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Apache signals global future for shelf gas

THE offshore oil and gas fields of Western Australia have the potential to be of global import-ance, rivalling the Gulf of Mexico, according to Jim Bass, managing director of Apache Energy.

The company’s faith in the future of the region was confirmed last week when he announced that the company planned to spend $150 million on exploration this year.

It was encouraged by the recent success of its Simpson-1 appraisal well which could indicate that the field contains twice as much oil than was calculated earlier.

Simpson is part of the successful Harriet joint venture, just one of Apache’s interests in Western Australia. The new field is particularly attractive for develop-ment, being only 2km from the joint venture’s major oil and gas collection facilities on Varanus Island.

It would increase Apache’s output to about 36,000 barrels of oil a day – a significant con-tribution to Australia’s production.

Apache has been one of the most aggressive oil and gas explorers in Western Australia since it arrived a decade ago.

Mr Bass, who arrived in Perth a year ago to control the company’s Australian operations, is particul-arly enthusiastic about developing the technology to discover strati-graphic hydrocarbon structures.

Apache, which while of modest size in Australia, is a major oil and gas operator around the world, has had an increasing commitment to Western Australia in recent years, greatly expanding the capacity on Varanus Island, which is close to Barrow Island on the North West Shelf, and in developing new enterprises like the Legendre project.

Since Apache arrived in Western Australia in 1991, its oil production has increased 25 times, and will rise again this year.

An international company with turnover of more than $A4 billion a year, Apache is working to have Western Australia play an increas-ing role in its international operations,

Continuing expansion of Varan-us and the associated pipeline systems from offshore fields and then to the mainland will be part of the company’s medium-term plans.

Apache is keen to see the development of new industries in Western Australia, which will consume increasing reserves of natural gas, and is confident that this will occur.

The new field would increase Apache’s output to about 36,000 barrels of

oil a day

Certainly the reserves that have been proved in recent years, particularly in the Carnarvon Basin, and held by a number of companies, could support production several times greater than the current level.

Mr Bass stresses Apache’s dedication to environmental and safety issues on the North West Shelf, noting that a special flare tower had been designed to avoid disturbance to a beach on which local turtles breed, and for the same reason the colour of lights and their configuration on the Island had been changed to suit the local wildlife.

The company had recently increased production from Harriet Alpha, one of the platforms off Varanus that will serve the Gypsy field, and incremental expansion had been carried out in several other platforms which fed oil and gas to the island, all part of the company’s continued confidence in the oil and gas industry in this State.

But its most important develop-ment of recent times has been the completion of the $100 million Legendre project, which involved devising a new contracting technique to greatly enhance the prospects of marginal oilfields.

With one of the two other participants in the project, Wood-side Petroleum, Apache developed “service agreements,” which are similar to “build-own-and-oper-ate” arrangements for power stations, now in widespread use throughout the world.

Under those arrangements, the companies that build a station own it and sell their electricity to utilities.

At Legendre, contractors carry out similar functions, carrying more risk than a conventional contract but the rewards are greater.

Service agreements are seen by many in the industry as a means of developing marginal or small fields off the Western Australian coast. The successful example offered by Apache and Woodside is certain to be studied carefully by other companies.

The development of Legendre North and Legendre South, was always going to involve a delicate calculation, because their relatively modest reserves of 44 million barrels of oil made them marginal, especially at the time when active planning began, when oil prices were little more than $US10 a barrel.

This caused considerable hesi-tation – the structures were discovered 32 years ago, but it was not until 1998 that additional studies and careful planning encouraged a decision to develop them.

Woodside Energy Ltd. is operator of the licence, with Apache and Santos Ltd. partners.

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