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Business |
British Gas mulls two LNG projects
Oil Search joint
venture study with BG eyes production of 7m tonnes a year by 2012
By BRIAN GOMEZ in Sydney
OIL Search has disclosed for the first time that its joint venture
study with British Gas is looking at the merits of building two
LNG gas trains with a capacity of 3.5 million tonnes a year each.
Although this was likely to be undertaken on a staggered basis,
the overall planned output would be larger than the proposed
output of five million to 6.5 million tonnes from the single train
proposal of ExxonMobil, Oil Search, Santos and other partners.
Oil Search managing director Peter Botten told the UBS Australian
Energy & Utilities Conference in Sydney Oil Search would decide on
its preferred LNG option within the next three months.
He acknowledged the advantage of fast-tracking an early LNG
project in Australia because of the large numbers of companies in
Australia and elsewhere, particularly the Middle East, that are
also planning large LNG ventures.
Rival InterOil had announced plans to fast track its proposed nine
million tonnes/year LNG project, plus one million tonnes/year of
natural gas liquids, with initial production targeted for 2012.
However, this timetable is heavily dependent on the successful
proving up of a large gas resource at its recently-discovered Elk
field in Gulf province.
In previous statements, Mr Botten had said its BG venture, based
on reserves at Kutubu and the nearby oilfields, was targeting for
initial production in 2012.
It had a big cost and logistical advantage because there was
already significant infrastructure in place in the oilfields with
significant quantities of gas being re-injected into the ground at
the Kutubu oilfield.
Industry sources expect that the Kutubu joint venture partners
were likely to announce shortly that they would not proceed with
an earlier plan to join forces with ExxonMobil for a much larger
project.
The ExxonMobil LNG plant was being based on gas reserves from the
Hides, Angore and Juha fields.
Capital costs were anticipated to be significantly lower for the
Oil Search/BG LNG venture as compared with the ExxonMobil and
InterOil project proposals, the key benefit for the Government
from the former being its ability to become a corporate tax payer
in a shorter time frame.
Mr Botten told the UBS conference British Gas was “an excellent
potential partner with a development track record and strong
marketing capabilities”.
He said the Kutubu field, which began oil production in 1992, had
around1.5 trillion cubic feet of natural gas.
Besides adequate gas reserves for LNG, it also provides “an ideal
fit” for the two proposed petrochemical plants being considered by
Japanese and Indian corporations..
 
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