Bayu-Undan LNG site remains uncertain
Bayu-Undan LNG site remains uncertain
SYDNEY (Reuter): The appointment of Broken Hill Pty Co Ltd as operator for the Bayu-Undan oil and gas field had no bearing on whether a liquefied natural gas (LNG) plant would be onshore or offshore, Phillips Petroleum Co said yesterday.
Jim Godlove, Darwin area manager for Phillips, which leads the "Bayu" part of the consortium, told Reuters his group continued to very strongly favor an onshore plant in Darwin.
Malcolm Garratt, senior external affairs adviser to BHP Petroleum, which leads the "Undan" part of the consortium, said no decision had been taken on where the plant would be located. A decision was expected in the near future, Garratt said.
BHP in the past has favored an offshore plant for the field, which straddles two blocks in the Timor Sea between Australia and Indonesia.
One senior official with the Northern Territory government said it would make "a huge difference" to Darwin whether the plant was offshore or onshore. An offshore plant would offer only servicing business, but an onshore plant would massively boost construction and on-going development.
The capital cost of offshore or onshore plant would be about the same, but operating costs would be "remarkably different", with onshore cheaper, with an offshore plant also detrimental to future developments in the Timor Sea, Phillips' Godlove said.
Stressing harmony in the consortium, Godlove said the choice of BHP's BHP Petroleum unit as operator related only to joint- venture operations.
"While BHP will be the named operator, the operations of the unit will be through a joint team and Phillips will have a very significant role in that joint team. I can't emphasize that enough," Godlove said.
Very clear understandings gave Phillips a role principally in engineering, procurement and construction, he said.
"That was an area that Phillips was determined in what had to be granted in order to agree to BHP (as) operator," he said.
BHP's Garratt said no figures could be given yet on the relative cost of construction of an offshore or onshore plant.
Bayu-Undan will be the second hydrocarbon field in the Australia-Indonesia Zone of Co-operation to go ahead, and is easily biggest.
BHP announced last month it had formal approval for development of the relatively small Elang and Kakatua oilfields, at a cost of A$94 million.
Bayu-Undan, which is estimated to contain proven and probable reserves of 3.1 trillion cubic feet of gas and about 400 million barrels of hydrocarbon liquids, will require initial expenditure of more than A$1 billion on facilities to strip condensate and liquefied petroleum gas from reserves, for first production in late 1998.
Total development cost, including an lng plant, has been estimated at up to A$4.0 billion.
An onshore lng facility, at a capital cost reported at A$1.9 billion, would involve a 470 km pipeline to Darwin. Phillips wanted production at three million tons production of lng a year, Godlove said.