Western Gas joins APA for Equus gas supply MoU

March 8, 2021

Western Gas Corp. Pty Ltd., Perth, operator and 100% owner of Equus gas fields offshore Western Australia, signed a memorandum of understanding with the APA energy infrastructure group to assess a possible gas supply to Western Australia and east coast Australia via a transcontinental pipeline.

The deal provides for a detailed joint study to assess development, commercial, marketing, and regulatory aspects of the project which, in turn, will form the basis of an integrated bankable feasibility study.

Equus comprises gas-condensate fields within four permits and one retention lease (WA-390-P, WA-474-P, WA-518-P, WA-519-P and WA-70-R) which have an independently certified 2C contingent resource over 2 tcf of gas and 42 million bbl of condensate. The fields lie 200 km northwest of Onslow.

Independent studies indicate the resource is sufficient to supply 350 terajoules/day of gas for over 15 years—equivalent to 35% of Western Australia’s domestic demand, 75% of New South Wales demand, or about 35% of the combined demand of New South Wales and Victoria, the company said.

The plan is to develop the fields via a 210 km undersea pipeline to the Ashburton North Strategic Industrial Area. This pipeline could also enable development of other stranded gas resources along its route and provide additional supplies for domestic markets.

Access into the east coast of Australia would be via an onshore transcontinental pipeline, a concept that subject to controversy since first mooted in the 1970s. Previous studies concluded such a pipeline would not be commercially viable. However, Western Gas believes Equus provides the large scale, dedicated and proven gas resource necessary to support such a project and deliver competitively priced gas to customers on both the west and east coast markets.

The upstream segment of the Equus development plan was completed by Western Gas and contractors McDermott and Baker Hughes in late 2019. The initial plan comprises three production wells linked by subsea infrastructure to a floating production storage and offtake (FPSO) vessel. The FPSO would process the field output, including gas dehydration, gas compression, and condensate stripping. Condensate would go direct to export while dry gas would be fed into the undersea pipeline to shore.

Western Gas is hoping to bring Equus gas on stream during the mid-2020s.

The fields were originally discovered by Hess Corp. between 2008 and 2012. The company drilled 16 wells which resulted in 14 successes in eight main fields. An estimated $6 billion (Aus.) investment was envisioned to bring the project to fruition with a plan to feed the gas into the Woodside Petroleum-led North West Shelf gas facilities on the Burrup Peninsula. The downturn in world oil prices and the high costs of development in Australia in 2016 curbed the project.

In early 2017, Hess wrote down the full value of the proposed project by $933 million (Aus.).

Western Gas bought the Equus package later that year on undisclosed terms. At that time, more than US$1.5 billion been spent on the project for exploration, appraisal, engineering, and development planning.