Month in Petroleum: August 2010 – LNG

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
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