NW Shelf expansion, supply deals in spotlight

Oct. 23, 1995
Woodside Petroleum Ltd., operator of Australia's Northwest Shelf liquefied natural gas export project, contends there are enough potential gas reserves in its adjoining offshore acreage to justify a $4-5 billion (Australian) expansion of the project. Woodside says gas reserves contained in recent discoveries on the company's surrounding offshore permits support the expansion without including nearby Gorgon field reserves to the north.

Woodside Petroleum Ltd., operator of Australia's Northwest Shelf liquefied natural gas export project, contends there are enough potential gas reserves in its adjoining offshore acreage to justify a $4-5 billion (Australian) expansion of the project.

Woodside says gas reserves contained in recent discoveries on the company's surrounding offshore permits support the expansion without including nearby Gorgon field reserves to the north.

This view runs counter to Shell Australia Ltd.'s proposal to link the West Australian Petroleum Pty. Ltd.'s (Wapet) group's Gorgon gas fields with the Northwest Shelf group's North Rankin/Goodwyn fields development to underpin an expansion of the $12 billion LNG export project (OGJ, Aug. 14, Newsletter). Such a linkage would allow early development of Gorgon fields.

Shell, along with a unit of Chevron Corp., is a member of both groups. Shell also holds a 34.27% interest in Woodside.

In other Northwest Shelf LNG action, Woodside and partners signed a $1.5 billion contract to supply gas to BHP Petroleum Pty. Ltd.'s new hot briquetted iron ore project being developed at Port Hedland, 200 km north of Dampier on the Western Australia coast.

Northwest Shelf expansion

Woodside Managing Director Charles Allen noted the Perseus discovery on the Northwest Shelf, made earlier this year, is estimated to contain 5 tcf of gas.

Added to several other undeveloped finds in the region, there is enough gas to support another 8 million metric tons/year of capacity to the Northwest Shelf project.

Gorgon, estimated to hold as much as 7 tcf but still needing appraisal drilling, is about 100 km southwest of the 7 million ton/year LNG onshore facilities on the Burrup Peninsula.

Acknowledging that his comments reflect Woodside's view alone, Allen added that there will be no commitments to any expansion for at least 2 years. However, a new project development could be on stream by 2002 and last for 20 years, he said.

LNG supply deals

The Northwest Shelf supply contract calls for Woodside and partners to supply as much as 142.5 MMcfd of gas from North Rankin/Goodwyn fields to BHP for 15 years starting in late 1997.

A pipeline to deliver the gas from Dampier to Port Hedland is under construction.

The new contract will increase Western Australia's gas consumption by about 25%, to 617.5 MMcfd from 532 MMcfd.

The accord marks the latest effort by Northwest Shelf partners to expand their market beyond existing long term contract supplies to Japan amid a temporary production capacity surplus.

The partners recently agreed to ship as many as five cargoes of LNG to Turkish gas company Botas, a unit of state owned Turkish Petroleum Corp. (OGJ, Aug. 28,. p. 44).

Botas began importing LNG in 1994 from Algeria. It will use the Northwest Shelf cargoes to diversify supply sources during winter peak demand.

The $60 million Turkish contract will begin with the first cargo to be delivered in mid-September and the last at the end of March 1996.

The 57,000 metric ton LNG capacity Lake Charles carrier, which earlier delivered spot cargoes of LNG to South Korea and Spain, will handle the Turkish deliveries.

The shipments to Turkey are in addition to regular contract deliveries to Japan and allow the Northwest Shelf project to take advantage of a short term surplus capacity in LNG production.

LPG supply deal

Another recent deal involving the Northwest Shelf project centers on a 5 year Woodside contract to sell Tokyo Gas Co. 500,000 tons of liquefied petroleum gas.

This contract covers Woodside's one sixth entitlement to project LPG production but does not begin until January 1997.

The LPG contract will follow 1 year after the start-up of LPG production from a new $318 million LPG chilling/storage/loading plant at the Burrup facilities, scheduled for early 1996.

Sales of LPG by other joint venture partners have not been completed. There is a possibility of a joint marketing effort, at least for the first year's production, until the plant has been fully commissioned.

The LPG will be sold fob from Dampier with prices tied to the international market.

Woodside holds a 50% interest in the domestic portion of the Northwest Shelf project with BP Australia and Chevron 16.66% each and BHP and Shell 8.33% each.

Of the LNG export portion of the project, Woodside, Shell, BHP, Chevron, and a combine of Mitsubishi Corp. and Mitsui & Co. each holds a one sixth interest. Copyright 1995 Oil & Gas Journal. All Rights Reserved.