – including oil and gas rights – and will be allowed to credit all state and federal resource taxes against current and future PRRT liabilities from a project, thus avoiding double taxation.

All other features of the PRRT including the range of uplift allowances for unutilised losses and capital write-offs, immediate expensing for expenditure and limited transfer of the tax value of losses, will also apply.

The fledging CSG industry is expected to benefit from being able to recover their full capital costs before having to pay the tax, which could significantly reduce the cost of financing projects.

The federal government said in a statement that placing all oil and gas projects under the PRRT provided certainty for projects in the emerging CSG-LNG sector and ensuring equitable tax treatment between competing projects.

The mining sector will fall under the new Minerals Resource Rent Tax, which is taxed at 30%, and applies only to iron ore and coal.

“This is a better return for Australians on the things that can be dug out of the ground only once it will end uncertainty and division and allow us to move forward as a nation,” Gillard said today.

“I believe we have struck the right balance.”

She rejected suggestions that the changes showed the government would cave in to interests, saying it had still achieved much of what it wanted to do with the revamps.

Treasurer Wayne Swan said while some miners would be unhappy about paying more tax, it would still encourage investment.

“This is a very good day for economic reform in Australia.”

BHP Billiton chief executive officer Marius Kloppers welcomed the changes, saying the new tax was closer to the company’s frequently stated principles of sound tax reform.

“At the request of the prime minister, there have been constructive discussions in the last week with the deputy prime minister and the resources minister which have resulted in a material improvement from the original tax proposal,” he added.

The changes do not come without a price though. The company tax rate will now be cut to 29% from 2013-14, but will not be reduced further while the planned resource exploration rebate has been scrapped.

A planned lift in compulsory superannuation contributions – from 9% to 12% by 2020 – remains unaffected.

Federal Resources Minister Martin Ferguson and former BHP chaiman Don Argus will lead a policy transition group to oversee the transition to the new tax regime.

Friday, 2 July 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1137392

Who's speaking at SEAAOC 2010?

2010-06-16T14:45:00.003+10:00

Peter Strachan, Independent Analyst, speaks to us about his overall thoughts on the current state of the global LNG market, how Australia is competing with its international LNG competitors, the impact of CSG and shale gas on Australian LNG exports and his predictions for AUsttralia's LNG industry over the next 12 months.

Arthur Dixon AM, Independent Consultant, speaks to us about the reason why Australia has been so proactive in developing its LNG industry, how LNG pricing concepts vary between APAC, Europe and the US and his upcoming presentation in Darwin.

For more information on the conference, go to www.seaaoc.com

SEAAOC 2009 presentations!

2010-06-16T14:40:00.005+10:00

The Hon Paul Henderson MLA

Sean Kildare, General Manager Darwin of Inpex

John Anderson, Vice President, WA/NT of Santos Limited

Joseph Marushack, President of ConocoPhillips Australia

Jurgen Hendrich, CEO & Managing Director of MEO Australia

Have you been a sponsor or exhibitor at SEAAOC?

2010-06-02T17:23:00.003+10:00

NT Resources Week brings you 2 major events of the year: SEAAOC - South East Asia Australia Offshore Conference and Mining the Territory.

SEAAOC is the region's largest and longest established petroleum conference.

SEAAOC features interactive conference formats and social networking breaks to enable you to meet key targets in a relaxed environment.

With over 650 leading resources professionals and over 100 exhibitors, attend SEAAOC and meet clients & new prospects, catch up with peers & old friends, and make your business development activities a pleasure rather than a chore!

For more information, go to www.seaaoc.com or www.ntresourcesweek.com.au

Woodside is trying to steal Timor reserves

2010-05-28T12:33:00.001+10:00

Timor Leste's Prime Minister has accused Woodside Petroleum and the partners of Sunrise liquefied natural gas project of trying to steal his country's natural resources from a gas field it's developing in the Timor Sea.

"I don't believe Woodside company because it is a liar," Xanana Gusmao said. "They intend to steal our oil and gas in the Timor Sea as they don't want to bring the pipeline to [Timor Leste]."

Gusmao’s comments came after Woodside lodged a proposal last Friday for a floating LNG development at the Greater Sunrise gas field against Dili’s preference to pipe the gas to onshore, according to local media reports.

In response, the National Petroleum Authority (ANP) has turned down the proposal, claiming the Sunrise joint venture had failed to provide feasibility studies of other development options.

Gusmao has called on the Timorese “to defend our wealth in the Timor Sea”.
“The pipeline must come to [Timor Leste], not to Darwin or floating as Woodside's desires," Gusmao was cited as saying on News.com.au.

The Timorese Prime Minister has also accused the Sunrise joint venture of breaking its promise to provide training for Timorese engineers.
The joint venture has hired only 30 local people so far in its Timor Sea exploration, he said.

The massive Greater Sunrise gas field in the sea between Australia and Timor Leste is estimated to hold 240 million barrels of light oil and 154 billion cubic metres of natural gas worth tens of billions of dollars.

Timor Leste sees the resources as key to lifting its 1.1 million people out of poverty by stimulating the local economy and creating jobs.
The nation has no major industry and unemployment is more than 30%, News.com.au reported.

Darwin is 450 kilometres from Greater Sunrise. Timor Leste is closer, but Woodside says a deep trench off the East Timorese coast would make building a pipeline there more difficult.

The joint venture partners for Sunrise include Shell, Osaka Gas and ConocoPhillips.
Woodside and partners Royal Dutch/Shell, Osaka Gas and ConocoPhillips are licensed to develop Greater Sunrise.

Thursday 27 May 2010
Upstream

Budget boost for WA resources sector

2010-05-26T15:26:00.002+10:00

WESTERN Australia's state budget includes $111 million set aside over five years for the liquefied natural gas hub at James Price Point in the Kimberley region.

The funding is intended to meet the cost of resolving land tenure issues and finalising state and commonwealth approvals for the hub’s development.

It includes $85 million over four years for a regional benefits agreement to contribute towards the social, health and economic needs of indigenous people in the Kimberley.

The budget noted that the hub is expected to attract at least two LNG projects.
Meanwhile, skills and approvals received boosts. An additional $19 million over two years has been set aside for 7600 training places with priority given to skill areas needed by the industry.

The government will also fund an additional 37 full-time employees in 2010 and 35 full-time employees in 2011 to improve the safety of workers in the resources sector.

Approvals for the resources industry will also be automated under budget funding of $8 million over four years which will enable online lodgement, payment and tracking of petroleum and mining applications.

“Liquefied natural gas projects such as the multi-billion Gorgon and Pluto projects, iron ore expansions in the Pilbara and Mid West, and new uranium and gold prospects are among the developments WA can anticipate,” Mines and Petroleum Minister Norman Moore said.

“This year’s budget is about maintaining the excellent level of growth and ensuring the state’s resources are managed responsibly and with maximum benefit to the community.”

Moore added that the budget also contained a further $6 million over four years to improve petroleum sector systems and processes, and an extra $5 million over the next three years to effectively monitor and review carbon geosequestration activities for the Gorgon project.

“The carbon capture and storage project associated with Gorgon is set to put WA at the forefront of investigations into this emerging technology,” the minister said.
The Chamber of Minerals and Energy Western Australia said the budget highlighted the vital role the resource sector is playing in the recovery of the WA economy.

In the coming year, CME said royalty income would rise by $1 billion to $3.27 billion or 14% of total government revenue, while in 2012-13 the contribution would increase to $3.6 billion.

This budget clearly shows the strong contribution the resource sector is making to the WA economy,” CMEWA chief executive Reg Howard-Smith said.

“A resource tax would throw these projections into disarray, and have a serious impact on state growth.

“For now though, the state’s finances remain healthy and the Triple-A credit rating secure.”

The Chamber of Commerce and Industry WA welcomed the funding commitments for the Browse LNG precinct and the decision to provide $19 million to create 7600 additional training places, and $3 million over two years to provide a cash bonus to employers that take on out-of-contract apprentices and trainees.

“This is an important investment in the state’s future,” CCI chief executive James Pearson said.

While industry groups have welcomed the Barnett government’s budget, peak environment groups have slammed it, saying the budget rewards polluters and punishes the environment.

The Conservation Council of WA said the budget reflected a government that has placed the environment as one of its lowest priorities.

“This budget continues the trend of running our environmental regulators on the smell of an oily rag,” Conservation Council director Piers Verstegen said.

“On the other side of the balance sheet, the budget increases the already very significant taxpayer subsidies for polluting industries in Western Australia.

“For example, the budget reveals that more than 99 per cent of capital expenditure by the government’s energy utility will fund polluting fossil-fuel generation; less than 1 per cent will be spent on renewable energy.”

Verstegen added that while the CCWA welcomed the funding provided for a marine park to be established at Camden Sound, the government’s environmental credentials in the Kimberley must be weighed against the heavy taxpayer investment in opening up the north for the resources sector.

He said the $111 million set aside for the establishment of an LNG hub at James Price Point was in the middle of the southern hemisphere’s most important humpback whale calving ground.

Friday, 21 May 2010
PNN

Santos, GDF Suez progress Bonaparte FLNG plans

2010-05-26T15:26:00.001+10:00

GDF Suez and Santos are planning a drilling campaign next year to confirm the reservoir potential of the Petrel, Tern and Frigate fields for the development of the Bonaparte floating liquefied natural gas project.

Speaking at the sidelines of the APPEA conference on Wednesday, Santos chief executive David Knox said work on the FLNG project was progressing, with the aim of drilling some wells next year and entering the front-end engineering and design work later in 2011.

GDF Suez bought a 60% stake in the Petrel, Tern and Frigate gas fields in the Bonaparte Basin from Santos late last year for $US200 million ($A236 million).

Knox said the two partners were targeting a final investment decision on the 2 million tonnes per annum FLNG facility by 2013, with first gas expected about four years later.

Northern Territory Chief Minister Paul Henderson told journalists at APPEA he understood that the FLNG project was currently in pre-FEED with about 60 people working on it.

“If all goes to plan, I think production is scheduled for 2018. But I’ll be having meetings with companies around this particular project,” he said.

The Bonaparte FLNG venture is the fifth FLNG proposal in Australia. Shell is planning an FLNG project at Prelude off Western Australia while the Woodside-led Sunrise joint venture has decided on FLNG for the Greater Sunrise fields in the Joint Petroleum Development Area in the Timor Sea.

Also in the Timor Sea, Flex LNG and PTT Exploration and Production have plans to use FLNG to develop their assets.

In other news, Knox said Santos was in final negotiations with Apache on how to develop both the Spar and smaller Halyard fields in WA’s Carnarvon Basin.

Santos acquired the Spar field, which is estimated to contain a gas resource of up to 600 petajoules with associated condensate of up to 8 million barrels, from the Gorgon joint venture partners in September 2008.

The field is likely to be developed through Varanus Island for domestic use though Knox would not go into further details.

“It’s going to be a very important new source of domestic gas for Western Australia,” he said.

“We’re quite excited about the whole Halyard-Spar operation. It’s actually going to be a very good news story for Western Australia.”

Friday, 21 May 2010
PNN

Oz tax 'would have killed Pluto'

2010-05-26T15:24:00.001+10:00

Woodside chief executive Don Voelte today claimed the A$13 billion (US$10.7 billion) Pluto liquefied natural gas development may not have gone ahead had it been modelled on the Australian federal government's resources super-profits tax (RSPT).
The Australian newspaper quoted Voelte saying that the project was created under the petroleum resources rent tax, but the Australian producer had checked its viability under the new tax proposal.

“We re-looked at the project using the new super-profits tax and we will tell you right now that management would not have been able to take that project to the board of directors,” he said at an industry function in Sydney.

“We would not try under the new taxes. Pluto would still be in the ground.”

Voelte said that, despite the fact Woodside would hardly be affected under the new proposal, as it could chose to stay under the petroleum tax regime, the company would be hit by investors who were nervous about the stability of investing in Australia.

“Woodside is hardly touched by the tax but it has huge implications for us,” he said.
“We have saturated the Australian banks and they have nothing left to offer, so we need to go overseas to borrow money.

“Big companies rely on foreign investment and we have to be seen to be a sovereign risk-free country.”

Voelte's concerns have been echoed by other giants in the country's resources sector.
Today, BHP Billiton told the Resource Tax Consultation Panel that the new tax would dramatically slow investment in Australia and cost jobs.

“BHP Billiton conveyed to the panel that the proposed super tax has been designed in a way that has the unintended effect of dramatically slowing investment in Australia and putting the future prosperity and employment prospects of all Australians at risk,” it said in a statement.

However, Prime Minister Kevin Rudd remains firm in his support for the proposed tax.
Speaking to reporters in Geelong, he said: “It's pretty important to focus on the need to bring about a reform for the nation that makes a difference for the competitiveness for all businesses.

“The core element for businesses right around the country is the need to have better company rates because currently they are becoming less competitive against the company tax rate applied right around the world.

“We're using this change for the (resources) industry to bring down the company tax rate by two percentage points nationwide.”

Meanwhile, it emerged that the biggest threat to the RSPT might eventually come from the High Court, not the resources sector.

When the government drafts the law imposing the planned tax, senior lawyers say it will need to tread very carefully to avoid a potentially fatal constitutional challenge.

Based on the government's explanation of how the tax would work, senior lawyers told the Australian they believe there is a chance the High Court could strike down key parts of the scheme.

They identified several potential weaknesses in the government's plan, but said the resources sector's most promising basis for a challenge concerned Section 114 of the Constitution.

Perth's Michael Blakiston, managing partner of resources law firm Blakiston & Crabb, told the newspaper: "I think that a constitutional challenge, including one based on the accommodation of the operation of Section 114 of the Constitution, has some very robust supporting principles."

Constitutional lawyer George Williams said he agreed that there appeared to be potential problems with the proposed RSPT but he believed they could be overcome by very careful drafting.

Williams said the crucial issue with the scheme was how it would be reconciled with Section 114.

This part of the Constitution prevents the commonwealth and the states from imposing "any tax" on their respective "property of any kind".

By law, onshore mineral resources are owned by the states - not the commonwealth.
Under the federal government's plan, the new tax would be imposed on profits earned by companies, not the resources themselves.

But Blakiston and several other senior lawyers believe the commonwealth might have trouble with Section 114 because the profits are what lawyers refer to as the "fruits" of state-owned property.

Section 114 could come into play because the RSPT would give companies a federal tax credit for their royalty payments to the states and would then require a payment to the commonwealth.

Unless the legislation imposing the tax differs significantly from the government's public statements, Blakiston and several senior lawyers believe it could come extremely close to being an impermissible federal tax on state-owned property.

"At the heart of matters is the observance of the golden rule, to have regard to substance over form in arriving at a just result," Blakiston said.

"I emphasise this because the practical effect of the proposed tax will massively affect economic wellbeing. I note that judicial commentary on this point is that 'a tax which taxes fruit may not tax the tree, but if the fruit belongs to the state, Section 114 protects ownership of the fruit as well as ownership of the tree. A tax on either the fruit or the tree is offensive to Section 114'."

But Williams said the fate of a challenge under Section 114 could come down to the precise words of the statute that imposed the tax.

"If it is drafted so that it really is a tax on profits of private entities who have the rights to mine state property, I don't think it would be a problem. But if they had it more directly linked to the state property in some way then you may be starting to raise some issues there," he told the newspaper.

The problem with Section 114 did not arise when the commonwealth enacted its petroleum resource rent tax because that tax applies only offshore - outside the jurisdiction of the states.

But there are other potential problems with the RSPT.

Section 118 of the Constitution requires the commonwealth to give "full faith and credit" to the laws of the states.

Even though the states would continue to receive royalty revenue under the commonwealth's plan, the impact of the state royalty laws on mining companies would be neutralised.

The government's discussion paper on the RSPT says the intention is to "remove the effects these royalties have on investment and production".

It would do this by giving mining companies federal tax credits that are equivalent to their royalty payments to the states.

The commonwealth credits would be set at the rate that was applied by the states on 2 May when the commonwealth unveiled its plan.

Friday 21 May 2010
Upstream

BHP Petroleum looking over the fence

2010-05-26T15:23:00.002+10:00

BHP Billiton’s petroleum division is, for the first time, investigating oil and gas acquisitions and believes it has the firepower required to expand, says BHP Billiton Petroleum chief executive Michael Yeager.

Speaking at a petroleum briefing in Sydney yesterday, Yeager said the division was in evaluation mode and looking beyond organic growth.

“In the first few years that I’ve been here, we’ve spent very little time on that. We’ve had our hands full growing our organisation,” he said.

“But now we do look over the fence. We have a team that is now looking at what we can do, looking at companies that have growth and opportunities that we think fit our execution capabilities.

“We have the firepower to do enormous things. We’re a big growth business for the corporation but it takes two to dance and it takes the right timing and it takes the right thinking.”

On diversifying the company’s petroleum portfolio to unconventional gas, Yeager said shale gas was not BHP Petroleum’s focus right now.

“We’re not in that right now, we’ve had our hands full in the larger things,” he said.

“If you were to see us take a step forward there [in shale gas], you would see us take a step forward more than likely in a way that allows us to learn and then move forward.

“But I would never say never. We want to be smart about those things and do them right.”

On the company’s Australian petroleum assets, Yeager said BHP Petroleum and ExxonMobil were hopeful of making a decision on how to develop the offshore Scarborough and Thebe fields in the next six to nine months.

BHP holds 100% of the Thebe field and has a 50% interest in Scarborough, with ExxonMobil holding the remaining 50%. The fields are believed to hold 10 trillion cubic feet of recoverable gas reserves, with the development expected to cost $US15-20 billion (about $A18-24 billion).

Yeager said the company was investigating three or four different development concepts, including developing a stand-alone liquefied natural gas plant at Onslow or tying the fields into Chevron’s Wheatstone or Woodside’s Pluto LNG projects.
“We’re confident that we’ve got an economic project and we’re confident that we’ve got multiple opportunities to make it economic.”

Yeager went on to say that he was not entirely happy with Woodside Petroleum’s plan to develop the $30 billion Browse LNG project at James Price Point in the Kimberley.
BHP is partner in Woodside’s Browse LNG development with BP, Chevron and Shell.

Earlier this year, the partners selected the Kimberley LNG hub at James Price Point as the site of the processing plant for gas from their Browse Basin fields, which include the Torosa, Brecknock and Calliance discoveries, located offshore around 425km north of Broome.

The federal and Western Australian governments had applied a bit of arm twisting to the partners – save Woodside – in saying James Price Point should be selected unless they could be satisfied an alternative development concept was likely to be commercially viable at an earlier time.

“We are complying right now with the Kimberley notion,” Yeager said.

“We’re working hard with the operator to make that work as good as we can, but obviously at the end of the day, the idea of building brand-new Kimberley infrastructure and having right down the road of it North West Shelf infrastructure that may or may not be full is the dilemma.

“Nevertheless, the Kimberley option has been put to us and we will be good partners on that.”

Front-end engineering and design work is expected to start next year with a final investment decision on Browse to be made by mid-2012.

Tuesday, 25 May 2010
PNN

NWS to be slugged with RSPT

2010-05-26T15:23:00.001+10:00

PARTNERS in the North West Shelf liquefied natural gas project could see the value of their investment drop after a spokeswoman for federal Resources Minister Martin Ferguson confirmed the project would fall under the resources super-profits tax.

The Australian quoted the spokeswoman as saying that like all resource projects not under the petroleum resource rent tax, the NWS would fall under the RSPT.

Representatives from operator Woodside Petroleum and partner BHP Billiton said the new regime would reduce the project’s value, with Woodside saying it would be concerned if the change in taxation regime damaged the NWS’ competitiveness with other LNG projects.

“Moving from the current system to a resource rent tax system is not a huge movement ... because it was already being hit pretty hard, but there is a loss of value on the North West Shelf,” the Australian quoted BHP Petroleum chief executive Michael Yeager as saying.

The change in regime will be yet another tax hit on Australia’s largest working oil and gas project. The government had in 2008 removed an excise exemption on the production of condensate at the NWS that had been in place since 1977.

Like the current hubbub surrounding the RSPT, which resource companies say was introduced without prior consultation with them, Woodside had claimed back in 2008 that the government had removed the condensate exemption without consultation.

The NWS currently works under a 12.5% royalty regime and 30% excise tax.

Wednesday, 26 May 2010
PNN

Sunrise to use Shell FLNG technology

2010-05-05T16:52:00.004+10:00

SHELL has confirmed that the floating liquefied natural gas technology to be used for the Prelude field will also be used by the Sunrise joint venture for the Greater Sunrise fields.

The company said its FLNG technology has been selected as the preferred option to develop the fields and that subject to final agreements, government approvals and a final investment decision, it would operate the facility and manage the design and build phases of the project for the JV.

Shell added that Sunrise would be the second use of its proprietary FLNG design, following its Prelude FLNG deployment in the Browse Basin.

“Sunrise is a significant resource, but is remote and technically challenging, so Shell’s FLNG technology provides the best technical and commercial development option,” Shell Australia upstream executive vice president Ann Pickard said.

The Sunrise FLNG facility will be capable of producing 4 million tonnes of LNG per annum along with condensate while the Prelude development will produce 3.5MMtpa of LNG as well as liquefied petroleum gas and condensate of about 1.5MMtpa equivalent.

Friday, 30 April 2010
PNN

Voelte sees Kimberley plant ‘slam dunk’

2010-05-05T16:52:00.003+10:00

Woodside chief executive Don Voelte has reportedly said he expected the controversial planned liquefied natural gas processing plant at James Price Point in Australia’s Kimberley region will “almost certainly” go ahead.

Voelte told journalists at the company’s annual general meeting that the company had ruled out a floating LNG solution for the remote Browse basin, according to a report by Australia’s Ninemsn broadcaster.

Voelte reportedly said he had been given assurances by Western Australian Premier Colin Barnett that an onshore plant in the environmentally and culturally sensitive area would go ahead.

As far as I'm concerned it's a slam dunk," Mr Voelte reportedly told journalist when commenting on whether the Kimberley project would go ahead.

The development is being opposed by local Aboriginal groups after Western Australia’s government weighed into the issue last year after months of stalling by Woodside over where to site the onshore component of the Browse project.

Voelte also reported said the company would also ultimately build five trains at the LNG plant of its Pluto project , at Karratha in the Pilbara area of Western Australia.

Friday 30 April, 2010
Upstream

Ramos Horta `premature' in rejecting Sunrise proposal

2010-05-05T16:52:00.001+10:00

SENIOR executives from Woodside Petroleum and Shell will fly to East Timor next week in a bid to convince President Jose Ramos Horta to accept plans for a controversial $US5 billion ($5.36bn) floating LNG platform to develop the Greater Sunrise gasfields.
Woodside chief executive Don Voelte said yesterday that it was "premature" for East Timor to have angrily rejected the proposal without seeing the detail of plans for the Timor Sea development.

He was responding to East Timor's criticism yesterday that the Woodside-led Sunrise joint venture had shown "an unacceptable level of arrogance" by announcing on Thursday that it would process the gas using floating LNG.

The East Timor government has the power to block the proposal and has long pushed for an LNG plant to be built on its own soil, arguing it offers the tiny nation greater economic benefits.

"The floating LNG concept for Greater Sunrise is neither in the best interests of the people of Timor-Leste nor technically and commercially sensible," Secretary of State for the Council of Ministers, Agio Pereira, said.

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He said Woodside's announcement was a "waste of valuable time, money and human capital".

Mr Voelte and Woodside's Sunrise project head, Jon Ozturgut, will go to East Timor next week to meet Mr Ramos Horta and other ministers and officials.

It is understood either Shell's Australian head of oil and gas, Ann Pickard, or the company's Sunrise vice-president Ian McKenzie will also be part of the delegation.

Speaking after yesterday's Woodside annual meeting in Perth, Mr Voelte said he did not believe the citizens of East Timor would allow their government to reject a project that would provide billions in revenue for the poor nation and create jobs.

He said: "We're going to go up there and show them the actual proposal. It's a compelling proposal. If I'm on the receiving end of this thing, I'm going to have a hard time explaining to the citizens of the country, if I was a political leader, why I didn't want to accept this. It's almost like manna from heaven."

Woodside chairman Michael Chaney told about 300 shareholders that 2010 promised to be a landmark year for the oil and gas producer as its focus on Australian LNG projects intensified.

"From 2011, Woodside will largely become an LNG company, albeit one continuing to benefit from condensate sales and income from a portfolio of quality oil assets," he said.

Mr Voelte predicted it was possible that Woodside's 90 per cent owned Pluto LNG development could one day host five LNG trains, or processing units.

The drilling campaign to support expansion at Pluto beyond one train was proceeding well, with the company finding gas at four of six wells drilled.

Mr Voelte also said he was confident the controversial Browse LNG project would go ahead at James Price Point, north of Broome, despite competing native tile claims over the area.

Sat 1 May, 2010
The Australian

Timor-Leste: thumbs down Sunrise FLNG option

2010-05-05T16:51:00.004+10:00

Woodside said yesterday venture partners for the multi-billion dollar Sunrise liquefied natural gas (LNG) project want to develop the field using a floating liquefaction platform, drawing stiff opposition from the Timor-Leste government, which also accused Woodside of exhibiting an "unacceptable level of arrogance".

The Greater Sunrise field contains an estimated 5.13 trillion cubic feet of gas and straddles Australian and Timor-Lesteese waters. Dili wants the gas developed on its shores, while Canberra has not declared a preference, according to a Reuters report.

"We will be going to Timor-Leste next week to show them the full proposal ... we will get them to read the proposal and then evaluate it," Woodside chief executive Don Voelte told reporters after the annual general meeting.

Voelte said the floating LNG plan was the most compelling and would bring more revenue to the citizens of Timor-Leste than any other option.

The venture would also commit to employing and training some people from Timor-Leste, and help the impoverished nation build a new resource industry onshore.
Australia and Timor-Leste reached a deal four years ago to evenly split billions of dollars of field royalties, but Timor-Lesteese President Jose Ramos-Horta had wanted jobs from processing to be based in his fledgling country.

Woodside ruled out building a liquefaction plant onshore, citing high costs and technical risks of building a pipeline across a deep ocean trench -- arguments disputed by Timor-Leste.

In a strongly worded statement, Timor-Leste said today that it would not approve the Sunrise joint venture's floating LNG plan "now or in the future" and said Woodside's announcement was "a waste of valuable time".

"Woodside was acutely aware of the governments' position before the announcement; but chose to proceed regardless. This is not only a source of great concern, but reflects an unacceptable level of arrogance," Secretary of State for the Council of Ministers H.E. Agio Pereira said in a statement.

Woodside's Voelte dismissed those comments as "posturing".

Floating LNG technology, owned by Royal Dutch Shell , is untried anywhere in the world. But Shell said the technology has undergone vigorous testing and plans to use the first of the nine ships it is building on its wholly-owned Prelude field off western Australia.

Partners in the Greater Sunrise field are US major ConocoPhillips , Shell and Japan's Osaka Gas.

Friday 30 April 2010
Upstream

Australia nod for Arrow takeover

2010-05-05T16:51:00.003+10:00

Australia has given foreign-investment approval for Anglo-Dutch supermajor Shell and PetroChina to buy coalbed methane outfit Arrow Energy for A$3.45 billion (US$3.2 billion), Arrow said today.

The approval clears a major regulatory hurdle and comes after Australia's competition regulator said it would not oppose the deal, but the transaction still requires regulatory approval from Chinese authorities and Arrow shareholders, Reuters reported.

Arrow said it is still on target to hold a shareholder meeting to vote on the deal in mid-July.

The Shell-PetroChina joint venture will integrate Arrow's Australian assets with Shell's existing CBM assets and Shell's site for a planned liquefied natural gas plant on Curtis Island, Queensland, the companies said earlier.

Shell and PetroChina will each own 50% of the gas produced by the LNG plant. Shell has said it was likely to sell its gas to China.

Friday 30 April 2010
Upstream

Woodside, Shell to convince Ramos-Horta on Sunrise FLNG

2010-05-05T16:51:00.001+10:00

WOODSIDE Petroleum managing director Don Voelte and Sunrise project head Jon Ozturgut will fly to East Timor this week to convince President Jose Ramos-Horta to accept a floating liquefied natural gas development for the Greater Sunrise fields.

East Timor Secretary of State for the Council of Ministers Agio Pereira had said last week the FLNG concept was not in the best interests of the East Timor people nor technically or commercially sensible.

Voelte told the Australian at Woodside’s annual general meeting on Friday that it was “premature” for East Timor to have rejected the proposal without seeing the detailed plans.

“We’re going to go up there and show them the actual proposal. It’s a compelling proposal. If I’m on the receiving end of this thing, I’m going to have a hard time explaining to the citizens of the country, if I was a political leader, why I didn’t want to accept this. It’s almost like manna from heaven."

Woodside had last week announced on behalf of the Sunrise joint venture that it had selected FLNG as the preferred development option for the Greater Sunrise fields.
Project partner Shell confirmed that its FLNG technology, which it is using for the Prelude field, would also be used at Greater Sunrise.

The Sunrise FLNG facility will be capable of producing 4 million tonnes of LNG per annum along with condensate.

The Greater Sunrise fields lie about 450km northwest of Darwin and are estimated to contain about 5.13 trillion cubic feet of gas and 225.9 million barrels of condensate.

A final investment decision on Sunrise is expected in 2012 with first LNG targeted for 2016.

The Sunrise JV participants include operator Woodside (33.4%), ConocoPhillips (30%), Shell (26.6%) and Osaka Gas (10%).

Monday 3 May, 2010
PNN

Woodside spots more exploration targets at Greater Pluto

2010-05-05T16:48:00.001+10:00

WOODSIDE Petroleum believes the ongoing exploration program in the Greater Pluto area has allowed the company to identify a mid-Triassic seismic sequence that, together with 3D seismic shot in southern Cazadores and Claudius, increases the number of prospective targets in the area.

Managing director Don Voelte said that having found gas in four of the six wells in the current exploration campaign, Woodside was increasingly confident that it could make a final investment decision on one or more expansion trains at the Pluto liquefied natural gas project.

“While we’re excited about the progress we’re making on Pluto, we shouldn’t lose sight of the continued standout performance of the North West Shelf. Twenty-one years after this great project first began producing liquefied natural gas, it remains Australia’s iconic resources project,” he added.

Woodside’s share of production from the NWS in 2009 was 2.4 million tonnes of LNG, 14.3 million barrels of oil equivalent of pipeline gas, 9.3 million barrels of condensate, 4.6 million barrels of oil through the Cossack Pioneer floating production, storage and offloading vessel, and 1.2 million barrels of liquefied petroleum gas, adding up to almost two-thirds of the company’s total production.

Voelte said that the decision to choose floating LNG for Greater Sunrise came about after an extensive three-year screening process.

“This option does not require an export pipeline which significantly reduces the environmental footprint of this development. But it will provide local industry participation, employment and training for people in Timor-Leste and Australia.”

He noted the company expected this year’s production to be 70-75 million barrels of oil equivalent, down from the 80.9MMboe produced in 2009, though this was expected to increase from 2011 and beyond.

Meanwhile, Woodside chairman Michael Chaney raised concerns about the industrial action faced by Pluto in December and January.

“The Australian LNG industry had enjoyed high levels of industrial harmony over recent years, providing a significant contribution to the sector’s reputation for reliability. This reputation has, in turn, helped foster broader investment in the industry.

“We hope the industrial activity at Pluto in December and January were isolated cases. Australians can expect the LNG industry to make an enormous contribution to the social and financial wellbeing of our community, but a poor industrial climate could diminish investment and reduce the size of that contribution.

“We should all be very wary of killing the goose that promises to lay a golden egg.”

Monday, 3 May 2010
PNN

Canberra dismisses threat from Timor

2010-05-05T16:47:00.000+10:00

THREATS by East Timor to invite Malaysia's state-owned energy company, Petronas, to develop the oil- and gas-rich Greater Sunrise field in the Timor Sea have drawn a rebuke from Canberra, with a reminder to Dili to abide by its "legal obligations".

Development of the $20 billion Greater Sunrise field faces potential delays over demands by East Timor for Woodside Energy to scrap plans for a floating platform to process the oil and gas and instead build a lengthy pipeline to shore.

At the weekend, the Gusmao government threatened to invite Petronas to undertake the development unless Woodside agreed to the pipeline plan.

But yesterday Resources and Energy Minister Martin Ferguson stepped in with a warning for East Timor.

"The Australian government has consistently maintained that the location of LNG processing is a commercial decision for the Sunrise joint venture," Mr Ferguson said.
"The Australian government is committed to the Timor Sea Treaty, the International Unitisation Agreement, and the Treaty on Certain Maritime Arrangements in the Timor Sea.

"As we have always said, we will carry out our obligations and we expect the Timor Leste government to meet its obligations."

The dispute has its origins in an earlier decision by Conoco-Phillips to build an LNG pipeline from its Bayu-Undan field to a processing facility in Darwin.
The project resulted in angry claims from East Timor that Australia was getting the main economic benefits from development of the Timor Sea.

Yesterday, senior oil industry sources played down Timor's threats to bring in Petronas.

"Despite what Dili is saying, I doubt Petronas would be keen to get in a stoush with big oil -- Woodside is 40 per cent owned by Shell," one executive said.

A spokesman for Woodside said while engineering and feasibility plans were under way, a final decision on developing Greater Sunrise was not expected until 2012.

Under a deal signed with the Howard government in 2007, East Timor and Australia agreed to share upstream revenues from Greater Sunrise 50-50, which could end up with both countries each receiving $10bn over the life of the project.

Tuesday 4 May, 2010
The Australian

Upstream growth on the cards for Shell

2010-03-22T08:58:00.000+11:00

SHELL has flagged an 11% growth in upstream production from 2009 levels to 3.5 million barrels of oil equivalent per day in 2012.

Chief executive officer Peter Voser said that with some 11 billion boe of new oil and gas resources under construction, Shell was moving into a delivery window across the next five years that would account for the growth in output.

Upstream, we have built up strong foundations in activities like gas-to-liquids, oil sands and liquefied natural gas,” he said.

Looking out to 2020, I expect Shell’s exploration to underpin new upstream growth, especially in North America and Australia, with additional barrels from development-led projects.”

Australia is expected to underpin Shell’s next tranche of LNG developments. This includes focusing on its Prelude LNG project as well as the company’s stakes in the Gorgon, Sunrise and Browse projects.

“We are focusing a lot now at the moment on Prelude, which is the first floating LNG project which we have. But we are also looking with our partners at other projects like Sunrise, Browse and potentially may look for Gorgon expansions,” Voser said during the teleconference on Shell’s strategy.

“We have taken a Gorgon FID [final investment decision] last year, so that's the first big one on the books now.”

He added Australia was a key growth region for the company with plenty of growth opportunities from now up to 2020 and beyond.

However, he was reluctant to touch on whether Shell would increase its joint bid for Arrow Energy, saying it was still under discussion.

Voser also said the super-major would turn its attention from unconventional petroleum projects such as oil sands and GTL to exploring and developing conventional oil and gas, though he argued falling costs of extracting tight gas in the United States and Canada had made it a conventional source of gas.

Shell also announced a further 1000 job cuts, mostly in refining and marketing, with another 1000 jobs to be slashed from its workforce by the end of 2011.

This, along with continuous improvement in operating performance, is aimed at saving $US1 billion ($A1.09 billion) this year.

Shell also flagged asset sales of $US1-3 billion each year as it exits from non-core positions across the company.

Wednesday, 17 March 2010
PNN

Timor Sea focus for Shell

2010-03-22T08:57:00.000+11:00

SHELL'S Prelude liquefied natural gas project in the Timor Sea will be a key focus for the energy giant in 2010, chief executive Peter Voser says.

But Mr Voser declined to comment, during a teleconference held from London on Tuesday, on Shell's multi-billion dollar joint takeover bid with Petrochina for Australia's Arrow Energy Ltd.

However, he did say its LNG growth projections did not include Arrow's resources.
He said the energy giant expected to increase its LNG capacity by about 40 per cent to 26 million tonnes per annum by 2015 and Australia was central to those plans.
"We have the potential to grow to around 35 million tonnes per annum by 2020, with Australia being the main driver of that,'' Mr Voser said.

"In Australia, there is huge potential - a lot of LNG growth with various projects. This does not include anything from the potential purchase of Arrow.

"That is a transaction which is under discussion at this stage and no further comments (will be made) on that side.''

The bid was launched last Monday and values the target at between $3.26 billion and $3.85 billion.

Several reports suggest Shell and Petrochina will need to increase the offer because it is too low.

On the Prelude project, almost 500km off Broome, Mr Voser said Shell would "firm up'' plans for a floating LNG processing vessel this year.
The proposed undertaking is being seen in the industry as a testing ground for cutting-edge technology.

"We are focusing a lot now at the moment on Prelude, which is the first floating LNG project which we have. But we are also looking with our partners at other projects like Sunrise, Browse and potentially may look for Gorgon expansions,'' Mr Voser said.

"We have taken a Gorgon FID (final investment decision) last year, so that's the first big one on the books now.

"Australia is the key growth region for Shell ... plenty of growth opportunities from now up to 2020 and beyond.''

Gorgon on Barrow Island, Western Australia, is a joint venture with US energy giants Chevron and ExxonMobil while Browse is a Woodside Petroleum Ltd-led project in WA's far north.

The Woodside-led Sunrise project in the Timor Sea is the subject of a dispute with East Timor's government, which wants a processing plant built on its shores.
The joint venture prefers floating LNG or a pipeline to an expanded Bayu Undan LNG plant at Darwin.

Mr Voser also said Shell would reduce staff by 2000 by the end of 2011, and potentially achieve $US1 billion ($A1.09 billion) in costs savings in 2010.
Peter Voser announced the latest round of job cuts as he presented the group's annual strategic update.

"The company had become too complicated and slower to respond than we'd like. So we are sharpening up,'' said Voser, whose group already axed 5000 jobs last year in a bid to streamline its operations.

He added: "The priorities are for a more competitive performance, for growth and for sharper delivery of strategy.

"We have more to do to drive out cost and improve the operating performance in the company.''

Shell, which has about 100,000 staff worldwide, also forecast on Tuesday that its output will soar by 11 per cent between 2009 and 2012, and it unveiled a 'new wave' of investment in production.

"Upstream production is expected to reach 3.5 million barrels of oil equivalent per day in 2012, an increase of 11 per cent from 2009,'' Shell said in a statement.

"In addition, the company is assessing over 35 new projects from some eight billion barrels of oil equivalent resources, which should underpin upstream growth to 2020,'' the company added.

The forecast was broadly in line with the company's previous guidance for a production increase of between 2.0-3.0 per cent per year. Shell also said it had ``confidence in further growth beyond 2012''.

Shell, which employs about 8500 workers in Britain, did not indicate where the latest job cuts would fall.

The Anglo-Dutch group added that its reserve replacement ratio - or the rate at which production is replaced by new oil discoveries - had hit a record 288 per cent last year.

That means that the group replaced proven oil and gas reserves much faster than they were depleted.

"These are exciting times for Shell,'' Voser added in the group's official statement.

"We are poised to deliver a new wave of financial and production growth. We are making substantial investments in new projects to drive Shell's financial performance going forward.''

Wednesday 17 March, 2010
Herald Sun

Arrow's Shell takeover negotiations continue but insiders say offer is too low

2010-03-22T08:56:00.001+11:00

ARROW Energy remains in "active discussions" with Royal Dutch Shell and its Chinese partner, despite speculation the Queensland coal seam gas player will reject their $3.3 billion bid and seek a higher offer.

The energy explorer's shares have risen more than 50 per cent since it announced on March 8 that Shell and PetroChina had offered $4.45 a share for its Australian business.

Arrow hit an all-time high of $5.31 yesterday but eased to close 2 down at $5.23 as more than 9.5 million shares changed hands.

Last night at a strategy update in London, Shell CEO Peter Voser would not comment on the Arrow bid. But he said Shell had the potential to grow its global LNG capacity to 35 million tonnes a year by 2020, from 18 million tonnes in 2009, with Australia being the main driver. He said Shell's Prelude LNG project in the Timor Sea would be a key focus this year.

"In Australia, there is huge potential - a lot of LNG growth with various projects. This does not include anything from the potential purchase of Arrow," he said.
Shell's proposed Curtis Island project at Gladstone could produce as much as 16 million tonnes of LNG a year from four LNG trains, or processing plants, when completed.

Arrow earlier yesterday told the market that it "continues active discussions" with Shell and PetroChina over their proposal.

Analysts believe the energy giants will need to dig deeper into their pockets in order to woo Arrow.

"The bid as it stands now looks to be on the low side," said Credit Suisse analyst Andrew Williams. "The ongoing talks point towards Arrow trying to get a higher price for the assets, and we'd agree with that."

Under the deal Arrow shareholders would keep ownership of the company's international assets, worth an estimated $400 million.

Mr Williams said Arrow's total business, with overseas assets, was worth at least $5.25 a share. "That would be where we think the ballgame begins."

Wilson HTM analyst John Young said to succeed, Shell/PetroChina would need to offer a figure in the high $5 range.

From Shell's perspective, an Arrow acquisition would give it gas to feed its proposed LNG plant on Curtis Island.

The Curtis Island venture is one of more than a dozen projects planned in Australia aimed at tapping rising Asian demand for fuels that generate less greenhouse gas than coal or oil.

RBS Morgans analyst Nik Burns said Arrow's current takeover talks were a "game of brinkmanship".

"They need to find a price that provides them with fair value, but at the same time one that doesn't risk Shell and PetroChina walking from the deal," he said.

He said if Shell was successful, the company might move fast to acquire AGL Energy's coal-seam gas interests in the Bowen Basin, potentially for $900 million. AGL might sell its 50 per cent stake in the Moranbah field should Shell acquire Arrow, he said.
Neil Beveridge, an analyst at Sanford C Bernstein, said for PetroChina, the Arrow deal would provide China's largest oil producer with LNG supplies it needs at a lower price than it would pay to acquire the gas through another company.

Wednesday 17 March, 2010
The Courier-Mail

Australia, China LNG trade tipped to grow

2010-03-22T08:55:00.000+11:00

AUSTRALIA and China are continuing to forge their strategic business partnership, with liquefied natural gas exports singled out by Resources Minister Martin Ferguson as an opportunity for trade growth.

Ferguson said global LNG demand was forecast to double by 2030 and that China’s investment in LNG-receiving terminals was growing rapidly, with three in operation, four under construction and many others in the pipeline.
“Here in Australia, we are also investing heavily in new LNG production with the first Pluto cargo due in 2011 and Gorgon now under construction to come onstream in 2014,” he said.

“The Browse, Ichthys, Prelude, Wheatstone and Sunrise projects are well-advanced in planning, as are Gladstone’s coal seam methane-based LNG projects. China is front and centre in many of these new LNG investments and export opportunities.”

The minister added that China was Australia’s largest two-way trading partner.

“Trade in two-way goods and services with China amounted to $83 billion last financial year, with one-third of Australia’s mineral exports going to China. Mineral and energy exports to China were worth more than $33 billion last financial year.”

Chinese money is flowing into Australia with more than $26 billion of Chinese investment approved in the Australian resources sector in 2008-09.

“On the investment front, I believe both China and Australia are committed to finding a mutually beneficial way forward and we are having many more successes than failures,” Ferguson said.

Thursday, 18 March 2010
PNN

Shell progresses Prelude FLNG plans

2010-03-14T12:00:00.003+11:00

SHELL has taken the next step for its Prelude floating liquefied natural gas development off Western Australia, signing two contracts with the Technip and Samsung Heavy Industries consortium.

The first contract covers the front-end engineering design (FEED) elements specific to the Prelude project, taking into account the composition of gas, local weather conditions and other site-specific factors.

The second contract details the terms under which the floating LNG facility would be built if a final investment decision for the project is made.

The signing of the two contracts follows a master agreement inked last July between Shell and the Technip-Samsung consortium to work on the design, construction and installation of multiple floating LNG facilities over a period of up to 15 years.

Last October, Shell announced it was planning to develop its Prelude and Concerto fields using FLNG, the first such application of its technology.

In a statement, Technip said planning for Prelude was progressing well.

Prelude has estimated reserves of about 2.5-3.0 trillion cubic feet of gas and about 120 million barrels of condensate, while the super-major has yet to announce reserves for the Concerto find, discovered in March this year.

Both fields are located in Shell's wholly owned WA-371-P permit.

The Prelude FLNG development will be capable of producing 3.5 million tonnes of LNG per annum and of handling liquefied petroleum gas and condensate, taking total liquid production up to, and in excess of, 5MMtpa.

A final investment decision on the project is targeted by early 2011. It would take about five years from FID for the 600,000t FLNG vessel to be constructed in Korea and towed to the Prelude field, 475 kilometres north-northeast of Broome.

While the facility is being built, Shell said it would contract a third-party mobile offshore drilling unit to drill eight subsea production wells.

Development drilling for the development is expected to start in 2013 and take about two years.

The wells will be drilled to a depth of about 5400m and tied back to the subsea manifolds before being connected to the FLNG facility via flowlines.

The FLNG installation and hook-up is expected to take about six months with commissioning in 2015 before first gas in 2016.

Wednesday, 10 March 2010
PNN

Gorgon, Wheatstone to drive Chevron growth

2010-03-14T12:00:00.001+11:00

US Major Chevron says its Australian natural gas developments and a large queue of major capital projects around the world will position the company for future growth.

Speaking to financial analysts in New York, chief executive officer John Watson said the company was poised for another decade of upstream growth.

“2009 was an outstanding year, capping a decade of performance improvements achieved through consistency in strategy and execution,” he said.

“Chevron has held a long-term view favouring aggressive upstream investment, and the company is poised for another decade of upstream growth.

“We expect a substantial production increase mid-decade as our portfolio shifts towards natural gas and Asia.”

Executive vice president global upstream and gas George Kirkland said the company has confidence in delivering its extensive and diverse queue of projects.

He said the highlight for Chevron during 2009 was the performance of its upstream and natural gas business.

Oil and gas production increased 7% in 2009 while the company added 1.1 billion barrels of net proved reserves, replacing 112% of its production.

“Our execution success demonstrates our capability to deliver large-scale projects,” Kirkland said.

“This gives us confidence to deliver the next generation of projects, in particular the Gorgon and Wheatstone LNG developments in Australia.”

Meanwhile, the company said 2000 staff positions would be cut from its downstream business due to difficult global market conditions.

Wednesday, 10 March 2010
PNN

Arrow funnels cash to LNG dream

2010-03-14T11:58:00.003+11:00

Australian integrated energy player Arrow Energy saw cash flow from continuing operations soar for the half year to 31 December as it boosted electricity generation revenue, but reported a net loss as it ramped up investment in its Fisherman’s Landing liquefied natural gas project.

The company also revived plans to list part of its overseas operations as a separate unit.

Arrow reported gross profit of $13.9 million for the year to 31 December from $2.9 million in the half year to December 2008 as revenues from continuing operations rose to $92 million from $38.9 million previously.

Earnings before income tax, debt and amortisation (which includes revenue from exceptional items) rose to $18.6 million from $2.7 million previously, the company said.

Attributable earnings fell to a loss of $16.27 million, or a loss of $2.25 per share, from a profit of $241.2 million, or 32 cents per share, in the same period in 2008 as expenses almost tripled to $36.4 million.

Cash on hand at the end of the period was $261 million.

Gas production rose in the period to 10.1 petajoules from 9.2 petajoules previously, while proved and probable reserves increased 129% to 6150 petajoules. Proved, probable and possible reserves rose to 18.6% to 11042 petajoules.

Arrow managing director Nick Davies said he expected he expected Arrow’s net production from coalbed methane and conventional gas sources in Australia and Asia to grow to 220 petajoules per annum by 2015.

He said the company was targeting annual growth of proved and probable reserves of 1500 petajoules going forward.

Arrow has launched a $300 million exploration and development programme to prove up CBM resources on the Surat, Bowen and Clarence Moreton basins in Queensland to feed the Fisherman’s Landing CBM-to-LNG project, it said.

It is partnering with Anglo-Dutch supermajor Shell to develop upstream assets in the Surat basin.

The company said earlier this month it would buy out partner LNG Ltd, which had been developing the downstream project to build two liquefaction trains capable of producing up to 3 million tonnes of LNG per year for export to Asian markets. The project will be based at Gladstone on the Queensland coast.

First LNG is expected from the first 1.5 million tpa train in late 2012 and Arrow said it is continuing talks with potential customers Golar LNG and Toyato Tsusho over sales terms.

Capital expenditure in the first phase of the project to 2012 is estimates at between $1.9 billion and $2 billion, Arow said.

A final investment decision on the project is expected at the end of the current quarter.

Arrow also said it had revived plans to float part of its overseas assets.

Analysts told Reuters, the IPO, expected later this year, would allow Arrow's international arm to fund itself separately and free up its cash to focus on delivering the Fisherman's Wharf project.

The Brisbane-based company said it may float 20% of its overseas assets later this year, and plans to list either on the Hong Kong or Singapore stock exchanges.

Shell already owns 10 percent of Arrow's international unit.

"Considering the quality of the overseas partnerships Arrow has and the fact that it already has support from Shell, I think the IPO would get very positive response," said an energy analyst who declined to be identified.

"Its hard to put a value on those assets now as most of them aren't producing yet, but given the acreages and quality of the joint ventures, the IPO could be in the range of $500 million or so."

Shares in Arrow rose 2.8% to A$3.64 by 0412 GMT.

Arrow's overseas operations currently has a total of seven projects in China, India, Indonesia and Vietnam, and it has nine more in the pipeline later this year.

Wednesday 17 February 2010
Upstream

Arrow ponders international spin-off

2010-03-14T11:58:00.001+11:00

ARROW Energy has revived plans to spin off at least part of its international arm, a move that could free up cash needed to fund the Fisherman’s Landing liquefied natural gas project in Gladstone.

The company said on Wednesday it might carry out a partial initial public offering of up to 20% of Arrow International in the first half of the 2010-11 financial year, reducing its stake to 70%.

Previous plans to sell off its international operations were shelved after Arrow formed a major alliance with Shell, which saw the supermajor acquire a 10% stake in Arrow International and a 30% stake in Arrow’s Australian upstream tenements.

Arrow has seven projects in China, India, Indonesia and Vietnam with another nine lined up for the second half of the current financial year.

Managing director Nick Davies said operations in most of these countries had the potential to be at least as large as Arrow’s Australian operations in size and profitability within the next six years.

He also revealed the company’s ambitious goal to grow production 10-fold by 2015.

“Gross gas production is up 27 per cent from this time last year, demonstrating the strong performance of our producing fields. We estimate that by 2015 Arrow’s net gas production will increase 10-fold to 220 petajoules per annum from our major Australian gas fields in the Bowen and Surat basins and multiple fields throughout Asia.”

Arrow posted a net loss of $A16.26 million for the half-year ending December 31, 2009, due to expenditure for Fisherman’s Landing, international business development and higher expense and depreciation associated with the Braemar 2 power station following the increase in ownership.

Earnings before interest, tax, depreciation and amortisation was $19.49 million, down from $336.73 million in the same period the previous year though this included the $307.6 million sale of tenements to Shell and a $26.6 million gain on revaluation of options held over Pure Energy shares.

Davies said the company’s increases in production and reserves over the past year had lifted its confidence to pursue multiple coal seam gas-to-LNG opportunities in Queensland.

“We increased our certified gross proved and probable reserves 129 per cent to 6150 petajoules after only six months of our $300 million exploration and appraisal program.”

Shares in Arrow closed at $3.64 on Wednesday, up 10c over the previous day.

Thursday, 18 February 2010
PNN

LNG dreaming with Santos

2010-03-14T11:57:00.005+11:00

SANTOS has big ambitions for its Gladstone liquefied natural gas project in Queensland with chief executive David Knox wanting the company to operate an LNG complex bigger than the North West Shelf.

In a conference call yesterday, Knox said the GLNG project could eventually have five processing trains producing 20 million tonnes a year.

He said the company’s ultimate goal at Gladstone was to build a 20MMtpa LNG hub that could draw gas from Queensland, South Australia and New South Wales.

“CEOs are occasionally allowed to dream and that would be the ultimate vision, that we’d have a North West Shelf-scale project on Curtis Island,” Knox said.

The GLNG project is currently a one-train 3.6MMtpa project which will use coal seam gas as feedstock. A final investment decision for the first train is expected mid-year.

Santos has a binding agreement with Petronas, which holds a 40% stake in the project, for 2MMtpa. The company is in discussions with several Asian LNG buyers for the remaining 1.6MMtpa.

Knox said that while Santos would like to introduce a third-party customer into the first train, it was not a requirement to move forward to a final investment decision.

“We are able to FID the first train with the underpinning contracts with Petronas but, as I say, what we’re really looking for in our marketing efforts right now is to sign up customers who are both interested in first-train volumes but to particularly underpin the second train so we can make that investment as close as we can to the first train,” he said.

“The marketing discussions are therefore focused around potentially offering some volume in the first train to a successful customer but also to really underpin the second train.”

Knox went on to say that the company planned to commit about $3 billion of long-lead items for GLNG in the coming months and didn’t believe there were any “real showstoppers” to getting environmental approval for the first train.

“Before we can make a final investment decision on this project we need approval of the EIS.

“That approval will, to a certain extent, drive exactly the date that we can FID.”

Friday, 19 February 2010
PNN

Stuart bags $10M from Timor acreage sale

2010-03-14T11:57:00.003+11:00

STUART Petroleum has boosted its coffers after receiving $10.29 million in settlement from the sale of its 50% stake in AC/P33 in the Timor Sea to PTTEP Australasia.

The company said the payment included recovery of back costs and an amount to cover the cost of casing which was transferred to the purchaser.

Stuart sold its 50% stake in AC/P33 which contains the Oliver field to PTTEP last October.

The company added that the sale has allowed it to eliminate bank debt and retain $3 million in cash.

Managing director Tino Guglielmo has previously said the company did well to take a position in the Timor Sea and use its technical capabilities to add value and pass the project on at a profit.

Stuart is expected to announce details soon on the first phase of its 2010 exploration program focusing on the Cooper-Eromanga Basin.

Friday, 19 February 2010
PNN

Arrow Wins Approval for A$550 Million Queensland Gas Pipeline

2010-03-14T11:57:00.001+11:00

Arrow Energy Ltd., Royal Dutch Shell Plc’s coal-seam gas partner in Australia, won government approval to build a pipeline to the proposed Fisherman’s Landing liquefied natural gas plant in the state of Queensland.

Construction of the link, expected to cost about A$550 million ($493 million), will start next year, with the first gas supplied for processing in late 2012, Arrow said today in a statement to the Australian stock exchange. The pipeline will stretch northwest from Dalby in the Surat Basin to Chinchilla, before heading north to Gladstone on the central Queensland coast, Arrow said.

Brisbane-based Arrow Energy aims to become the first of five proposed Queensland coal-seam gas to LNG projects to make shipments to Asia. Arrow’s project may cost as much as A$2.2 billion to develop, it said earlier this month.

The Queensland government awarded Arrow a license to develop the 470-kilometer (292-mile) pipeline, the company said today. While Arrow seeks to be first, it may delay a decision to approve the LNG development until the middle of 2010 after acquiring 100 percent of the venture, analysts have said.

Arrow has dropped 12 percent this year in Sydney trading, compared with a 4 percent decline for the benchmark S&P/ASX 200 Index.

Thursday 18 February, 2010
Bloomberg

More gas on the cards for Oil Search

2010-03-14T11:56:00.005+11:00

OIL Search plans to focus 2010 exploration efforts on finding more gas to underpin liquefied natural gas expansion in Papua New Guinea and expects to resolve the remaining issues for PNG LNG this quarter.

Managing director Peter Botten said in a statement key exploration activities this year included drilling the Wasuma, Korka and Mananda Attic wells, as well as onshore and offshore seismic in PNG.

He added the company would also continue its seismic and drilling program in the Middle East and north Africa.

While development activities will focus on gas conservation and improving facilities, infrastructure reliability as well as extending facility life to support the PNG LNG project, Oil Search is still looking to get the most out of its oil assets.

This includes drilling one or two development wells on the Moran field; appraising the Agogo deep play, which had encountered oil in several intervals in a previously untested footwall forelimb compartment; and carrying out a workover campaign in the Kutubu, Moran and SE Gobe fields.

Botten said the new deep intervals at Agogo will be flow tested to determine hydrocarbon content, reservoir productivity and the potential for further development opportunities.

“Importantly, the discovery of oil in the Agogo footwall forelimb has opened up a new play fairway in the Fold Belt and has significant implications for the development of analogous structures below existing fields and the prospectivity on trend in adjacent licences.”

Botten also touched on progress for the PNG LNG project.

“The remaining issues to financial close, including the signing of the final SPA (sales purchase agreement), which will result in the PNG LNG plant’s initial capacity being fully contracted, are expected to be resolved during the first quarter of 2010 with first draw-downs from the project financing facility expected shortly before financial close,” he said.

Meanwhile, Oil Search reiterated that full-year 2010 production would be about 10% lower than in 2009 at 7.2-7.4 million barrels of oil equivalent.

The company posted a net profit after tax of $US133.7 million ($A148.4 million) for 2009, down from $US313.4 million in 2008, due to lower production and lower oil prices.

Revenue for the year was down 37% from 2008 to $US512.2 million while production was 5% lower to 8.1MMboe, due to natural decline at its mature PNG oil fields, facilities downtime and the sale of the Middle East producing assets in May 2008.

Tuesday, 23 February 2010
PNN

PetroChina joins Shell in $3.3bn bid for Arrow Energy

2010-03-14T11:56:00.003+11:00

OIL giants Shell and PetroChina have made a combined $3.3 billion bid for Queensland coal seam gas producer Arrow Energy as consolidation in Gladstone’s burgeoning export liquefied natural gas industry steps up.

Arrow shares surged as much as 47.4 per cent to a record $5.13 when the $4.45 a share bid, which does not include Arrow's overseas assets, was revealed today.

The bid, which was described by Arrow as a "non-binding indicative and conditional proposal", was a at a 28 per cent premium to Arrow's Friday closing price.

Arrow shareholders would also receive a share in Arrow's international business, which the company is planning to float in Hong Kong or Singapore.

By early afternoon, Arrow was up $1.62, or 47 per cent, at $5.06 compared with a 0.9 per cent rise in the benchmark S&P/ASX 200 index.

The joint bid, said to be half each from the two oil giants, comes as Arrow is preparing to buy the $2bn Fisherman's Landing LNG project, touted to be the nation's first CSG-to-LNG operation, from LNG Ltd.

Shell owns 30 per cent of Arrow's CSG ground and is planning its own LNG plant on Curtis Island off Gladstone.

Shell confirmed it was in discussions to acquire Arrow, excluding the international assets, of which it already has a 10 per cent stake.

Citi and UBS are advising Arrow on the deal. Arrow has advised shareholders to take no action on the bid.

The involvement of PetroChina -- China's largest-listed oil company by capacity -- could create a political hurdle for the bid considering the Australian government has taken a cautious stance on the issue of Chinese entities buying Australian resource producers.

China would not have a controlling stake in the gas fields or the LNG project.

This is the second attempt by Shell to gain control of Arrow with Shell's initial offer, never confirmed by either party, made last year.

A successful bid could give Shell's plans to build a standalone terminal at Gladstone port in Queensland a shot in the arm.

The proposed plant would produce 16 million tonnes a year of LNG, with first gas targeted in 2014 or 2015, but the Anglo-Dutch major doesn't have enough gas under its control at present.

Coal seam gas -- trapped stores of methane hundreds of metres below the Earth's surface -- is one of the world's hottest energy plays.

More than $20bn was spent in 2008 on deals in Australia alone by companies including Shell, US producer ConocoPhillips and Britain’s BG Group.

This activity reflects shrinking access that Western companies have to conventional natural gas reserves elsewhere in the world, as major gas producers such as Russia and Qatar favour production by local state-owned firms.

Environmental benefits are also playing a part in fuelling investment as coal seam gas doesn't produce any sulphur dioxide or particulates, and emits only 50 per cent of the carbon dioxide emitted when coal is burnt.

Monday 8 March, 2010
Bloomberg

Qld govt offers $10M to skill workers for CSG-LNG industry

2010-03-14T11:56:00.001+11:00

THE Australian Petroleum Production Exploration Association has welcomed the Queensland government’s $10 million flagship training program, saying it would help kick off new careers in the burgeoning coal seam gas-to-liquefied natural gas industry.

Premier Anna Bligh announced the initiative to train thousands of workers needed for the new CSG-LNG industries on Sunday.

The premier said the program would cater for up to 18,000 direct and indirect jobs, and was part of the government’s election commitment to create 100,000 new jobs in the current term of government.

The eight proposed CSG-LNG projects under consideration across the state will generate unprecedented demand for workers with specific technical skills.

“It’s essential that our training system is geared to meet industry demand – that’s why we’re developing this program hand in hand with industry,” Bligh said.

“The focus of the CSG-LNG Industry Training Program will be on up-skilling present mining industry workers and equipping newcomers with the required skills.

“For example, there are significant skill shortages for technicians in the areas of drilling, production, maintenance, electrical, instrumentation and logistics.”

APPEA Queensland director Matthew Paull said the new initiative would see the Queensland government working in partnership with the industry to equip potential employees with the high-technology skills required to work in the industry.

"The Queensland government and our industry are committed to engaging local communities and sharing the new employment opportunities presented by the exciting growth of our industry," Paull said.

"The CSG-LNG industry will provide a range of highly skilled employment opportunities and this initiative is a real and practical way to create new highly skilled career pathways and maximise the economic benefit of these exciting new projects for local communities.”

The government’s initial investment of $5 million would fund the program over two years with companies within the industry matching the government’s contribution dollar for dollar when they access training through the program.

Meanwhile, Energy Skills Queensland chief executive officer Glenn Porter said the unique nature of the CSG-LNG industry meant anyone interested in a career in the industry would need to start acquiring the right skills as soon as possible.

"The extraction of coal seam gas is a cleaner process than coal which produces a cleaner fuel, and it’s relatively new technology," Porter said.

"That means we need to start finding people who want to work as process operations technicians, drilling technicians, engineers and a host of other occupations in career opportunities that are about to start appearing across Queensland."

Tuesday, 9 March 2010
PNN

Australia Arrow needs A$1.32 bln for LNG costs

2010-02-11T15:51:00.003+11:00

Australia's Arrow Energy Ltd (AOE.AX) said its share of costs relating to a liquefied natural gas export project on Australia's eastern coast will be around $1.18 billion and it is considering several funding options.

Brisbane-based Arrow said that apart from cashflow and existing cash resources, funding options for the A$1.32 billion ($1.18 billion) investment at Fisherman's Landing LNG include equity raising, a project stake sale, corporate and project debt finance and export credit agency supported debt finance.

"Included in our funding options are also a number of milestone payments that can be earned under our agreement with Shell," Arrow said in a statement.

Shares in Arrow rose 4.8 percent to A$3.72 by 2353 GMT, outperforming a 1.28 percent gain in the broader index.

Arrow is a partner with Royal Dutch Shell (RDSa.L) in Australia coal seam gas ventures. Under an agreement inked in 2009, Arrow will receive $133 million from Shell upon a final investment decision to proceed with the Fisherman's Landing project and a further $66 million when the plant produces LNG.

Fisherman's Landing is the smallest but most advanced of five coal seam gas-to-LNG projects planned for the Gladstone port in Australia's northeastern Queensland state.
The first phase of the project is expected to cost A$2 billion and will have a single production train with a capacity 1.5 million tonnes per year (mtpy).

Arrow in January said it would take on a much bigger role in the LNG plant, signing a preliminary agreement to develop and take full ownership of the first production unit and to take a 49 per cent stake in all other site infrastructure, including storage tanks and jetties.

The project is due for a final investment decision this quarter and first LNG in late 2012.

Tuesday 2 February, 2010
Reuters

Offshore workers get pay rise, industry concerned

2010-02-11T15:51:00.001+11:00

THE Maritime Union of Australia is hopeful that its agreement with Total Marine Services over a pay increase will help with negotiations with Farstad Shipping and Go Offshore.

The union struck an agreement on Monday for a 30% wage rise over three years and an increase in allowances for TMS workers, who service the offshore oil and gas industry.

MUA national secretary Paddy Crumlin said the agreement gave workers security and companies stability through to July 2013.

“This is a crucial agreement for the industry,” he said.

Crumlin went on to say the pay rise was also measured against a reasonable wage increase and payment of a project allowance bonus (PAB) for workers on construction projects which will be adjusted with wage increases from January 1.

“We fought hard for this payment which now brings maritime workers close to parity with other workers like riggers doing exactly the same tasks on those projects.
“While other EBAs [enterprise bargaining agreement] being negotiated with Farstad and Go Offshore are separate EBAs, we are hopeful that this agreement with TMS will assist in bringing those talks to a conclusion as well.”

However, the national employers’ organisation for the resources and energy sector, Australian Mines and Metals Association, said the so-called agreement has created a worrying precedent.

AMMA chief executive Steve Knott said the three-month dispute highlighted acts of virtual piracy were allowed to occur under the Fair Work regime, with the agreement coming down to employers being forced to either “comply or die”.

“The nature of the dispute clearly demonstrates the ease unions can use the new Fair Work Act laws to initiate damaging strike activity in pursuit of outrageous claims, all while the government sits idly by and watches such reckless action unfold from the sidelines,” he said.

“When people hear members of the government cheering on an agreement which in effect results in a $50,000 pay rise to already world's best-paid seafarers earning $130,000, they would rightly be asking themselves how such increases could be economically justified.”

The Australian Shipowners Association told the Australian TMS could only resist repeated strike action for so long, and the wage rise could flow onto other shipping companies.
The 30% wage increase comprises 8.5% back dated to September 2009; 3.5% from January 1, 2010; and 6% from July 2010 to July 2012.

Wednesday, 3 February 2010
PNN

Kimberley LNG hub unsurprising choice for Browse JV

2010-02-11T15:50:00.003+11:00

PARTNERS in the Browse joint venture have selected the Kimberley liquefied natural gas hub at James Price Point as the site of the processing plant for gas from their Browse Basin fields.

The decision satisfies a condition of the retention leases for A-28-R, WA-29-R, WA-30-R, WA-31-R, WA-32-R, TR-5 and R-2 to select a development concept within 120 days from December 2, 2009.

The federal and Western Australia governments had previously applied a bit of arm twisting to the partners – save Woodside Petroleum – in saying James Price Point should be selected unless they could be satisfied an alternate development concept was likely to be commercially viable at an earlier time.

Woodside has been a proponent of the Kimberley LNG hub and had, along with the WA state government, signed a $1.5 billion in-principle compensation agreement with the Kimberley Land Council.

The Browse partners will now move on to the basis of design before beginning front-end engineering and design work in 2011 with a final investment decision to be made by mid-2012.

The proposed Browse development includes the Torosa, Brecknock and Calliance discoveries, located offshore around 425km north of Broome.

These fields contain a combined contingent resource of about 14 trillion cubic feet of dry gas and 370 million barrels of condensate.

The natural gas contained in the gas fields will primarily be converted into LNG for export to international markets.

The Kimberley LNG hub, covering a total area of up to 2500 hectares, will include LNG storage tanks set back about 750m from the shoreline and LNG trains located a further kilometre inland from the tanks.

The fenced area of the hub will extend for up to 1.5km of coastline and public access would be maintained in the buffer zones around the area.

Tuesday, 9 February 2010
PNN

Sunrise decision delayed

2010-02-11T15:50:00.001+11:00

THE decision on the multibillion-dollar Sunrise gas project has been delayed.
Australian energy company Woodside said last year that an announcement on whether to pipe gas to Darwin or build a floating processing plant would be made by December 31.
The deadline passed without any decision being made public.

The Northern Territory News understands the announcement will not be made until the end of March.

Woodside, the senior partner in the consortium developing the gas field in the Timor Sea, yesterday said a decision would be announced in the first quarter of this year.
But an industry source told the NT News that the consortium had put back the announcement to the end of March "for internal reasons".

The Territory Government and unions are lobbying for the gas to be piped 450km southeast to Darwin.

This would entail building another "train" or two at the ConocoPhillips LNG plant at Wickham Point.

The job would cost at least $1 billion and employ hundreds of workers in construction. Room for expansion was factored in when the Wickham Point complex was built in 2003.

A floating platform, however, would be built overseas and probably be manned mainly by foreign workers.

Chief Minister Paul Henderson said the Territory Government had told Canberra "stridently and emphatically" that Sunrise gas should be piped to Darwin.
And NT Resources Minister Kon Vatskalis said that the floating platform technology was still "untried and untested".

A third choice - piping the gas to East Timor - has been ruled out because of instability in the country, lack of infrastructure and skilled workers, and the engineering difficulties of running a pipeline down a deep, undersea trench.
Sunrise is being developed by Woodside, Shell, ConocoPhillips and Osaka Gas.

February 10th, 2010
NT News

Woodside sharpens Browse pencil

2010-02-11T15:49:00.001+11:00

Australian independent Woodside has handed out contracts for “basis of design” work on the Browse liquefied natural gas development off Western Australia after project partners came to agreement on an onshore processing site for the venture.

Woodside said the work would determine the “major design parameters” for the development of the offshore fields and the processing plant to be built at James Price Point in the Kimberley.

Perth-based Woodside said it had handed the onshore component of planning to engineering groups Bechtel Australia and Kellogg, Brown & Root. Work on the offshore facilities will be handled by a joint venture of WorleyParsons Services and Select Granherne, while JP Kenny would scope the subsea infrastructure and pipelines component.

The initial contracts will allow the venture to kick off Front End Engineering and Design work next year, with a final decision on the project expected in 2012.

Wednesday 10 February, 2010
Upstream

Arrow snaps up Fisherman’s Landing

2010-02-11T15:48:00.000+11:00

ARROW Energy is acquiring the Fisherman’s Landing LNG plant in Gladstone from Liquefied Natural Gas Ltd for about $168 million including an upfront payment of $A51 million in cash and options.

The move to buy the plant and all associated infrastructure comes barely a month after signing the January 4 deal giving it ownership of the first liquefied natural gas train at Fisherman’s Landing and supersedes the older heads of agreement.
The new agreement is subject to the completion of confirmatory due diligence by Arrow, and LNG Ltd gaining shareholder approval at a meeting to be held within the next 45 days.

“Arrow is excited to be taking full control of the construction and future operation of the world’s first CSG-to-LNG facility,” Arrow chief executive officer Nick Davies said.

“This further simplification of the Fisherman’s Landing LNG development and the elimination of the commercial agreements with LNG Ltd, will improve the ability to construct, finance and ultimately allow for greater flexibility in the operation of the plan.”

He added initial site works have already started with project design and planning well advanced.

The price of the acquisition includes $45 million for the reimbursement of project costs incurred to date, an initial $US5 million ($A5.7 million) licensing fee for use of LNG Ltd’s OSMR liquefaction technology, and a grant of 12.5 million options exercisable at $3.50 each which expire on May 14, 2010.

Arrow will also pay LNG Ltd a minimum royalty of 0.7% calculated on the oil price differential above $US60 per barrel for the first train, while a higher royalty of 0.9% will be payable if capital expenditure for the project is materially lower than current estimates of $2.1-2.2 billion.

Further payments will be payable to LNG Ltd once certain milestones are reached, including $24 million at final investment decision; an additional $US5 million licensing fee for the use of OSMR at FID; $24 million when the plant produces 1 million tonnes of LNG per annum; and $63.5 million when the plant reaches 3MMtpa LNG production capacity through a second train.

Arrow now plans to focus on full integration of the design and construction plans for the Fisherman’s Landing LNG facility into its overall project development plan.
This will include an assessment of the previously announced March 31, 2010, FID date and any project enhancement opportunities that may be available on an integrated basis.

First LNG production remains on track for late 2012.

The company also is in talks with Golar Energy to transfer the existing HoA for the sale and purchase of LNG from Train 1.

Arrow added the overall project cost estimates remained within its financial capability, saying it was still in the scope of the funding options outlined on February 2.

These include a combination of corporate and project debt finance as well as export credit agency-supported debt finance.

LNG Ltd managing director Maurice Brand said that on completion of the deal, the company would have $85 million in cash, 12.5 million Arrow options and no further funding commitments for Fisherman’s Landing, allowing it to focus on marketing its OSMR technology and other mid-scale LNG opportunities.

Fisherman’s Landing is planned as a two-train LNG plant capable of producing 3MMtpa, which uses coal seam gas from Arrow’s upstream tenements as feedstock.

Thursday, 11 February 2010
PNN

Timor to block Woodside's oil development plans

2010-01-19T16:10:00.001+11:00

JAKARTA, Indonesia -- East Timor's government will block proposals by an Australian-led consortium to develop a disputed oil and gas field worth billions of dollars, The Associated Press has learned.

Proposals to exploit “Greater Sunrise” — estimated to hold 240 million barrels of light oil and 5.4 trillion cubic feet (154 billion cubic meters) of natural gas — must be approved by both sides, a 2007 treaty between the neighbor states.

The deal gives the parties until 2013 to agree upon a joint development plan. But Timor's latest position shoots down all proposals put forward so far by the consortium headed by Australian oil and gas company Woodside Petroleum Ltd.

Timor is already tapping a US$5 billion petroleum fund established with income from another field in the Timor Sea, but the vastly larger Greater Sunrise is seen as key to developing the young democracy and lifting its 1.1 million people out of poverty.

In their toughest stance to date, Timor says it will not support Woodside's development plan, possibly rendering the 2007 treaty meaningless.

“The current proposed plans of Woodside and the consortium partners to pipe gas from the Greater Sunrise field to either Darwin or a floating LNG (liquid natural gas plant) would not be approved by the government,” Secretary of State Agio Pereira said in a statement obtained Wednesday by The Associated Press.

Woodside, which leads the consortium including Royal Dutch/Shell, Osaka Gas and ConocoPhillips, argued that piping the resources to an existing processing plant in Darwin, more than 300 miles (500 kilometers) away, is the most commercially viable option. It has also researched a floating gas processing plant, which would be the first in the world and cost billions of dollars.

But East Timor, an underdeveloped country with no major industry to speak of, wants to run a deep sea pipeline to its coast, about a third of the distance of a pipeline to Darwin in Australia's Northern Territory. It has been looking for commercial partners to develop a multibillion dollar national petrochemical industry that is says would spur economic growth and dent towering unemployment.

With billions of dollars in tax revenue and profits involved, the fight over Greater Sunrise could not be of higher stakes for Timor. The former Portuguese colony broke from Indonesian occupation a decade ago and is struggling to feed, shelter and educate its population.

It ranks among the least developed countries in the world and is the poorest in Southeast Asia.

Thursday, January 14, 2010
The China Post

Chevron Keeps Focus On Offshore In 2010

2010-01-19T16:09:00.001+11:00

Chevron will spend 2010 trying to advance its large project inventory to focus mostly in the deepwater area - a contrary play given the industry frenzy over onshore shale gas basins.

Chevron announced a capital spending budget of $21.6 billion for 2010, with 80%, or more than $17 billion, directed to exploration and development. Although this amount might encourage investors, it is a 5% decline from last year.

It is common for most integrated oil majors to direct most upstream spending toward international projects, and Chevron is no exception. In 2010, the company will spend $13.2 billion on international projects and $4.1 billion in the United States.

International Projects
In 2010, Chevron will start progressing on the Gorgon gas project, a huge endeavor located in Australia. The project received approval to proceed in September 2009, and it's projected to cost $37 billion for the first phase alone.

The project involves offshore development of the Gorgon and Jansz natural gas fields, along with constructing a three-train Liquefied Natural Gas (LNG) facility on a nearby island. Chevron has 25-year contracts to supply gas to three Japanese utilities, and it will also build a pipeline to supply gas to Australia. The project is so large that Chevron is partnering with Exxon Mobil and Royal Dutch Shell, both of which have a 25% share.

North America
Chevron also has a large portfolio of projects in North America to progress in 2010. The company is heavily involved in exploring and developing various deepwater prospects in the Gulf of Mexico. These projects include Jack, St. Malo, Perdido, Tahiti, Buckskin and several others. All of these projects are in various stages of exploration or development, with some producing and some at the early stage of infrastructure build-out. The company should move these projects steadily forward in 2010.

Chevron is also participating in expanding the Athabasca Oil Sands project in Canada, which is operated by Royal Dutch Shell. The expansion will add capacity of 100,000 barrels per day to the current production of 155,000. Marathon Oil (NYSE: MRO) also has a 20% stake in this project. Startup is expected in 2011.

Focus On Long-Term Offshore Projects Should Pay Off
Although Chevron is spending a little less on exploration and development in 2010, the company will maintain its focus on long-term offshore projects that should pay off with excellent returns when completed

Thursday 14 January, 2010
Investopedia

Golder secures Wheatstone gig

2010-01-19T16:05:00.001+11:00

CHEVRON is pushing ahead with its planned Wheatstone liquefied natural gas project off Western Australia's North West Shelf, awarding a $20 million contract for geotechnical investigations for the construction of an LNG plant.

Ground engineering and environmental services company Golder Associates secured the contract and will provide geotechnical consultation for the design and construction of an LNG plant at Ashburton North, southwest of Onslow.

The company plans to carry out a four-month field program of geotechnical investigations using four offshore drill rigs, two nearshore jack-up barges, in situ downhole pressure-meter testing, downhole seismic testing, cone penetration tests and test pitting.

Chevron will supply the LNG plant with gas from its wholly owned Wheatstone field, which was discovered in 2004 in WA-253-P and WA-17-6, some 200 kilometres north of Onslow.

The adjacent Iago field was discovered in 2000 and spans two permits - WA-17-R, owned by Chevron, and WA-16-R, owned one-third by Shell Development.

The initial phase of Wheatstone will have the capacity to produce 8.6 million tonnes of LNG per annum and will include a domestic gas plant.
"Drawing on all the human energy in Chevron, including at the Global Technology Centre in Perth, will help make Wheatstone the most advanced, environmentally responsible LNG project in the world," Golder senior environmental engineer Peter Reeves said.

Chevron expects to make a final investment decision on Wheatstone in 2011.

Monday, 18 January 2010
PNN