Shell makes audacious pitch to develop Timor gas<\/p>\n
CANBERRA (Dow Jones): Royal Dutch\/Shell Group Friday announced
\ndetailed plans to recast billions of dollars of natural gas
\ndevelopments in the Timor Sea, potentially putting itself at odds
\nwith key partners.<\/p>\n
Shell's proposal to use a floating facility to process
\nliquefied natural gas at the Greater Sunrise field off the
\nnorthern coast of Australia is aimed at cutting estimated
\ndevelopment costs of US$4.9 billion by 40 percent.<\/p>\n
If accepted, it will sidestep plans to pipe the gas to the
\ncity of Darwin for processing and could throw into further doubt
\ndevelopment plans for other fields in the region.<\/p>\n
Shell admits the technology is unproven but still wants
\npartners Woodside Petroleum Ltd. and Phillips Petroleum Co. Ltd.
\nto make a quick ruling on its proposal.<\/p>\n
\"We are prepared to put our name behind it, to put our
\nfinancial resources behind this to give undertakings it will work
\nand will deliver LNG,\" said Shell Development (Australia) chief
\nexecutive Alan Parsley.<\/p>\n
Woodside and Phillips, which has a bigger stake in the
\nneighboring but smaller Bayu-Undan field, so far have limited
\ninformation about the plan to use the world's first floating
\nliquefied natural gas, or FLNG, technology.<\/p>\n
A spokesman for Woodside said the company will support any
\nalternative development proposal provided it works. At the
\nmoment, the plan is to have Greater Sunrise gas processed in
\nDarwin, joining a pipeline from Bayu-Undan which will start
\nproduction sooner.<\/p>\n
Woodside said the proposal must be acceptable to all
\nstakeholders, including joint venture partners, customers and
\ngovernments.<\/p>\n
Jim Godlove, Phillips' Darwin area manager, said Shell hasn't
\nprovided any details of its proposal to the U.S. company.<\/p>\n
Woodside is the operator and 33.4 percent stakeholder in
\nGreater Sunrise and was a supporter of the recent pipeline deal
\nwith the Bayu-Undan consortium. Phillips has 30 percent in
\nGreater Sunrise, Shell 26.6 percent and Japan's Osaka Gas Ltd. 10
\npercent.<\/p>\n
Woodside and Shell have had a rocky relationship in the past
\n12 months, with Shell making two unsuccessful takeover bids.<\/p>\n
The most recent bid, which valued Woodside at about A$10
\nbillion, was rejected by the Australian government in April on
\nnational interest grounds as Woodside is the operator of the
\ngiant North West Shelf gas project.<\/p>\n
Shell's Parsley said a third bid isn't likely, with a focus
\ninstead on improving their working relationship.<\/p>\n
Greater Sunrise has resources of 9.2 trillion cubic feet of
\ngas and is located in deep water about 500 kilometers northwest
\nof Darwin.<\/p>\n
Shell's announcement comes barely a week after Phillips and
\nits partners in the Bayu-Undan project, southwest of Greater
\nSunrise, put plans to build a US$500 million undersea natural gas
\npipeline to Darwin on indefinite hold because of tax issues.<\/p>\n
Phillips is 50.3 percent stakeholder and operator of Bayu-
\nUndan. Other participants are Australia's Santos Ltd.with 11.8
\npercent, Petroz NL with 8.3 percent, Japan's Inpex Sahul Ltd.
\nwith 11.7 percent, Kerr-McGee Corp. with 11.2 percent, and
\nItaly's ENI SpA with 6.7 percent.<\/p>\n
Stage 2 of Bayu-Undan was to involve a cooperative development
\nwith Greater Sunrise to jointly run an undersea gas pipe to
\nDarwin, for offtake by a range of gas processors, including a
\nland-based LNG plant and pipeliners for hauling gas to eastern
\nand southeastern Australian markets. Bayu-Undan planned to land
\ngas in Darwin in 2004.<\/p>\n
Based on Shell's FLNG proposal, the Greater Sunrise partners
\nwill be prepared to run their own gas pipeline to Darwin to
\nsupply gas to that area, said Parsley.<\/p>",
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