Pluto expansion decision pushed back

In its report for the half-year ended June 30, 2010, the company said a final investment decision on the Pluto expansion remains contingent on securing enough gas supplies, either through exploration or other resource owners.

“Work will continue into 2011 to achieve the investment case for Pluto expansion,” Woodside said.

To offset this, Woodside noted that its concerns about competition for construction resources from other LNG projects had not materialised and that this, together with the delay in drilling its 20-well program, gave it additional time to further its exploration efforts.

Ten wells have being drilled in the exploration program, of which six have encountered gas.

Earlier this year, managing director Don Voelte said the company was aiming to be in a position to make a FID on Train 2 by the end of the year and Train 3 by the end of 2011.

However, early results from the company’s exploration program appear to have not provided the support Woodside needs to achieve this target, a problem compounded by a lack of success in securing third-party gas for the project expansion.

Woodside added that work on Pluto Train 1 remained on schedule with a target start-up by end February 2011 and the first LNG cargo expected to ship by end March 2011.

It said any schedule slippage should no longer be significant and any delay would increase associated costs by a quarter of one per cent of the total project cost per week.

Onshore and offshore teams at Pluto are now moving into the commissioning phase of the project, which would continue throughout the second half of 2010.

The company is also cruising along with work on its North West Shelf Venture with fabrication of the North Rankin B jacket ahead of schedule in Indonesia while fabrication of the topsides is progressing to plan in South Korea.

The NWSV is also continuing pre-development studies to define the plan to commercialise the undeveloped petroleum resources in the Greater Western Flank area through a phased tieback to the Goodwyn A platform.

Selection of the first phase development is expected in the second half of 2010 with front-end engineering and design studies planned through 2011.

On oil production, Woodside expects its North West Shelf Oil project to resume production by the end of the first quarter 2011.

Conversion, completion and commissioning works for the Okha floating production, storage and offtake vessel are continuing at Keppel Shipyard in Singapore while refurbishment of the subsea infrastructure is expected to start in the latter part of the fourth quarter.

Drilling of the Main West production well at Enfield was completed at the end of the half-year and will be followed by the Horst production well. Both wells are expected to contribute to production in the second half of this year.

Meanwhile, the company posted net profit of $901 million for the first half ended June 30, 2010, up 40% from the previous corresponding period.

Underlying net profit was also up 26% to $813 million while revenue was up 45% to $2.1 billion on the back of stronger commodity prices.

This was despite production dropping 8% to 36.7 million barrels of oil equivalent from the sale of Woodside’s Otway gas assets and natural field decline in its oil assets, though the company maintained that full-year production is still expected to be 70-78MMboe.

Shares in Woodside were up 1.18% this morning to $43.59.

 
Thursday, 29 July 2010
PetroleumNews.net
http://www.petroleumnews.net/StoryView.asp?StoryID=1139081