The agreement adds weight to the thoughts of Santos' managing director, John Ellice-Flint, who previously said the Northern Territory needs a second-generation fuel source to take over and expand the role played by the ageing Mereenie field. The Bonaparte Basin is the "most logical" solution, he said. Santos has an interest in the Petrel and Tern fields in the Basin.
Woodside and Santos have also spoken about jointly developing their fields, totalling 2 trillion cubic feet, to compete directly with the PNG gas project to supply Northern Australia.
The Blacktip/Gove agreement is conditional on all the partners making a final investment decision and finalising pipeline arrangements for the subsea and land transportation of gas from the Joseph Bonaparte Gulf to Gove.
The agreement proposes gas supply of 40 petajoules a year over 20 years from 2007. Blacktip gas provides Alcan with a long-term secure and clean energy source capable of supporting the gasification and expansion of its Gove alumina refinery. Woodside's Gas Business Unit Director, David Maxwell, said the agreement with Alcan was a key step towards the commercialisation of Blacktip gas.
Development of the Blacktip gas field provides a secure and competitive gas supply for the Northern Territory and supports Alcan's proposed gasification and expansion of its Gove facilities," he said.
Blacktip, which is more than 100km north of Wyndham in the offshore permit, WA279P, was discovered in September 2001. Its scope for recovery is 1.1 trillion cubic feet of gas.
Woodside also confirmed that it had reached agreement with Eni on a restructuring of interests in the Bonaparte Gulf in which Eni has increased its stake in permits WA 279P 30%, WA313P 33.33% and NT/P57 30%.
