23/10/2009 - 06:48

Chevron in Wheatstone partnership deal

23/10/2009 - 06:48

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Apache Corporation and Kuwait Foreign Petroleum Exploration Co have teamed up with Chevron over the $25 billion Wheatstone gas project, leaving Woodside Petroleum to look elsewhere for extra gas supply sources for its Pluto expansion.

Chevron in Wheatstone partnership deal

Apache Corporation and Kuwait Foreign Petroleum Exploration Co have teamed up with Chevron over the $25 billion Wheatstone gas project, leaving Woodside Petroleum to look elsewhere for extra gas supply sources for its Pluto expansion.

Apache and KUFPEC last night signed an exclusive agreement to supply natural gas from their jointly-owned Julimar and Brunello fields to supply train one and two, with a combined capacity of 8.6 million tonnes each year, of the Wheatstone liquefied natural gas project.

The project's processing facility will be located at Ashburton North.

Apache and KUFPEC will also take a 16.25 per cent and 8.75 per cent interest, respectively, in the project.

However, Apache said in a statement that its Wheatstone interest may be reduced at the final investment decision stage to accommodate investments by the project's foundation customers.

A final investment decision on Wheatstone is expected in 2011 and first gas is tipped for 2016.

Apache added its net share of the front end engineering and design costs at Wheatstone is expected to be $US110 million ($A119 million).

Apache's net capital for the project, before any sell-down, is currently estimated to be $US1.2 billion ($A1.3 billion) for the upstream development of Julimar and Brunello fields, while a further $US2.9 billion ($A3.1 billion) is estimated for the Wheatstone LNG plant.

Capital costs for the Wheatstone project is estimated at $25 billion.

"Apache projects net sales will be approximately 190 million cubic feet of gas and 5,100 barrels of condensate per day with a 15-year production plateau," Apache said in a statement."

Chevron's deal has taken away the two most likely candidates for Woodside Petroleum's expansion of its Pluto LNG project.

In a statement today, Woodside said it had been informed by Apache and KUFPEC that talks over processing gas from their fields through Pluto would be discontinued.

"Woodside remains in discussions with several third party gas owners in the Carnarvon basin over the potential processing of their gas through Pluto," the company said.

"Those discussions will continue to be based on delivering acceptable value to all parties."

Woodside added that it had started a Greater Pluto exploration drilling program this quarter, with results to "substantially contribute to an expansion of the foundation Pluto LNG project, which is 78 per cent complete".

The first phase of the Pluto project, comprising of one train, is expected to start production later next year.

The front end engineering design work is currently taking place for trains two and three of Pluto, and a final investment decision on the expansion is expected next year.

The expansion is estimated to cost $20 billion, and first gas from train two is tipped in 2013, followed by train three in 2014.

 

Both announcements are below:

 

Chevron

Chevron Australia and Chevron (TAPL) today announced the signing of an agreement with Apache Julimar Pty Ltd, a subsidiary of the Apache Corporation (NYSE: APA), and KUFPEC Australia (Julimar) Pty Ltd, a subsidiary of the Kuwait Foreign Petroleum Exploration Company k.s.c., as natural gas suppliers at the Wheatstone natural gas hub and twenty five percent (25%) equity participants in the project facilities.

Under the agreement, Apache and KUFPEC will provide natural gas from their Julimar and Brunello fields, located in north-western Australia, to supply Train 1 and 2 of the Wheatstone Project. Apache will assume a 16.25 percent equity interest and KUFPEC an 8.75 percent equity interest in the Chevron operated Wheatstone Project, located at Ashburton North near Onslow in the Pilbara region of Western Australia.

Jim Blackwell, President of Chevron Asia Pacific Exploration and Production, said "We are pleased to have Apache and KUFPEC as foundation partners in the Wheatstone Project. Bringing in Apache and KUFPEC will help us grow a Wheatstone LNG hub with both Chevron and third party gas. This agreement will make Wheatstone the first LNG project in Australia to attract large volumes of third party supply gas."

Roy Krzywosinski, Managing Director of Chevron Australia, welcomed Apache and KUFPEC as foundation participants in the first phase of the Wheatstone Project. "This agreement will result in development synergies which will be equitably shared by the foundation participants and further demonstrates the benefits of our open access hub concept," he said.

"The additional gas supply will extend the life of the Wheatstone project -- making it more desirable for customers and bringing increased benefits to Australia through employment, government revenue and local business opportunities.

"We are committed to growing our natural gas business in Australia by moving both the Gorgon and Wheatstone projects forward," said Krzywosinski.

The first phase of the project consists of two liquefied natural gas (LNG) processing trains with a total capacity of about 8.6 million tonnes per year and a domestic gas plant. A final investment decision is targeted for 2011.

Discovered in 2004, Chevron's Wheatstone field is located in the WA-253-P and WA-17-R permit areas in water depths of around 650 feet (200 meters).

The adjacent Iago field was discovered in 2000 and spans two retention permits, WA-17-R, which is wholly owned by Chevron Australia, and WA-16-R, in which Chevron has a majority interest.

Chevron is one of the world's leading integrated energy companies and through its Australian subsidiaries, has been present in Australia for more than 50 years.

With the ingenuity and commitment of more than 1,400 people, Chevron Australia leads the development of the Gorgon and Wheatstone natural gas projects; manages its equal one-sixth interest in the North West Shelf Venture; and operates Australia's largest onshore oilfield on Barrow Island and the Thevenard Island oilfields.

The company is also a participant in the Browse liquefied natural gas development and is a significant investor in exploration offshore northwest Australia, one of Chevron's four global focus areas for exploration.

In addition, Chevron's Perth-based Global Technology Centre provides technology support and solutions to the company's operations in Australia and around the world.

 

Woodside

Woodside advises that overnight (Australian time) it was informed by US-based Apache Corporation that Apache and Kuwait Foreign Petroleum Exploration Company were discontinuing talks on processing gas from their WA 356-P permit through Woodside's Pluto LNG Project.

This does not affect Woodside's previous advice in relation to the company's plans for an expansion of the Pluto LNG Project.

Woodside remains in discussions with several third party gas owners in the Carnarvon basin over the potential processing of their gas through Pluto. Those discussions will continue to be based on delivering acceptable value to all parties.

Woodside is beginning a 20-plus well Greater Pluto exploration drilling program this quarter, and expects the results of this initial campaign to substantially contribute to an expansion of the foundation Pluto LNG Project, which is now 78% complete. As advised in our 19 August 2009 Half Year Results presentation, Woodside's current Carnarvon basin exploration portfolio includes 39 prospects and 35+ leads.

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