Articles on LNG and Sunrise
Nigel Wilson, National Energy Writer, Weekend Australian, February 3, 2007
The Timor Sea, north of Australia, continues to be talked up as a major part of Australia's energy future.
Santos and ConocoPhillips are busily proving up gas reserves that might justify expansion of the Darwin LNG development at Wickham Point in Darwin Harbour.
Woodside believes there's a chance the East Timor Government could ratify treaties that would allow the Greater Sunrise project to proceed.
And among the smaller companies a recently revitalised Methanol Australia, now called MEO Australia, is pursuing gas projects planned for the Australian waters of the Timor Sea.
The company was formed in 1994 and listed on the stock exchange under the name of Timor Sea Petroleum, and, despite several excursions, has for the past five years concentrated on progressing high-CO2 gas reserves at Tassie Shoals, and finding more gas to supply an LNG development.
This week the Federal Government awarded major project facilitation (MPF) status to MEO Australia's Timor Sea LNG Project and the 5000 tonnes-a-day Tassie Shoal methanol project which already have environmental approvals.
The Tassie Shoal announcement is a piece of deja vu because it received MPF status in December 2001 at a time when the Australian Government believed there would be a rush to develop Timor Sea gas reserves in the aftermath of East Timor achieving independence.
Federal Resources Minister Ian Macfarlane said this week the projects would further develop Australia's valuable petroleum resources and serve the rapidly expanding markets in the Asia/Pacific region.
MPF status meant the Australian Government's inward investment agency, Invest Australia, would work with MEO Australia to progress the projects through the approvals process and identify relevant government program that might assist the projects.
"Each project will generate approximately 50 local jobs during the construction phase, with both areas expected to create about 110 ongoing jobs when they are operational," Macfarlane said.
Even though both MEO Australia projects lie outside the Joint Petroleum Development Area north of Darwin, to some extent their progress has been hindered the lack of progress on JPDA development.
MEO's managing director, Chris Hart, noted this week that while methanol was originally the prime focus for the company, MEO had expanded its goals to include the exploration and appraisal of its 100 per cent owned exploration permit, NT/P68 as well as the development of an offshore 3-million-tonne-a-year LNG plant. MEO believes the permit could contain significant reserves of liquids-rich gas.
Based on the Heron-1 well drilled in 1972 (almost out of the Ark in terms of modern exploration technology) which encountered a 50m gas bearing zone, MEO has acquired new 2-D and 3-D seismic which is now being processed.
MEO calls the discovery Epenarra and believes it could contain significant quantities of condensate.
Hart said MEO Australia had committed to drill up to three wells in the permit beginning in the third quarter of this year.
Stockbrokers Tolhurst Noall in a research brief prepared for clients this week said MEO Australia offered a high-risk exposure to the development of two world-scale gas-to-liquids developments.
It said the key risks were securing sufficient gas supplies, securing necessary funding, and securing long-term offtake agreements and the project execution.
The brief said NT/P68 could provide a resolution to the gas supply issue with drilling success likely to go a long way to confirming the viability of the projects.
"We believe securing long-term LNG offtake agreements should be less challenging than investors appear to believe, as the demand for LNG in the Asian markets continues unabated, and the scale of the LNG project -- while very material to MEO Australia -- is modest enough to be readily absorbed."
By Mark Hillier, Upstream Online, 10 March 2008
Anglo-Dutch supermajor Shell has unveiled plans to develop a generic floating liquefied natural gas production unit that will have capacity of 3.5 million tonnes per annum.
Jon Chadwick, executive vice president Asia for Shell Gas & Power, told the Gastech conference that the supermajor had devoted “substantive engineering hours to FLNG” and had come up with a design for a vessel that would be as much as 450 metres long and 75 metres wide.
The vessel will also have extra hydrocarbon liquids capacity.
He added that Shell intended to launch an interntational tender within about four months to selected consortia formed from shipyards in Japan and South Korea and international engineering, procurement and construction contractors to carry out work on the project.
Chadwick gave no further details on costs or time scales for the project, nor did he say where the supermajor might locate its first LNG production floater.
However, he said that the internal engineering work that the supermajor has carried out to date, which has included extensive evaluation and testing, shows that there are “no technical showstoppers for the concept”.
The design is also expected to be cyclone tolerant. That would make it suitable for waters off Western Australia where there are large quantities of natural gas waiting to be developed, as well as waters in some areas of Asia.
Offshore West Africa is another area where potential for floating liquefaction has been suggested, while Shell was recently linked to a reported proposal to locate an LNG floater off southern Iraq to process associated gas from Iraqi oilfields that is currently flared.
Shell has had a long interest in floating liquefaction dating back to the days when first attempts were made to commercialise the Sunrise field that is shared between Australia and East Timor.
Initially such efforts, which also involved it looking at other potential projects, such as Kudu off Namibia, did not yield fruit. Now though Shell is confident that things have moved on, with Chadwick arguing that: “we now believe that the time for FLNG has come”.
By Upstream staff, 10 March 2008
ExxonMobil said today that it expects liquefied natural gas capacity to climb 400% by 2030 to help meet the world’s growing appetite for natural gas.
“Global LNG demand is expected to increase from about 100 million tonnes per annum in 2000 to more than 500 million tonnes per annum in 2030,” said ExxonMobil’s power & gas marketing president, Andrew Swiger, at the GasTech conference in Bangkok today.
The five-fold rise, will change the way LNG is traded and require strong relationships between international oil companies, national oil companies and host nations, added Swiger.
Citing Qatar as an example, Swiger said “through partnerships with international oil companies – and backed by balanced fiscal policies, rule of law, sanctity of contracts and a reputation for being a reliable supplier – Qatar is now the world’s largest LNG exporter.”
Qatar Petroleum and ExxonMobil ventures are building four 7.8 million tonnes per year LNG trains in Qatar that are almost four times larger than trains built in the mid-1990’s. The companies are also building a new generation of LNG tanker with a capacity nearly double that of conventional LNG carriers of today.
By Russell Searancke, Upstream Online, 14 March 2008
Paul Henderson, the chief minister of Australia’s Northern Territory, has held "high-level talks" with senior officials from Osaka Gas over a potential deal to sell the Japanese utility liquefied natural gas from the Darwin LNG project.
“Osaka Gas is one of the biggest players in the international gas industry - and I’d love to see its Senboku [receiving terminal in Osaka] source some of its LNG from Darwin,” said Henderson. “Osaka Gas already gets some of its LNG from Australia – I want the Territory added to that list of suppliers.”
“The company has interests in several gas reserves north of the Territory, including Greater Sunrise and Evans Shoal. I emphasised the Northern Territory’s government’s support for the development of these fields," said Henderson.
The Darwin LNG project is operated by ConocoPhillips, which is trying to build a gas portfolio to underpin the construction of a second LNG train at Darwin.
Opposition Leader Risks Gas Deal
Northern Territory Government Media Release, 4 April 2008
Chief Minister Paul Henderson said Opposition Leader Terry Mills’ continued opposition to the second LNG plant is putting at risk the potentially biggest project ever seen in the Territory.
“We don’t have to choose between an LNG plant and a good harbour -- under my Government you can get both,” MMr Henderson said.
“I will protect the environment and our economy.
“We already have one LNG plant and a great recreational fishing harbour existing side by side nothing would change with aa second plant.
“Unfortunately the Opposition Leader wants to sacrifice the chance at a $12 billion project to try and get a cheap political headline.
“There is no other suitable site for the potential Inpex plant the biggest advantage we have over WA is that we have existing infrastructure.
“Another site without the necessary infrastructure - somewhere else in the Territory would kill any hopes we have of winning the project pure and simple.
“I’ve worked hard for us to get in the race for a second LNG plant and the chance for thousands of new jobs in Darwin.
“Opposition Leader Terry Mills is risking the Territory’s chance to get high paid jobs and even stronger economic growth.”
CLP Opposition Confused Over Gas
Northern Territory Government Media Release, 8 April 2008
CLP Opposition Leader Terry Mills’ confusion over gas is getting worse, as he continues to change his position.
Chief Minister Paul Henderson met representatives of Inpex in Perth today to argue Darwin’s strong case for a second LNG plant, while Mr Mills ran around in circles.
“We’re in the fight of our lives to get a $12 billion development and thousands of jobs for the Territory, while the CLP Opposition tries to scuttle the project,” Mr Henderson said.
Last Friday, the Opposition Leader said:
This morning the CLP Opposition Leader admitted that prior to making those comments he’d been told:
Just hours later Mr Mills was advocating Glyde Point again – despite acknowledging it has no chance of being the site for the second LNG plant:
“Enough is enough – Mr Mills should apologise to the people of the Northern Territory and let Government get on with the job of trying to attract projects to boost our strong economy,” said Mr Henderson.
“We don’t have to choose between an LNG plant and a great, healthy harbour – under my Government you can have both.>
“We already have one LNG plant and a great recreational fishing harbour existing side by side – nothing would change with a second plant.
“The previous CLP Government chose Middle Arm as the site for our original gas plant – and all the infrastructure is there for our second plant.
“It is Middle Arm - a gas ready location; or Western Australia – there are no other viable alternatives.”
Contact: Gemma Buxton 0401 110 064
THE WESTERN FRONT: Nigel Wilson, The Australian, May 05, 2008
Greater Sunrise is once more being touted as a development project after several years where the political situation in East Timor has limited Woodside, the project operator, in translating its enthusiasm into a commercial outcome. Floating LNG is an intriguing prospect.
Shell, one of the Sunrise partners, has work under way on a huge floating LNG processing vessel, which could commercialise gas reserves in the range of 1-5 trillion cubic feet.
The top end of the range is not out of kilter with the revised reported reserves at Greater Sunrise.
Floating LNG not only might solve some of the political issues surrounding development of gas assets in the joint petroleum development area of the Timor Sea, but also might substantially reduce the capital costs of Greater Sunrise.
Shell says floating LNG incorporates the replacement of three elements of a conventional LNG scheme, namely the production platform, the pipeline to bring gas ashore and all the onshore facilities for liquefaction and loading.
Instead, using sub-sea production, the offshore gas is produced directly to a barge moored above the gas field, with the barge supporting a compact liquefaction plant and storage facility.
While no project scope has been released for Greater Sunrise, Mr Voelte pointed out the obvious -- a floating LNG plant would not require expensive sub-sea pipelines and would also avoid the logistical issues in constructing a land-based plant either in Australia or in East Timor.
Though the public debate on Greater Sunrise has been quiet since before the assassination attempt on President Ramos Horta in February, it cannot be said yet the Dili administration has given up its preferred position of having the Greater Sunrise processing operation located in East Timor.
As an aside, a floating LNG plant might draw the crabs in Australia as well because it would most likely be built in a foreign shipyard and be operated by a foreign crew.
Mr Voelte has said previously that Greater Sunrise is a possibility for development before the Browse Basin, but that prospect seems to be slipping if only because a new exploration program is needed to help prove up further reserves.
Even so, Greater Sunrise will be on the agenda this week when Resources Minister Martin Ferguson makes his first visit to East Timor.
The visit marks a significant point in Australia's relations with the poorest country in our region. It has received up to $1.5 billion in revenues from the Bayu Undan project in the Timor Sea, which goes into a special petroleum fund.
It is a demonstration of the importance of the JPDA not only to East Timor's development but to the further development of Australia's oil and gas industry in the north.
The Timor Sea treaty between Australia and East Timor, which came into force in April 2004, provides the underpinnings for regulatory and legal certainty for investment in oil and gas developments.
The treaty establishes that the Timor Sea Designated Authority is administered by Mr Ferguson's department.
But the authority is currently run from Dili and its executive director is East Timorese. The federal Department of Resources, Energy and Tourism has a team working with the authority to assist in moving the TSDA into the East Timor bureaucracy so it will effectively be a function of that country's public service.
The key to this effort is that capacity has to be built into the East Timor bureaucracy to provide continuing industry confidence in governance arrangements for the JPDA.
The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)