Asia Pulse

June 12, 2002 Wednesday

127.5 million (S72.46 million) phase two development of Woodside Petroleum Ltd's Laminaria field in the Timor Sea saw its first flow of oil today.

The project, which began on schedule and within budget, involved the drilling of two new wells - Laminaria 7 and 8 - with subsea completions and tie-ins to the floating production, storage and offloading facility, Northern Endeavour.

Phase two was designed to accelerate production and access incremental reserves from the Laminaria and Corallina oil fields.

Initial production from Laminaria 8 was showing flow rates of around 50,000 barrels of oil per day (bopd) while Laminaria 7 flowed at a clean up rate of about 20,000 bopd.

Daily production from the Laminaria and Corallina fields immediately before starting the hook up of the two wells was about 73,000 bopd.

However Woodside said drilling difficulties meant the phase two wells were redesigned as vertical rather than horizontal producers.

"As a result, ultimate oil recovery from phase 2 is likely to be lower than previously planned," it said.

Production this year from the Laminaria field will largely depend on the rate of decline of the phase one and phase two wells.

Woodside's latest attempt to boost reserves in the Timor Sea failed earlier this month after no hydrocarbons were encountered from the Laminaria North exploration well.

Woodside holds a 50 per cent interest in the Corallina oil field in joint venture with BHP Billiton, 25 per cent and Shell Development (Australia), 25 per cent.

In the Laminaria field, Woodside has 44.9 per cent, BHP 32.6 per cent and Shell 22.5 per cent.

Meanwhile, Woodside, operator of the North West Shelf (NWS) off the WA coast, said it was still waiting to learn who will supply China's first liquified natural gas import terminal.

The NWS venture is hoping to beat off competition from Indonesia and Qatar to supply three million tonnes a year of LNG from the NWS gas fields to China's booming Guangdong province from 2005 to 2035. 750,000 S426,225) a year.

A Woodside spokesman said he could not comment on when China National Offshore Oil Co (CNOOC) would make a decision.

"We're still waiting on the Chinese decision," he said.

However, one of Woodside's NWS partners, Royal Dutch Shell, told Bloomberg in Kuala Lumpur that it expected a decision by the end of July.

Director of Asia Pacific/Global LNG at Shell, Peter de Wit, said the Chinese are very close to making a decision.

"The process is taking a long time to come to this point.

"To stick with the timetable they've set themselves they really need to make decisions."

Both Shell and Woodside hold a one sixth interest in the NWS in partnership with BHP Billiton, Chevron, Japan Australia LNG (MIMI) Pty Ltd, BP Developments.

Department of Foreign Affairs and Trade (DFAT) officials said in April they were cautiously optimistic about Australia's chances.

But they added that the decision was more than a month away and could be delayed further, given past experience.