Phillips and El Paso to bring Australian LNG to California

Phillips Petroleum Co. and El Paso Corp. Thursday announced plans for a liquefied natural gas project to deliver Timor Sea gas to southern California and Mexico's Baja California. Cost of the project would be up to $3.5 billion.

By the OGJ Online Staff

�Phillips Petroleum Co. and El Paso Corp. Thursday announced plans to deliver Timor Sea liquefied natural gas to southern California and Mexico's Baja California.

The two companies' subsidiaries signed a letter of intent for El Paso's long-term purchase of LNG from a plant to be built by Phillips near Darwin, Australia.

A definitive agreement, expected by midyear, will outline terms for sales beginning in 2005. El Paso will market the 680 MMcfd of gas.

Cost of the project, including the LNG plant, ships, and a West Coast receiving terminal, is estimated at between $3 billion and $3.5 billion, depending upon the size of the LNG plant, Phillips spokeswoman Kristi DesJarlais said.

The Darwin LNG facility, using Phillips' LNG technology, will be supplied from the Greater Sunrise fields, which had reserves of 9 tcf.

Phillips and El Paso plan to jointly develop LNG shipping and the receiving terminal. They are working with Mexican and US authorities to select the site for the terminal and acquire permits for the terminal, slated to go on stream in 2005. Existing pipelines will transport the gas to customers.

The Phillips-El Paso announcement follows the increase of Phillips' interest in the Greater Sunrise fields to 30% and finalization with Shell Development Australia Pty. Ltd. and Woodside Petroleum Ltd. of terms for development of Timor Sea gas resources (OGJ Online, Feb. 23, 2001).

Gas production from the Woodside-operated Greater Sunrise fields could begin as early as mid-2006. Until then, Phillips-owned reserves in Bayu-Undan will be used.

Bill Parker, Phillips executive vice president of worldwide production and operations, said, "The Timor Sea will become a new center of production for Phillips."

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