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Australian natural gas: part five

Hydrocarbon Engineering,


Read part four of this article here.

Longer term LNG projects (proposed/possible)

Scarborough Floating LNG

BHP and Exxon received federal government approval for a massive floating LNG project off the coast of Western Australia near Exmouth, known as Scarborough LNG. It is envisioned as being 495 m long, larger even than the Prelude FLNG facility. LNG production would be 6 - 7 million tpy. If the project moves forward, drilling would take place in 2018 and 2019.

Browse Floating LNG

Woodside is planning development of a Browse Basin FLNG project. At least three gas fields would be developed for this project: Torosa (discovered in 1971), Brecknock (discovered in 1979) and Calliance (discovered in 2000). These are known collectively as the Browse resources. The resource is located approximately 425 km offshore north of Broome in Western Australia. Woodside's partners are Shell (Australia), BP Developments Australia Pty Ltd, Japan Australia LNG (MIMI Browse) Pty Ltd, and PetroChina International Investment (Australia) Pty Ltd. The joint venture partners switched to a Floating LNG design in 2012 in order to reduce costs. The partners recently announced that they would postpone making a final investment decision until 2016, citing low oil prices. If the project moves forward, production would commence in 2020.

Greater Sunrise FLNG

The Sunrise and Troubador gas and condensate fields are collectively known as the Greater Sunrise Fields, located approximately 150 km southeast of Timor-Leste and 450 km northwest of Darwin, Northern Territory. Woodside would be the project operator (33.4%), with partners ConocoPhillips (30%), Shell (26.6%) and Osaka Gas (10%.) The partners favor using Shell's FLNG technology, as in the Prelude project. Approximately 20.1% of the Greater Sunrise fields are in the JPDA, administered by the governments of Australia and Timor-Leste. The maritime agreements have not been settled, but a ‘Sunrise Commission’ has been established to provide strategic direction and oversee approvals.

Additional plans

There are several other LNG projects planned in Australia, though their timing is not firm, and financial decisions have not been made. For example, there are two CBM projects: the Fisherman's Landing CBM LNG Project, and the Arrow CBM LNG project. Thailand's PTTEP discovered a gas and condensate field in the Timor Sea in 2011, and it hopes to develop the resource using FLNG. The project would be known as Cash Maple LNG. Santos and Gaz de France cancelled plans to build the Bonaparte LNG facility, citing rising costs and an inadequate natural gas reserve.

Conclusion

The Australian economy has already felt the impact of the drop in global oil prices, but the impacts are mixed. As refineries have been closed, Australia's refined product imports have grown, rising by approximately 128 800 bpd between FY 2010 - 2011 and FY 2013 - 2014. The downside fallout may affect the LNG industry. There is concern that some of the more ambitious and capital intensive projects will suffer from poorer economics. Already, several have noted cost overruns. Some standalone projects may be postponed or cancelled, while others may be linked to existing plants to prolong their lives and reduce costs. Many analysts have commented on the reductions in planned capital expenditures among the major energy companies. However, the six large projects already underway largely are considered feasible even at oil prices of US$40 - 50/bbl. Moreover, in some instances, the drop in spending on Australian LNG projects was already planned before the drop in oil prices. For example, in January 2015, Chevron announced that its 2015 corporate capital expenditures budget would be US$35 billion, down 13% from its 2013 budget. Such an outcome is to be expected. However, in the case of Australian LNG, the reduction in spending comes because the projects are nearing completion. As the Gorgon and Wheatstone LNG projects are commissioned, spending is expected to fall from US$8 billion in 2015 to just US$1 billion in 2017. The Gorgon project is now more than 90% complete. The first LNG cargo is expected this year. The Wheatstone project is 60% complete, and it is on schedule for startup in 2016.

Australia's LNG industry is in the midst of a growth spurt, with 2015 capacity of 32.8 million tpy (including the second train of Queensland Curtis LNG). The six major projects now underway will add 48.8 million tpy, bringing capacity to 81.6 million tpy. The current weakness in oil prices has injected a note of caution into further expansion, particularly in light of possible LNG export projects in the US, Canada and Russia. Yet the main LNG customers are in Asia, and Australia's projects are already geared toward this market. China in particular is expected to emerge as a major new importer, as it hurriedly builds LNG import terminals. The Chinese government has set a goal of increasing the share of natural gas in primary energy consumption to 10% by the year 2020, up from 5.1% in 2013. There is certain to be competition for this and other markets, but Australia is certain to remain a strong competitor.


Written by Nancy Yamaguchi. This is an abridged article taken from the May 2015 issue of Hydrocarbon Engineering.

Read the article online at: https://www.hydrocarbonengineering.com/special-reports/01052015/australian-natural-gas-part-five-672/


 

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