The Woodside-operated Otway Gas Project began gas sales in September, about 12 months behind schedule and about 20% over its original budget of $811 million.
With the commissioning and start-up of the plant completed, gas production was expected to increase towards the end of the year. But problems persisted and by the end of the year, Otway Gas had achieved only about a week's production since formal commissioning.
The Otway Gas plant is on the Victorian coast west of Melbourne, but the project draws its gas from Tasmania’s Thylacine field as well as Victoria’s Geographe. Joint venture participants are Woodside, Origin Energy, Benaris International and CalEnergy Gas (Australia).
Over the life of the plant, the Thylacine and Geographe fields are expected to produce 950 billion cubic feet of raw gas, (equivalent to 885 petajoules of natural gas), 12.2 million barrels of condensate and 1.7 million tonnes of liquid petroleum gas.
Meanwhile, the Santos-operated Casino project, also in the Otway Basin, was completed last year on time and under budget, and has had no serious hiccups.
The Casino partners – Santos, Australian Worldwide Exploration and Mitsui – have now decided to tie the nearby Henry field into the Casino facilities.
Santos says the Vic/P44 joint venture has agreed to spend $275 million developing its Henry gas field, in the offshore Otway Basin, using infrastructure from its nearby Casino development.
The JV drilled three exploration wells in this permit with a 100% success rate.
Developing Henry will let the JV make additional gas sales to TRUenergy under an existing agreement, for processing at its Iona facility.
The development involves drilling and completing the Henry-2 well, as well as the Netherby-1 sidetrack if the exploration well planned for mid 2008 is successful.
In addition, 17km of subsea pipeline and control umbilical will be installed from the existing Casino facilities to Henry and Netherby, and a further 5km to the Pecten East location.
First gas production is targeted for the first half of 2009, with flow rates of 120 terajoules per day from the combined Casino and Henry development.
Gippsland serves up seafood
Meanwhile, east of Melbourne in the Gippsland Basin, where explorers like to name fields after fish, an ExxonMobil-led joint venture has agreed to spend about $1 billion developing the first stage of their Kipper gas field for first production in 2011.
Co-venturers BHP Billiton and Santos said the first phase of the project would involve two subsea wells, three new pipelines and platform modifications.
Gas and liquids would be processed via Exxon and BHP's Gippsland joint venture facilities.
Kipper has a confirmed resource of about 620 billion cubic feet of recoverable gas and 30 million barrels of condensate/LPG
First gas production is targeted for the first half of 2011, with gross gas output rates starting at about 75 terajoules per day. Estimated field life is 15 years.
Elsewhere in Gippsland, Nexus Energy has been granted a production licence for Longtom and has contracted a rig to drill another appraisal well at the Bass Strait gas field.
The Melbourne-based midcap said the pipeline installation vessel will arrive at the project in March, with all activities scheduled to finish before May when the Longtom-4 well is due to spud.
Nexus said that Longtom-4 was not required for first gas from the field, as the earlier Longtom-3 well can provide the entire Santos' contracted flow-rate of 68 terajoules per day.
International advisory firm Gaffney Cline and Associates estimates the Longtom project, which is forecast to deliver about $A70 million of operating cash flow per year, contains more than 800PJ of possible contingent resources.
Meanwhile in August, the Basker Manta Gummy partners – Anzon Energy, Beach Petroleum and Itochu – were awarded two production licences for BMG’s gas development phase, but it is uncertain when they will start developing BMG gas.
The partners were supposed to bring the natural gas component of the project online in 2009, but in June they terminated a gas sales agreement with Alinta in favour of boosting oil production from the Bass Strait project.
Much will depend on the attitude of Anzon’s merger partner, which is likely to be Perth’s Arc Energy, although Nexus is still a longshot to acquire Anzon.
BassGas brawl settled
And in Bass Strait’s third basin, the Bass Basin, 2007 saw the BassGas joint venture settle arbitration with sacked contractor Clough Limited. The arbitrator found that Clough was liable for damages and rejected Clough's $95.7 million trade practices claim that alleged there was misleading conduct on the part of operator Origin Energy.
BassGas was fully commissioned in mid-2006, two years behind schedule and during that time the development's budget blew out from the original $450 million to about $750 million. The joint venture and Clough blamed each for various problems associated with the project.
The BassGas JV comprises Origin, AWE, and CalEnergy, as well as new entrant Arc energy, which bought Mitsui’s stake this year.
Looking ahead
BassGas had a rough beginning, but the project is now operating smoothly, producing about 23 petajoules a year of gas, as well as 1 million barrels of condensate and 65,000 tonnes of LPG. And there is plenty of exploration upside in its immediate neighbourhood.
Meanwhile in the Otway, a development plan is likely to be finalised in 2008 for the Origin Energy-operated Halladale and Black Watch discoveries, which are in shallow water only 4km from the coast.
With both demand and supply growing, it seems likely that Bass Strait gas exploration and production will continue to expand.
