The Mereenie joint venture of Central Petroleum Ltd. and the Macquarie Group has decided to proceed with development of the Mereenie gas project in central Australia following the Australian Competition and Consumer Commission’s interim approval of joint marketing arrangements.
The 50-50 JV confirmed the go-ahead of the drilling of the West Mereenie-26 well and an immediate $12-million (Aus.) upgrade of the processing plant.
This will increase Mereenie plant capacity to 63 terajoules/day from the current 25 terajoules/day. Of this current total capacity, 15 terajoules/day is sold to the Northern Territory and the remainder reinjected into the reservoir. About 58 terajoules/day will be sold as gas without adversely affecting the field’s current crude oil production.
The aim is to develop the field’s gas potential to coincide with the bringing on stream of the Northern Gas Pipeline, scheduled for December. The pipeline’s initial capacity will be 90 terajoules/day of gas of which about 32 terajoules/day has been contracted.
The combine said other rationale for the project includes the fact that the Australian east coast gas market remains critically short with citygate gas prices standing at $8-10 (Aus.)/gigajoule. It added that pipeline reforms promise more internationally competitive pipeline tariffs.
CPL’s Managing Director Richard Cottee said the group will use every endeavour to ensure Mereenie’s processing plant has the capacity to sell 58 terajoules/day of sales gas by yearend.