Production blow as storms hit

THE tropical cyclone season in north-west Australia has disrupted the operations of a number of resource companies, leading to falls in production for the March quarter. Spokesman for the Bureau of Meteorology’s severe weather section, Joe Courtney, said there had been seven cyclones in Western Australia this year. “The average is five,” he said. “Six of the cyclones formed off the north-west coast, with four of these reaching category three.” Mr Courtney said three cyclones, Clare, Floyd and Glenda, were severe systems, with Cyclone Glenda reaching category four. “All have affected mining industries in the north-west to some degree.” Mr Courtney said while the season had been disruptive for the north-west in terms of lost production, it hadn’t been “abnormal” in terms of cyclonic activity. “We probably don’t expect any further major systems for the rest of the season,” he said. Last week, mining giant BHP Billiton Ltd attributed a drop in iron ore production to cyclone activity, while oil and gas player Tap Oil Ltd’s oil production was also affected. BHP said its iron ore production for the quarter was 22.5 million tones, down 5 per cent on the previous corresponding period, and 9 per cent on December 2005, was primarily due to cyclone activity and continued wet weather conditions. Tap Oil Ltd’s production of 384,000 barrels of oil was affected by the impact of cyclone activity, resulting in 11 days’ down-time at the company’s Woollybutt oil field in the North West Shelf. “Tropical cyclones Clare and Daryl interrupted production for several days in January 2006,” Tap Oil said of its 15 per cent owned Woollybutt field. “Tropical cyclone Emma interrupted production in February 2006, while production was shut-in again in March 2006 for tropical cyclone Glenda. “Vessel re-connection was delayed due to tropical cyclone Hubert in April 2006. The resulting production losses are considered temporary only, as production is not lost but deferred to future periods.” Rio Tinto Ltd also suffered, with its iron ore production for the first quarter falling by 3.85 million tonnes, or 12 per cent, from the December quarter to 28.67 million tonnes. “The severity of the weather conditions is likely to have a modest effect on iron ore production early in the second quarter and a consequent increase in unit cash costs,” Rio Tinto said in its March quarter statement. Woodside Ltd’s oil production for the March quarter slipped to 14.3 million barrels of oil equivalent, 3.3 per cent lower than in the December quarter, as a result of cyclone activity. About 500 tonnes of production was lost during the March quarter for nickel miner Minara Resources Ltd due to an interruption to gas supplies caused by cyclone Glenda. The company, which was originally targeting full-year production of 36,000 tonnes of nickel, said this was now likely to be somewhere between 34,000 and 36,000 tonnes. Nickel and copper operations from Fox Resources Ltd’s Radio Hill mine were disrupted for four days in January 2006 due to cyclones Clare and Daryl affecting the Karratha and Pilbara regions. South Australian-based gas and petroleum explorer and producer Santos Ltd’s oil production of 3.22 mmbbl for the first quarter 2006 was 24 per cent lower than fourth quarter 2005 as a result of cyclone activity affecting its Carnarvon Basin production.