The bulk of the cost blow-out has been caused by the need to rectify design problems. Origin Energy is blaming the original engineering, procurement and construction contractor, Clough Engineering, while Clough says the Origin-led joint venture is at fault.
Arbitration with Clough on matters relating to the construction contract is continuing.
“At the time of entering into the development project in April 2003, there was uncertainty regarding the level of some impurities in the gas from the Yolla field,” Origin said yesterday.
“The initial design of the plant allowed for modification should later testing of gas from the Yolla field reveal that further treatment was required. Modifications have been required to the plant and this added approximately $25 million to the joint venture’s cost of the project.”
The original schedule was to reach the Ready for Start Up milestone by June 8, 2004. Clough claimed to have reached this milestone on November 10, 2004. The JV disputed this and Origin took over management of the project from Clough in December 2004.
“Since that time a rigorous design and defect rectification program has been pursued to bring the BassGas Project to first gas production,” Origin said.
“The Safe Astoria offshore accommodation vessel, which was moored alongside the Yolla A platform to allow critical elements of the offshore remediation work to be finalized, was released in late June following the successful completion of that work. The plant is now being prepared to ramp-up production and sales as the final commissioning of the project through to performance testing continues.”
Once fully commissioned, the BassGas project is expected to have a capacity of about 23 petajoules of sales of gas per annum, with around 1 million barrels of condensate and 70,000 tonnes of liquefied petroleum gas.
All gas produced is being purchased by Origin Energy Retail to supply markets in southeastern Australia. All condensate is being exported to the Shell refinery in Geelong, while LPG will be sold to several buyers.
The BassGas joint venture comprises Origin Energy (operator and 42.5% equity), Australian Worldwide Exploration (30%), CalEnergy (15%) and Mitsui subsidiary Wandoo Petroleum (12.5%).
