Inpex chooses Darwin to host LNG plant

Western Australia has formally lost its bid to host a multi-billion dollar liquefied natural gas plant, with Japanese company Inpex Ltd today announcing Darwin as its preferred site.

As has been widely tipped since before the state election, Inpex and project partner Total E&P Australia announced Blaydin Point in Darwin as the site to host the Ichthys LNG facility.

Inpex was previously weighing up either Darwin or the Maret Islands in WA as possible sites for the facility, which would have generated some 2000 jobs and around $50 billion in income for WA over the life of the project.

Initial production is expected to top 8 million tonnes of LNG and 1.6 million tonnes of LPG each year.

The forecasted production volumes represent about 50 per cent of current Australian annual LNG production and some 60 per cent of current Australian LPG production.

Inpex anticipates the project being operational for 40 years.

Inpex president Naoki Kuroda said Darwin provides the company with the certainty required for the project's tight schedule to enable the first LNG shipment to be made in late 2014 or early 2015.

"We are pleased with the support we have received from the Northern Territory people, the Government and key stakeholders and we are impressed by the business and infrastructure capabilities in the area," Mr Kuroda said.

"Environmental, economic and engineering studies have demonstrated the viability of locating an LNG plant at Blaydin Point and have lent weight to this decision."

"Now that a location has been selected, front-end engineering design will follow shortly and a final investment decision is expected near the end of 2009 or early in 2010."

Premier Colin Barnett had last week made a final pitch with Inpex representatives for WA to host the project, however had said he was pessimistic about the state's chances.

The Northern Territory had called an early election in a bid to increase its chances of being selected, while during the WA election campaign, Mr Barnett accused then Treasurer Eric Ripper of misleading the public, saying Inpex had already selected Darwin and had told the Labor Party of its decision.

Today Mr Ripper, the former state development minister, said he is satisfied the previous Labor government did all it could to persuade Inpex to base the LNG facility in WA.

The former Carpenter government had set up the Northern Development Taskforce to consult with industry, environment and indigenous groups on the location for a central gas processing site.

Mr Ripper said the government would have decided on a location for the hub by October, with all approvals in place by 2010.

"There are very sensitive issues in the Kimberley," Mr Ripper told ABC Radio before today's official announcement.

"I wasn't going to have our government ride roughshod over environmental and traditional owner interests in the Kimberley.

"It's a very, very special area."

Peak mining and business lobby groups have called WA's loss as "disappointing" and proof the government needs clear up the excessive red tape restricting the state's business investment and economic growth.

The Chamber of Commerce and Industry WA executive director industry policy, Trevor Lovelle said although the decision is a huge blow to WA, there are other opportunities.

"CCI will work closely with local companies and Inpex to help secure major contracts for WA in the construction, operation and ongoing servicing of the gas processing plant," Mr Lovelle said.

"Today's decision should ring alarm bells for the new State Government, and highlight the damage that excessive red and green tape is causing to the WA economy, and business and industry of all sizes."

Meanwhile the Association of Mining and Exploration Companies congratulated the Northern Territory on its win.

AMEC chief executive Justin Walawski said the decision by Inpex to incur hundreds of millions of dollars of added expenses to build the plant in Darwin is a vote of confidence in the policies of the Northern Territory Government.

"When Governments work hard to find the right balance between the environment, indigenous heritage and development, they will be rewarded with a strong local economy for many years," Dr Walawski said.

"AMEC congratulates the Northern Territory Government and wider community for their effort in striking that balance on this occasion.

"While it is very disappointing to see Western Australia's falling policy reputation suffer another blow, the project will create much needed infrastructure and opportunity for everyone in northern Australia."

Below is the full announcement:

INPEX Announces Northern Territory Location for Ichthys LNG Facility.

INPEX Browse, Ltd. (INPEX), as Operator of the Ichthys Joint Venture (INPEX 76% and Total E&P Australia 24%), has today announced that the designated industrial site on Blaydin Point on Middle Arm Peninsula in Darwin has been selected as the location for its proposed LNG processing facility.

INPEX President, Mr Naoki Kuroda, said Darwin provides INPEX with the certainty required for the project's tight schedule to enable the first LNG shipment to be made in late 2014 or early 2015.

"We are pleased with the support we have received from the Northern Territory people, the Government and key stakeholders and we are impressed by the business and infrastructure capabilities in the area."

"Environmental, economic and engineering studies have demonstrated the viability of locating an LNG plant at Blaydin Point and have lent weight to this decision."

"Now that a location has been selected, front-end engineering design will follow shortly and a final investment decision is expected near the end of 2009 or early in 2010"

More than US$20billion in capital expenditure will be required to construct the offshore and onshore facilities required to produce gas and condensate offshore and deliver gas from the Ichthys Field to the Blaydin Point LNG processing facility via an 850 kilometre pipeline.

The reserve volume of the Ichthys Field is estimated to be 12.8 trillion cubic feet of natural gas and 527 million barrels of condensate. Initially the project is expected to produce more than 8 million tonnes of LNG, 1.6 million tonnes of LPG per annum and 100,000 barrels of condensate per day. These forecasted production volumes represent about 50% of current Australian annual LNG production, about 60% of current Australian LPG production and about 20% of current Australian crude oil production respectively. Clearly, the Ichthys

Project is poised to make a major contribution to the Australian economy.

Middle Arm Peninsula has the capacity to support the two initial LNG trains, and there is an opportunity for additional LNG trains to accommodate future expansion. More than 2000 people will be required in Darwin during the peak of the four-year construction phase of the project, and a full-time workforce of approximately 300 will be needed in Darwin to maintain and operate the onshore facilities. INPEX looks forward to being an active member of the Darwin community by sourcing goods and services from local businesses and providing employment opportunities during both the construction and operations phases.

It is anticipated that the Project will be in operation for at least 40 years.

"We believe that our Project will make a significant contribution to the development of the Australian economy and will serve to reinforce the strong business ties that already exist between Australia and Japan," Mr Kuroda said.