Chevron group short-lists companies for PNG-Australia line

The Chevron Corp. group promoting the sale of gas from its fields in the Papua New Guinea highlands to Queensland, Australia, has short-listed two combines for construction, ownership, and operation of the proposed pipeline between the two countries. Chevron said last week that the Australian Gas Light Co./Petronas and the Nova Corp./Williams Cos. combines will compete for the right to participate in the venture. The two groups were selected from about 26 companies that expressed interest

Sept. 22, 1997

3 min read

Chevron said last week that the Australian Gas Light Co./Petronas and the Nova Corp./Williams Cos. combines will compete for the right to participate in the venture.

The two groups were selected from about 26 companies that expressed interest earlier this year.

Negotiations with the two finalists are likely to continue until first quarter 1998.

The ambitious $2 billion (Australian) gas project involves commercial use of the gas produced from the Kutubu oil fields development, which currently is being reinjected into the fields in the Papua New Guinea highlands.

Chevron's plan is to bring the gas 160 km down from the highlands to the Gulf of Papua in a pipeline paralleling the existing oil export pipeline. A processing plant will be built at Kopi on the Kikori River to separate methane and ethane from LPG and condensate.

The methane/ethane will then be piped for 460 km under Torres Strait to the tip of Australia's Cape York Peninsula before traveling overland a further 2,000 km to Townsville and Gladstone on the East Queensland coast (see map, OGJ, Oct. 21, 1996, p. 28).

Gas customers

Chevron is currently in negotiation with Comalco to supply gas for a proposed new aluminum refinery at Gladstone and with power authorities to supply gas for electricity to a new power station proposed for Townsville. Both contracts are needed for the gas proposal to become a reality.

The LPG separated from the gas stream at Kopi would be sent for further processing at a new offshore plant to be located in the Gulf of Papua near the existing Kumul oil terminal. LPG would then be available for shipping to markets in Papua New Guinea as well as overseas.

Condensate from the gas stream will be sent to the Kumul terminal to mingle with the oil export stream.

The plan calls for first gas to flow to customers in 2001.

Kutubu update

The project has been spurred by the fact that the gas in the Kutubu reservoirs will need to be blown down about that time in order to achieve maximum recovery of the oil in its depleting years.

If the gas project can be successfully brought on stream, there is likely to be sufficient supplies to add a liquefied natural gas export component to the Kutubu development early in the next century. Chevron has already found several large gas fields in the highlands-Juha and P'nyang-that could be developed during that period.

Meanwhile, the Kutubu oil joint venture has celebrated the sale of 200 million bbl from the fields this week. Total recovery is expected to be 300 million bbl, and its production rate is already declining rapidly.