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Australian natural gas: part three

Hydrocarbon Engineering,

Read part two of this article here.

Growth in Australia’s LNG industry

Australian LNG projects and exports

There are four projects now producing LNG, six under construction and firm for completion, and several proposed or possible.

The Northwest Shelf Venture

The industry began to explore the Carnarvon Basin in Australia’s continental shelf in the 1960s. By the 1970s, major deposits of natural gas and condensates had been discovered. The largest development was the North West Shelf Venture (NWSV.) There are six participants in the venture as it stands today: BP Developments Australia Pty Ltd, BHP Billiton Petroleum (North West Shelf) Pty Ltd, Chevron Australia Pty Ltd, Shell Development (Australia) Pty Ltd, Japan Australia LNG (MIMI) Pty Ltd, and Woodside Energy Ltd, the operator of the project.

The Karratha gas plant was built in 1980. Natural gas production began in 1984, and condensate exports commenced. The second phase of development included two LNG processing trains, made economically feasible by 20 year supply agreements with eight Japanese customers. The Perseus gas and condensate field came into production in 1990. In 1992, a third LNG train was added. New LPG extraction and storage capacity subsequently was added. By 1995 the Karratha plant had an annual capacity of 7.5 million tpy of LNG. As additional fields were developed, a fourth LNG train was added. Upon its completion in 2004, LNG production capacity rose to 11.9 million tpy. The fifth phase of development started in 2005, including a 4.4 million tpy LNG processing train, a second LNG loading berth, and expansions at the Karratha Gas Plant. The fifth train was completed in August 2008, bringing Australia’s LNG production capacity to 16.3 million tpy.

Darwin LNG

Australia’s second LNG production centre is at Darwin in the Northern Territory. This plant was built to utilise natural gas from the Bayu-Undan field, discovered by ConocoPhillips in 1995.

ConocoPhillips was able to develop the resource by creating a joint venture, which includes Santos, INPEX, Eni, and with the Tokyo Electric Power Company and the Tokyo Gas Company as committed long term customers. The first phase of development started in 2004, with the drilling of 13 wells and the construction of the offshore facilities needed to produce condensate, propane and butane. The second phase included a 502 km pipeline and the LNG plant at Wickham Point. This is a single production train facility with a capacity of 3.6 million tpy. Construction began in June 2003, and the plant was commissioned in January/February 2006, several months ahead of schedule. Phase 3 included additional drilling to sustain production.

The Darwin LNG facility has licenses to produce as much as 10 million tpy of LNG, but any further development will rely upon market demand and on whether the natural gas supplies can be developed and connected to the Darwin LNG plant.

The Pluto Project

Australia's third LNG project is the Pluto Project, operated by Woodside Energy, which owns 90% of the project. The Pluto field was discovered in 2005 in Carnarvon Basin, approximately 190 km northwest of Karratha. Construction on the single train 4.3 million tpy Pluto LNG project began in November 2007, located on the Burrup Peninsula. It originally was scheduled for completion in 2010, but the project was delayed to 2011 because of construction delays and poor weather (including Tropical Cyclone Carlos, which hit Barrow Island in February 2011). The company announced another delay until 2012 as it searched for additional sources of natural gas. The project also yields condensate. Tokyo Gas Pluto and Kansai Electric Power Australia have 5% stakes in the project, and they have committed to 15 year sales agreements. Woodside is considering two additional phases of development at Pluto, so that the project could expand into a three train LNG project with a capacity of 12 million tpy. However, project costs have risen, and additional natural gas supplies have been difficult to procure, so these plans are not firm.

Queensland Curtis Island LNG

A fourth entrant has just been added to Australia's roster of LNG exporters: the BG Group, which in December 2014 commenced loading LNG from the Queensland Curtis Island LNG (QCLNG) project at Gladstone. This project is unique because it is the first in the world to convert coal seam gas into LNG. Queensland Curtis LNG is a project of the Queensland Gas Company (QGC), in alliance with the BG Group headquartered in the UK. The second train is expected to be complete in the third quarter of 2015, which will bring capacity to approximately 8.5 million tpy. Tokyo Gas was the first Japanese customer to commit to purchasing LNG from CBM. The largest supply contract is between BG Group and the Chinese National Offshore Oil Corporation (CNOOC), which has committed to purchasing 72 million t of LNG over the next 20 years. This also is China's first purchase of LNG from CBM. CNOOC and Tokyo Gas have equity participation in QCLNG. Supply agreements also have been signed with Japan's Chubu Electric, GNL Chile, and the Energy Market Authority of Singapore.

Australia's LNG exports by destination

Exports commenced in 1989, with the launch of the NWSV. Japan was the sole customer in 1989, taking 0.9 billion m3. Japan remains the chief destination, with LNG imports rising to 24.4 billion m3 in 2013. This represented nearly 81% of Australia's exports. But additional customers have emerged, and the new LNG projects will have a strong Asia focus. South Korea received its first cargo in 2000, and exports to South Korea grew to 1.7 billion m3 in 2009 before dropping to 0.8 billion m3 in 2013. Taiwan and India both started purchasing Australian LNG in 2005, and China received its first cargo in 2006. Exports to China have grown significantly, from 1 billion m3 in 2006 to 5.2 billion m3 in 2010 and 4.8 billion m3 in 2013. In total, Australian LNG exports rose from 9.8 billion m3 in 1997 to 30.2 billion m3 in 2013, equating to a growth in exports of 7.3%/y.

Read part four of this article here.

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

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