Armour has a gas sales agreement with the ConocoPhillips and Origin Energy operated facility for the former Origin-owned oil and gas fields it is bringing back into production on the Roma Shelf.
Armour's agreement with APA is for ten year term and provides a connection for up to 30 terajoules per day.
"Late last year we announced that we had secured a gas sales agreement with Australia Pacific
LNG. Execution of the connection agreement with APA now means that we can commence supply of gas to Australia Pacific LNG as soon as the Kincora project restart is completed," Armour executive chairman Nick Mather said this morning.
"Armour continues to move closer to becoming a significant gas producer supplying gas into the east coast gas market and alleviating the supply side constraints that market currently faces."
The first phase of the Kincora restart involves recommissioning of the gas processing and compression facilities and the increase of the gas production rate to an initial 9TJpd, initially sourcing gas from the Newstead storage facility, ahead of other wells being restarted.
First gas production and commencement of gas sales delivering into the APLNG offtake agreement is targeted to be achieved by June with the balance of the restart program, including associated liquids production, is planned to be completed by September.
The second phase will involve the drilling of new wells plus workovers and stimulations of existing wells to achieve an increase in gas production to 20TJpd over the following 12-18 months.
Kincora will then be running at 70% capacity, and the aim will then by to achieve 100% plant capacity.
Associated liquids production from the project historically averaged 9942 barrels of condensate per petajoules produced and 2066 tonnes of LPG/PJ of gas produced.
Based on historical production rates, at a gas production rate of 20TJpd liquids production is expected to reach 198bcpd and 41t of LPG per day.
Newstead has capacity for 7.5PJ and currently holds 2.3PJ.
The APLNG agreement allows Armour to increase delivery to Gladstone to 3.65PJpa.
Armour shares were up 6.6% to 8.1 cents this morning.
