Darwin plant for Timor Gap 'economical'

Darwin plant for Timor Gap 'economical'

PERTH (Reuters): Phillips Petroleum Co Ltd said yesterday it would not cost any more to build a new liquefied natural gas (LNG) plant onshore at Darwin, Australia, than a floating one in the Timor Gap.

"When compared on an equivalent project basis we do not view the Darwin, Australia alternative as more costly than an offshore facility," Fred Storer, general manager of the Phillips Oil Co of Australia division of Phillips Petroleum Co, told Reuters.

Storer was responding to comments last week by Indonesian Mines and Energy Minister I.B. Sudjana that Indonesia wants a floating facility for the Bayu-Undan gas field in the Timor Gap Zone of Cooperation (ZOCA) with Australia.

Stores, however, said he agreed with the minister that another idea to put the plant on Indonesia's Timor island was not possible for technical as well as economic reasons.

Phillips and another Bayu-Undan participant, The Broken Hill Pty Co Ltd, are evaluating separate proposals to build facilities to process raw gas into LNG from the Bayu-Undan field.

Phillips has proposed building an onshore LNG plant in the northern Australia city of Darwin linked by a 500-km pipeline, while BHP favors offshore production near the field using patented technology.

A BHP spokesman said he endorsed the Indonesian minister's remarks, but declined to make any further comment.

Bayu-Undan, which is estimated to contain proven and probable gas reserves of 3.1 trillion cubic feet of gas and about 400 million barrels of hydrocarbon liquids, is estimated to require A$1 billion on facilities expenditure before production could commence.

The BHP/Phillips consortium plans a plant with capacity of up to three million tons per year and a production start of around 2003.

Phillips and BHP both have insisted a final decision to proceed with development of a plant would be based on a commercial need for additional LNG.

The Timor Gap treaty between Indonesia and Australia provides equal royalty rights for both countries within the ZOCA. But it does not say whether royalties should be based on the value of gas before or after it is processed.

Australia and Indonesia signed the ZOCA agreement in 1989 to divide the seabed between northern Australia and Timor island into two separate and one jointly-managed exploration zones.

The Bayu-Undan field is spread across two permits held by separate joint ventures, with Phillips in one and BHP in the other.

The DeGolyer & McNaughton consultancy of Dallas, Texas, has determined the initial equity in the field as 55.20192 percent to the ZOCA 91-12 joint venture and 44.79808 percent to the ZOCA 91- 13 joint venture, Petroz Ltd said last week.

Partners in ZOCA 91-12 are BHP 42.417 percent, Santos Ltd 21.426 percent, Indonesia's Inpex Sahul 21.209 percent and Petroz with 14.948 percent.

Partners in ZOCA 91-13 are Phillips with 60 percent, Oryx Energy Co 25 percent and Hardy Oil & Gas Plc 15 percent.