10/09/2009 - 09:36

BHP awards Clough Macedon FEED contract

10/09/2009 - 09:36

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Development of BHP Billiton's $1 billion Macedon domestic gas project off Exmouth has moved closer, following the formal start of front end engineering and design work.

BHP awards Clough Macedon FEED contract

Development of BHP Billiton's $1 billion Macedon domestic gas project off Exmouth has moved closer, following the formal start of front end engineering and design work.

Perth oil and gas contractor Clough this morning said it had been awarded a $US12 million ($A14 million) contract to complete the FEED engineering study. The contract encompasses project management, engineering, safety and environmental risk management and procurement support, in addition to cost and schedule estimates.

Clough said the FEED execution team would be based in Houston, where BHP Billiton's Macedon project team is located, although Clough's Perth office would also provide support on the local project execution strategy.

The development concept to be studied in the FEED phase is based on four subsea wells routed via an 85 km subsea wet gas pipeline to an onshore gas plant for processing for export through an onshore pipeline to tie-in at the Dampier-Bunbury gas pipeline.

Clough chief executive John Smith said the company was delighted to support BHP "in the critical early stages of this important West Australian domestic gas project".

BHP has already submitted its development proposal for Macedon to federal environmental authorities, and has previously indicated it hoped to start construction in 2010 in time for an accelerated production start as early as 2012.

The field, 40km north of Exmouth, contains around 1.2 trillion cubic feet of gas, making it too small for LNG development but sufficient to supply around 200 terajoules of gas daily to local industry, matching Apache's proposed Devil Creek domestic gas project which is slated to start production in 2011.

BHP proposes to site its domestic gas processing plant at Ashburton North, near Onslow, where Chevron is planning to build the onshore LNG plant for its $20 billion Wheatstone project.

The development of Macedon and Devil Creek represent the biggest upturn in domestic gas supply since the North West Shelf was established in 1985, and will significantly bolster the state's defences against any repeat of the disruption caused when the Varanus Island gas plant explosion last year shut-down a third of the state's gas supplies for six months.

Critically, the WA government last month cleared the way for BHP to proceed with Macedon by passing legislation to broaden the specifications of gas allowed to be carried by the Dampier-Bunbury pipeline. The Macedon gas has a lower heating value than gas already carried by the pipeline, meaning a greater volume of gas must be shipped to deliver the same amount of energy, effectively reducing the capacity of the pipeline.

Access to the pipeline will depend on BHP agreeing to contribute to an upgrade of the pipeline needed to accommodate gas from the Macedon field.

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