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Australia’s Woodside plans new LNG project Company’s 100%-owned Pluto, off western Australia, could cost around $4 billion, deliver to Asia, Americas as early as 2010 Allen Baker Petroleum News Contributing Writer
Australia’s Woodside Petroleum Ltd. is planning to go ahead with an LNG project to commercialize gas in its recently discovered Pluto field about 120 miles off the coast of Western Australia.
The plant to liquefy the natural gas from the field could be built on the Burrup Peninsula, all but next door to the liquefaction facilities for the North West Shelf project, Australia’s largest energy development, the company said Aug. 8.
Woodside is operator of the North West Shelf complex, with a one-sixth share. It is also involved in plans for the offshore Browse Basin development and Greater Sunrise, in the Timor Sea.
Woodside managing director Don Voelte, who took over the top job last year, has slated a very fast track for the Pluto project, whose gas was discovered just this past spring. The company plans to start construction in 2007 and have tankers loading up as early as 2010. That would be just seven years from the time Woodside was awarded the exploration acreage. Impressive discovery Just two wells have been drilled at Pluto so far, with more exploration drilling planned this year and next. But that pair was impressive. The first one, in April, showed a flow rate of 46.5 million standard cubic feet daily, and the second 5 miles away confirmed the size of the deposit last month. Woodside is figuring the field holds at least 3.5 trillion cubic feet of natural gas.
The field is in waters about 1,200 to 3,200 feet deep. Preliminary plans call for a production platform in shallower waters about 10 miles from the wells, and a 120-mile line from that platform to the onshore LNG plant.
That complex would have up to two liquefaction trains, a loading jetty and other infrastructure for exporting 5 million to 7 million tonnes of LNG annually, with projected customers in Japan, Korea, China and the United States. That would be the equivalent of around 650 million to 900 million cubic feet of gas daily.
The plant could handle gas from other developments as well, Voelte said. Chevron’s 2.5 tcf Wheatstone is nearby and discoveries by Santos and Apache are also in the region. Demand window The company sees a window of demand for LNG in Asia and North America opening in the 2010-2012 period and figures the race goes to the swift.
“Our 100 percent ownership of the field will permit fast yet rigorous decision-making,” Voelte said. “Woodside’s core LNG management and operations on the North West Shelf provide the key ingredients for meeting the market window for LNG supplies at the end of this decade.”
Competition for customers could get heated in the not-too-distant future as the Chevron-led $8 billion Gorgon project off Australia is also expected to be aiming at the same markets.
Woodside has been mentioned as a takeover target for China’s CNOOC Ltd. after its bid for Unocal Corp. hit a reef. But that could be complicated by the 34 percent stake that Shell holds in Woodside, and by Australian security concerns. Shell wanted to buy all of Woodside a few years ago, but the Australian government refused to allow it.
Woodside is now the second-largest energy concern in Australia, and management appears to be hoping size will be a deterrent to the sharks. Woodside’s production reached 176,000 barrels of oil equivalent daily in the second quarter, up 12 percent from the first quarter. It has interests in Africa and the Gulf of Mexico in addition to its Australian operations. First Bayu-Undan LNG The ConocoPhillips-led Bayu-Undan offshore field has sent its first natural gas heading for Darwin, Australia, Aug. 8, the same day the company signed a sales agreement with customers Tokyo Electric Power Co. and Tokyo Gas Co. Ltd. for LNG from the development. The contract, like and earlier Heads of Agreement, calls for shipment to the two utilities of a total of 3 million tonnes of LNG each year for 17 years.
Bayu-Undan, in the Timor, Sea, has been producing condensate since early 2004, with the gas injected back into the field. It holds estimated reserves of 400 million barrels of condensate and 3.4 trillion cubic feet of gas. Eni, Emet, Impex, Petroz and Santos also have interests in the field. Gazprom partner? Russia’s Gazprom has released a list of the companies being considered to partner on development of the huge Shtokman deposit on the Barents Sea shelf, according to Russian news agencies.
ExxonMobil, Chevron, and ConocoPhillips of the United States made the list, along with European giants Shell and Total. Gazprom might also pick Norway’s Statoil or Hydro, or perhaps Mitsui or Sumitomo of Japan.
Shtokman has reserves estimated at more than 112 tcf of gas, along with huge amounts of condensate. The development would almost certainly involve an LNG train to allow exports, and that possibility has been cited as one reason the Russian company was so eager to become a partner in the Shell-led Sakhalin 2 project, where Gazprom is getting a 25 percent stake from Shell in exchange for interests in an onshore Siberian gas field.
Shtokman is expected to cost $10 billion or more to develop. The company has said it will announce its choice of a partner this fall.
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