BHP Billiton group energy president Philip Aiken kicked things off at the Australian Petroleum Production & Exploration Association (APPEA) event by saying the joint venture's Bass Strait exploration program had found little in recent years.

ExxonMobil Australia chairman Mark Nolan responded that it was too early to rule out more good Bass Strait petroleum discoveries. He went on to say that BHP's plans for the Scarborough gas field were unrealistic as they were based on inaccurate reserves estimates.

Aiken said three recent appraisal wells drilled by BHP had increased certainty about the field, which it estimated to contain eight trillion cubic feet of gas.

BHP Billiton hoped to be able to start developing its planned Cabrillo Port liquefied natural gas terminal off the Californian coast by the end of this year, according to Aiken.

Entry to the western US gas market would improve Scarborough's commercial viability, he said.

But Nolan threw cold water on Aiken's claims.

"ExxonMobil believes Scarborough is unlikely to be commercially viable in the near term," Nolan said.

"BHP's assessment [of reserves] is very high and we don't agree."

While the Scarborough field is held 50/50 by the two partners, ExxonMobil is the operator and the field would not be developed without its agreement, Nolan said.

The BHP-ExxonMobil partnership dates Back to the 1960's, when BHP and Esso (now an Exxon subsidiary) began large scale oil exploration in Bass Strait.

But the partnership has become strained in recent years in the wake of the Longford gas plant explosion.

BHP Billiton is suing its Esso for losses and damages arising from the explosion and fire at the jointly owned, Esso-operated Longford gas plant near Sale in south-eastern Victoria six years ago.

In December BHP Billiton began proceedings in the Supreme Court of Victoria to recover losses arising from the Longford incident.

In return Esso filed a lawsuit of its own against BHP claiming that the plant was a 50-50 venture in which both companies were to share in the costs, risks and rewards.

Esso said BHP hadn't paid half of the A$32.5 million compensation package approved by the Victorian Supreme Court for businesses that suffered in the wake of the Longford explosion. Esso also wants BHP to pay half of the legal costs incurred in the class action suit.

BHP Billiton is claiming that Esso failed to operate the Longford plant in accordance with the standards required by the joint venture agreement and that Esso breached the duty of care that it owed BHP Billiton in directing operations at the facility.

BHP Billiton has not specified the amount of money it was seeking, but in December 1998 it said it lost A$60 million after the explosion led to the shutdown of production from Bass Strait.

Now Scarborough is also straining the relationship.

Aiken has said BHP sees Scarborough as a priority while ExxonMobil doesn't, and has suggested Exxon should consider selling its stake in the field.

APPEA 2005 Conference news is proudly brought to you by