Supply fills rising Asian demand.

Operators in Australia's Carnarvon Basin offshore between Exmouth and the Burrup Peninsula plan to lay siege to Asia's hunger for clean energy with an arsenal of trillions of cubic feet of natural gas.

They have the backing of the Australian national government and the government of Western Australia. "The government is committed to expanding oil and gas investing. We welcome investment," said Paul Mercer in the oil and gas division of Western Australia's Department of Industry and Technology at Norway's Offshore Northern Seas conference.

"We're looking for know-how and technology, and we encourage you to come and have a look," added Robert Fisher, agent general for Western Australia.

That look would show Western Australia consumes about 700 Bcf of gas, 300 Bcf for local use and 400 Bcf to feed the giant North West Shelf (NWS) group's liquefied natural gas (LNG) complex at Dampier on the Burrup Peninsula. Most of that LNG feeds Japanese utilities under contracts that run to the end of this decade.

Those contracts derive from one of Australia's advantages. It's the closest working gas source for the two-thirds of the world population in Asia, which also represent some of the world's fastest growing economies. An LNG tanker takes 8 days to get from Dampier to Japan compared to 15 days from the Middle East and 19 days from Trinidad and Tobago.

The three NWS trains ship 7.5 million tons of LNG annually, and the group is building a fourth train at a cost of US $2.2 billion (A$4 billion) - including a new 42-in.-diameter, 80-mile (129-km) pipeline from North Rankin field - to raise production to 11.7 million tons.

The reason: The Chinese LNG market could reach 7 million to 10 million tons by 2010, Taiwan will need an additional 5.7 million tons by 2010, India will need 10 million tons in 2010, and South Korean demand will grow 65% to 17.3 million tons in the next 3 years.

In addition, gas growth plans in the Burrup Peninsula area include a $544.8 million ($1 billion) specialty products plant by Syntroleum, a $490.2 million ($900 million) ammonia and urea plant by Dampier Nitrogen, a $326.8 ($600 million) ammonia plant by Burrup Fertilizers, a $544.8 million ($1 billion) dimethyl ether plant by Japan DME, a $1.1 billion ($2 billion) methanol plant by Methanex and a $326.8 million ($600 million) methanol plant by GTL Resources.

Of course, those don't count the $4.4 billion ($8 billion) Sasol Chevron GTL operation that still is in the planning stages.

They also don't count the contract the NWS consortium signed in September with the Chinese National Offshore Oil Co. (CNOOC) to supply LNG to a new re-gasification terminal being built at Guangdong, China. The 3-million-ton-per-year first phase of that contract will supply power and energy to Hong Kong, starting in 2005. The second phase, due for completion in 2008, will feed energy to the Pearl River Delta.
The Chinese projects also will require a $544.8 million ($1 billion) fifth LNG train on Burrup Peninsula to raise production to 15 million tons a year, since the NWS group already had commitments for two-thirds of the production from the fourth train. Producers have the supply side covered.

The Carnarvon Basin holds 64 Tcf of natural gas reserves, and the Browse Basin immediately north can supply another 35 Tcf.

In the early stages of the LNG operation, North Rankin field supplied all of the LNG gas from its estimated 11.2 Tcf of gas reserves. Now, gas also is coming in from Goodwyn field platform 15 miles (24 km) to the west with subsea contributions from Echo and Yodel fields. Plans also call for hookups from Perseus field immediately west of the North Rankin A platform.

The consortium's fields also include Wanaea, Cossack, Lambert and Hermes.

There's a lot more to the North West Shelf than the consortium. ExxonMobil and Phillips discovered Athena field, an extension to Perseus, that is scheduled to hook into the new North Rankin pipeline. The Athena 1 well tested at 47.4 MMcf/d.

Feeding gas processing facilities at Varanus Island south-southwest of North Rankin are a host of fields, including Apache Corp.'s East Spar and the company's Harriet group of oil and gas discoveries.

Still looming on the sidelines as a project under consideration is ChevronTexaco's Gorgon complex. Gorgon has 9.6 Tcf in reserves by itself, and the greater Gorgon area has 13.8 Tcf of proven reserves and 17.6 Tcf of proven and probable reserves.

Other projects under consideration include ExxonMobil's John Brookes with 1 Tcf in reserves and a well that tested at 53.4 MMcf/d, BHP Billiton's Macedon/Pyrenees complex, ExxonMobil's Scarborough and Woodside's Scott Reef/Brecknock/Brecknock South group with 20.5 Tcf in reserves.
Although the basin has been explored, it still is at the exploration density of the Gulf of Mexico 30 years ago.

Comments