Giant Timor Sea gas project clears major hurdle<\/p>\n
SYDNEY (Reuter): The U.S.-Australian development of the giant
\nBayu-Undan gas field in the Timor Sea cleared its biggest hurdle
\non Wednesday when BHP Petroleum and Phillips Petroleum agreed
\nthat BHP should be the sole operator.<\/p>\n
Joint venture participants said the agreement meant they could
\nnow consider exactly how to develop the A$4 billion field and
\nwhether to build a liquefied natural gas (LNG) processing plant
\nonshore near Darwin in the Northern Territory or build such a
\nfloating plant.<\/p>\n
\"This agreement is the most fundamental development in terms
\nof defining the project,\" said Petroz NL Finance Manager Rob
\nCrook.<\/p>\n
The field, which was last estimated to have proven and
\nprobable reserves of 3.1 trillion cubic feet (tcf), is straddled
\nby two joint venture groups.<\/p>\n
\"It's a very, very large world-scale discovery,\" said Petroz'
\nCrook.<\/p>\n
Getting the two groups to agree on who would operate the
\nfacilities needed to jointly exploit the field and how the
\nproceeds would be divided up was a crucial step, Crook said.<\/p>\n
The \"Bayu\" side of the field is covered by the Zone of
\nCooperation Agreement (ZOCA) 91-13 is owned by a Phillips-led
\njoint venture that includes Oryx Energy Co of the U.S. with 25
\npercent and Britain's Hardy Oil & Gas Plc with 15 percent.
\nPhillips has 60 percent.<\/p>\n
The \"Undan\" side of the field covered by ZOCA 91-12 is owned
\nby a BHP-led joint venture which includes Petroz with 13.371
\npercent, Santos Ltd [STO.AX] with 21.426 percent and Indonesia's
\nInpex Sahul with 21.21 percent. BHP has 42.417 percent.<\/p>\n
The ZOCAs were made possible by a treaty between Australia and
\nIndonesia and are a key factor in the relatively warm diplomatic
\nties between the two neighbors.<\/p>\n
BHP said meetings of joint venture participants in Melbourne
\nlate last week had selected BHP Petroleum as the unit operator of
\nthe field. BHP Petroleum is a unit of the Broken Hill Pty Co Ltd,
\nAustralia's largest company and the half-owner of the Bass Strait
\noil fields off the Victorian coast.<\/p>\n
\"The single field extends across both contract areas and any
\ndevelopment will be carried out under the framework of a
\nunitization agreement and utilize shared facilities,\" BHP said.<\/p>\n
Petroz said in a separate statement the joint venturers had
\ndecided on the upstream liquids and condensate phase of the
\nproject, but had yet to decide on where the downstream LNG plant
\nwould be located.<\/p>\n
\"The upstream phase of the project consists of a liquids
\nstripping\/gas recycling operation whereby condensate and LPG
\n(Liquid Petroleum Gas) are separated from the gas stream offshore
\nand transported by tankers to market,\" Petroz said.<\/p>\n
\"It is expected that the offshore liquids recovery project
\nwill be integrated with an LNG production facility,\" it said.<\/p>\n
\"Both offshore and onshore locations for the LNG facilities
\nare under consideration,\" it said.<\/p>\n
The development of the field was expected to start in 1998,
\nleading to the first production of condensate and LPG in 2001.
\nPetroz's Crook said the upstream condensate and LPG facility
\nalready decided on had been estimated to cost around A$1.5
\nbillion to build. He said it was envisaged the field would
\nproduce about 3-4 tcf, 230 million barrels of gas condensate and
\n130 million barrels of LPG.<\/p>\n
The field is split about 60-40 percent in favor of the BHP-led
\njoint venture, he said.<\/p>",
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