Total seeks 30% of Ichthys

Speaking to media in Perth yesterday, Total president of exploration and production Yves-Louis Darricarrere said Total was seeking the stake, pinning its major growth hopes in Australia on Ichthys and the GLNG project.

“We are in talks to increase our stake in the Ichthys project to 30%,” he said.

He would not be drawn on the timing of any such announcement or much Total would buy the stake for, but he said it would be an equity stake only, with the LNG from the project already contracted to others.

“We already have a lot on our plate and given the amount of investment, and the challenges we have ahead with these two projects … my first priority today is to carry out the two major projects,” he said.

While Total is hoping to spend $US20 billion in investments worldwide this year, Darricarrere said its Australian investments would be organic, and all but ruled itself out of the running for a Browse stake.

“While we cannot rule it out, we have a lot on our plate at the moment with Ichthys and GLNG,” he said.

Australian operations manager Mike Sangster also confirmed to media that while it had hit a gas discovery in WA-403-P, it would need to do more work, including seismic to be carried out later this year, to quantify the resource.

Darricarrere said while it was more than likely any gas discovery would feed Ichthys and any potential expansions, if the discovery were big enough, Total would consider a separate development.

“If the discovery is big enough then of course, why not have a separate development? Of course we know nothing until we are able to find out more,” he said.

He also poured cold water on suggestions that it would acquire a smaller player in the Cooper Basin as it seeks to source more gas for the GLNG project.

“Most our growth, I see as being organic … I am thinking more about exploration than any acquisitions,” he said.

In a wide-ranging discussion with media, he said Total had watched the debate on coal seam gas, particularly in Queensland where it has stakes in Surat and Bowen Basin permits, with interest.

“I think in this debate there are some real issues and there are some not real issues,” he said.

He said CSG operators faced increasing scrutiny and opposition in regards to land access, lauding GLNG partner Santos for “not having a heavy hand approach” with landholders.

He also flagged water disposal as a potential issue for the industry, but said there was “confusion” about potential contamination to aquifers.

“There are no issues I think with drinking water, to the contrary, very rarely is fraccing used for coal seam gas projects … it is marginal, not like shale gas.”

“In CSG you have a lot more natural fractures, so there is no need to fracture them more to free the gas.”

He also said if there were a risk of contamination, it was exactly the same as it would be for conventional wells, and called on the industry to communicate this more effectively.

Meanwhile, he played down fears of rising costs for LNG projects worldwide, but said large capital expenditure infrastructure projects faced unique pressures in Australia.

Total confirmed late last year the cost of the Ichthys project had risen from an earlier estimate of $25 billion out to $30 billion, and speculation mounted that the total cost could even rise to $40 billion on the back of rising labour costs.

“I don’t think LNG has been particularly exposed to great cost increases in recent years.”

“There are specific factors in Australia which makes it more expensive … it is true that the cost of building activities in Australia are quite high,” he said, hinting at “reasons you know”.

Speaking on the prospect on the US becoming a net energy exporter on the back of the shale revolution, Darricarrere said times could get tough for shale gas drillers in the US, as he saw politicians in the country as wanting to keep prices as low as possible.

“The shale gas revolution has particularly changed the gas industry in the US. It’s clear that the US will have gas for many years … and I think they will want to keep the gas for that,” he said.

“They have the one export project … but I don’t see anymore. They would want the gas to remain cheap.”

US Energy Secretary Steven Chu testified in the US senate earlier this week that his department had not made up its mind one way or another on the prospect of exporting gas, saying that it was waiting on a report to be handed down in autumn on the prospect.

Wednesday, 22 February 2012
James McGrath
http://www.energynewspremium.net/StoryView.asp?StoryID=3200420
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