Rick Wilkinson
OGJ correspondent
MELBOURNE, June 15 -- The controversial Kipper field in the Bass Strait—the largest undeveloped gas field in southeastern Australia—has finally been moved onto a development path with first production planned for 2009.
Operator Esso Australia Resources Pty. Ltd., Melbourne, had a deadline of June 9 to apply for a production license and now expects to move into front-end engineering and design by the first half of 2006.
The company has signed a memorandum of understanding and unitization agreement with other participants: BHP Billiton Pty. Ltd., Melbourne; Woodside Energy Ltd., Perth; and Santos Ltd., Adelaide. It plans to develop the field via existing Esso-BHP infrastructure.
Kipper field
Kipper has proved and probable reserves of 620 bcf of gas and 30 million bbl of oil and condensate.
The field lies in 90 m of water in the Gippsland basin east of Esso-BHP's Tuna field and 40 km off Victoria. It was found in 1986 by a group operated by Shell Australia (which included Esso-BHP) and confirmed a short time later by a second well, which also encountered a small oil leg. Geologists noted that the Kipper structure straddles the boundary with Esso-BHP's production license L/9, with most on the Shell side.
At that time gas was not a priority, and new discoveries had little chance of commercial development, especially those outside Esso-BHP's network. Nevertheless, Shell wanted to establish a production facility independent of the Esso-BHP system. Esso-BHP saw no immediate market for the gas.
That stalemate dragged on for most of the next 2 decades, during which Shell and its minor partners (Australia Worldwide Exploration Ltd., News Ltd., and Petroz NL) sold their interests in the field to Woodside and Santos.
Kipper was granted a retention lease (RL/2) in 1994 and a 5-year renewal in 1999. Woodside and Santos believed the field to be commercial and proposed an independent development scheme, but Esso-BHP remained opposed.
The Victorian government was inclined to the Woodside-Santos view and wanted to see a development plan submitted during the second retention license period. When the companies applied for a third term in mid-2004 the government refused. The oil companies faced an ultimatum—submit an application for a production license within 12 months, or forfeit the area. That deadline expired on June 9.
Differences mended
The recent announcement indicates the companies have resolved their differences. The outline plan is to bring Kipper gas by pipeline to Esso-BHP's West Tuna facilities and then onto the Marlin field production hub and hence to treatment facilities onshore at the Longford gas plant.
The Kipper-West Tuna link will provide Esso-BHP an opportunity for gas development at Tuna. The oil field contains a gas cap that has yet to be produced. In addition, Kipper has a 12% carbon dioxide content, which will be diluted when combined with production from gas fields in the existing Bass Strait network.
The combined flow from Kipper and Tuna will necessitate an upgrade of the Longford plant.
The Kipper unitization interests across Permits RL/2 and L/9 are Esso and BHP 32.5% each, Woodside 21%, and Santos 14%.
