This has upset the power company, which had been relying on Manta Gummy gas for its Tamar Valley project in Tasmania.
BMG partners Anzon Australia and Beach Petroleum said oil production was the most profitable part of the project and the decision to delay investment in the gas phase was made after further consideration of oil development needs.
These include committing to a larger floating production storage and offtake vessel to replace the Crystal Ocean FPSO and the Basker Spirit shuttle tanker.
The agreement with Alinta to supply 225 petajoules of gas over a primary term of 15 years, beginning in 2009, was conditional on the final investment decision being made by the end of this month.
Alinta has now begun assessing the options available to it following the lapsing of what was a key contractual arrangement for the proposed 200MW power station.
Alinta Energy executive general manager Jim Hennessy said the options included building the project in stages or deferring its until a new gas supply agreement could be negotiated with other producers.
“The decision by Beach Petroleum and Anzon not to proceed with the development of the Basker Manta and Gummy gas field is disappointing,” Hennessy said.
“This is a significant setback to the Tamar Valley Power Station project and Alinta is now carefully considering all the options available to it in terms of meeting the needs of the Tasmanian energy market.”
One option was to defer the project completely until a new gas supply agreement could be negotiated, according to Alinta.
Another option, given the strong demand for peaking generation in the National Electricity Market, was to continue with the construction of the 180 MW of back-up plant while Alinta investigated a way to proceed with the 200 MW combined cycle project.
Hennessy said the lapsing of the gas supply agreement did not necessarily mean the purchase of the Bell Bay site and turbines would not continue.
Meanwhile, the BMG joint venturers have said they expected to commit to a gas development within the next 12 months with any future gas off-take arrangements to complement the oil development plan.
The duo said the Basker-6 oil development well is scheduled to be drilled in the first quarter of 2008 while progress is being made on securing a rig for further oil development in 2008-09.
This is also likely to include gas appraisal and oil exploration work.
Development of the BMG project began less than two years ago, with a focus on producing oil from the Basker and Manta fields, based on initial proved and probable (2P) reserves estimates of about 23 million barrels.
But new wells drilled in 2006 have lifted expectations of its potential, with 2P oil reserves now at nearly 40MMbbl and a nearly quadrupled estimate of the gas condensate resource.
