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Oiland
Gas
SPECIAL REPORT
businessnews.com.au
Price recovery gets
F E AT U R E projects pumping
Decisions on
two big gas
projects are due,
$12 billion of
chemical projects
are under
consideration,
and a
decommissioning
timebomb awaits.
Matt Mckenzie
matthew.mckenzie@businessnews.com.au
@Matt_Mckenzie_
6-PAGE FEATURE
T
HERE would have been
some grim faces among
Western Australia’s oil
and gas workforce one particu-
lar April morning last year.
Of the many difficult
moments faced by the industry
at the height of the COVID-19
crisis, perhaps none stands out
more than that on April 20 (US
time), when the price of futures
contracts for West Texas Inter-
mediate oil fell below minus $37
DECISIONS: Daniel Toleman says two big projects could get the go ahead this year. Photo: David Henry
a barrel.
Global supply had been
boosted by government-owned deferred a decision on two LNG prices, which are most are averaging more than $7/GJ which comprised Mitsui and
oil producers, demand had been major projects. relevant to WA, spiked. for the next two years, ACCC Beach Energy’s Waitsia stage
crippled by lockdowns, and the In July, the business was From a low of $2.29 per giga- data shows. two project in the Perth Basin,
US was reportedly running out forced to write-down asset joule in July 2020, the Australian In the next 12 months, two and Santos’s Bayu-Undan infill
of storage space for oil. It was values by $US3.9 billion because netback price lifted to $19.60/ large final investment decisions in the Timor Sea.
later revealed that aggressive of the low oil price. GJ in February 2021, according are on the horizon, for Santos’s Many of these projects share
futures trading had also signif- How rapidly the mood can to data from the Australian Barossa and Woodside’s Scar- a common theme: it’s about
icantly affected the price. change. Competition and Consumer borough-Pluto project. capacity utilisation at existing
Only weeks earlier, Woodside At the time of writing, West Commission. They would follow more LNG processing plants.
Petroleum had trimmed its Texas crude was changing Spot prices have since than $1 billion of final invest- Only the Scarborough to
spending by 50 per cent and hands for $US60.50/barrel. retreated, but forward prices ment decisions over summer, Pluto development is likely to
28 | March 1, 2021
FEATURE
The project pipeline Source: Business News Data & Insights
Project Name Owner/Developer Product Cost ($) Status
Browse Woodside Petroleum LNG 27bn Possible
Scarborough and Pluto Train 2 Woodside Petroleum LNG 15bn Likely
Gorgon Stage 2 Chevron LNG 5bn Ongoing
Barossa Santos LNG 4.7bn Likely
Burrup Urea Plant Perdaman Urea 4.5bn Possible
Gas Conversion Project Derby Fertilizer and Petrochemical Complex Fertiliser and Petrochemicals 4.1bn Possible
Equus Western Gas Gas 2.6bn Possible
Project Haber Strike Energy Urea 2.3bn Possible
Dorado Santos Oil 2.2bn Likely
Crux Shell LNG 2bn Likely
Jansz/Io (Gorgon) compression Chevron LNG 2bn Likely
Burrup Petrochemical Plant Coogee, Mitsubishi Corporation Methanol 1.3bn Possible
Waitsia Stage 2 Mitsui & Co, Beach Energy LNG 750m Likely
Julimar/Brunello stage 2 - Wheatstone Woodside Petroleum LNG 600m Ongoing
Mid West interconnector APA Group Pipeline 480m Ongoing
West Erregulla Stage 1 Strike Energy, Warrego Energy Gas 300m Likely
Bayu-Undan infill Santos LNG 300m Ongoing
Karratha Hydrogen Yara Pilbara Hydrogen 200m Possible
Pluto Infill Woodside Petroleum Gas 130m Ongoing
Micro LNG Research Plant Future Energy Exports Cooperative Research Centre LNG/Hydrogen 70m Possible
West Erregulla Stage 2 Strike Energy, Warrego Energy Gas ND Likely
Pluto-KGP Interconnector Woodside Petroleum LNG ND Ongoing
Amulet, Talisman Kato Energy Oil ND Possible
Corowa Kato Energy Oil ND Possible
Clio/Acme Chevron LNG ND Possible
include construction of a new Until that project is built, February that the company had a tieback to Karratha would be chemical processing through
liquefaction train. gas from three Bayu-Undan used 2020 to sharpen the value the base case solution, Mr Tole- its Project Haber.
Waitsia’s owners have a swap wells will be processed through proposition, increasing planned man said. In the near term, the major
deal to market gas through Darwin LNG. offshore capacity by 20 per cent With a final investment deci- final investment decisions
the existing North West Shelf Santos signed a 10-year, to 8mtpa. sion in 2024, the project would looming in 2021 will create
Karratha plant and replace its 1.5 million tonne per annum For the North West Shelf, the be ready for startup by 2030. opportunities for contractors
domestic gas reservation require- contract in December with Mit- Waitsia deal will help keep pro- There are alternatives to after a quiet year.
ments, while the Bayu-Undan subishi to offtake Barossa gas. cessing trains online and avoid Browse, he said, though none Woodside’s forward work
infill will temporarily keep For Woodside, there have a huge excess capacity forming was yet a frontrunner. plan filed in September shows
Santos’s Darwin LNG plant hum- been two recent contracts that at the plant. They could be Western Gas’s about 23 packages expected
ming until Barossa is finalised. will support Scarborough. Woodside said in a November Equus, Chevron’s Clio and to go out to tender, mostly for
Wood Mackenzie senior Trading house Uniper asked briefing that North West Shelf Acme, another Perth Basin pro- Scarborough.
analyst Daniel Toleman told to double its offtake to be 1mtpa would be offshore constrained, ject, or gas from the Canning Those include four tenders
Business News the two major from 2021 to 2025 and then or not have enough incoming Basin. through Bechtel for Pluto
final investment decisions to 2mtpa from 2026, while RWE gas to run at full capacity, by The state government last train 2, for security, protective
watch in the local market this Supply and Trading GmbH will 2022. year announced it would disal- clothing, and non-destructive
year would be Scarborough and buy 840,000tpa from 2025. If Waitsia had not proceeded, low exporting of onshore gas, testing.
Barossa. Mr Toleman said he expected the company would have while allowing an exemption Shell listed 14 packages in its
A green light for Barossa is a final commercial agreement needed to shut train 3 at Karra- for Waitsia. plans, while Chevron had only
expected in April. between Woodside and BHP in tha by 2024. Mr Toleman said it was pos- one to open this year.
“The Darwin LNG facility will April or May, with a final invest- Projections showed as much sible a further large onshore Among the few tender win-
be empty otherwise,” Mr Tole- ment decision targeted for the as 50 per cent of the Karratha project may be granted an ners in the past 12 months was
man said. second half of the year. capacity would have been avail- exemption, although it would DOF Subsea, which will be
“Santos has done a lot of work BHP owns 26.5 per cent of two able by 2028, with contracts not be easy. providing offshore services to
to optimise that project. offshore Scarborough titles, under negotiation at the time Strike Energy has flagged a Chevron.
“Barossa is an attractive with Woodside holding the and gas from Scarborough final investment decision on For Santos’s Barossa, Subsea
project going into existing remainder. potentially filling half of that. West Erregulla in the first half 7 will install subsea umbilicals,
infrastructure, it’s competitive Woodside chief executive Construction of the long- of this year, and the company
on the global scale.” Peter Coleman told investors in awaited Browse LNG project in may move into downstream Continued on page 31
March 1, 2021 | 29
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OIL AND GAS FEATURE
Price recovery gets ACCC LNG pricing data
projects pumping 20 – Historical netback prices
From page 29
risers and flowlines, while Aker Front-end engineering and $ 10 –
Solutions will supply umbilicals design work is to begin in the
and National Oilwell Varco Den- first half of 2021.
mark I/S the risers. Santos also indicated it would
Upstream Production Solu- consider a later, second, phase
tions was given a $144 million at Dorado, which would involve
contract by the federal govern- gas production. 0–
ment to manage the Northern Western Gas has partnered January 2016 January 2017 January 2018 January 2019 January 2020 January 2021
Endeavour floating oil facility, with APA Group to assess a
after owner Northern Oil and potential transcontinental
Gas Australia was placed in gas pipeline linking its Equus
liquidation. project to the east coast, an
MMA Offshore has subcon- investment forecast to cost $3.5
tracted to provide a vessel for billion.
Upstream. APA has also committed to
a $460 million MidWest inter-
Deals connector pipeline linking the
Woodside and Chevron both main Dampier Bunbury line to
have asset sales on the radar. the Goldfields line.
Chevron announced it would Kato Energy, a partnership
explore the sale of its 16.7 per of Hydra Energy, Tamarind and
cent share of the North West Skye Energy, has lodged docu-
Shelf operations, with poten- ments with regulators for small,
tial buyers rumoured to include short-term developments at the
Beach Energy, Global Infra- Amulet, Talisman and Corowa
structure Partners, Canada fields in the Carnarvon Basin.
Pension Plan and Investment Drilling at Corowa will get
Board, and Woodside. under way late in 2021 if all goes
In Woodside’s case, buying to plan.
a larger share of North West Onshore, there were notable
Shelf could help get Browse moves in the Canning Basin.
across the line, because it will Origin Energy signed a $35
make alignment between part- million farm-in deal with Buru
ners much easier. Energy and Rey Resources for
In December, Shell sold a 26.25 seven tenements, planned with
Photo: Chevron
per cent slice of the Queensland two wells.
Curtis LNG common-user facil- Origin general manager of
ities to Global Infrastructure integrated gas Mark Schubert
Partners in a $US2.5 billion deal. said the gas resources were Canning Basin gas from Theia Chief executive Stuart Nicholls An inspector from the
Mr Toleman said Shell and strong and the fields had carbon Energy for a $4.5 billion project. touted downstream processing National Offshore Petroleum
BP, which each hold a one sixth capture and storage potential. A more advanced plan is Per- as a way to unlock more value Safety and Environmental Man-
slice of North West Shelf, may In addition, the acreage daman’s $4.5 billion Burrup urea from natural resources. agement Authority had issued
seek to reduce their stakes in would give an option to supply plant, where a final investment Beyond construction and an improvement notice in Octo-
the future as they transition gas for LNG backfill, he said. decision is due mid year. operation, end-of-life manage- ber 2019.
their portfolios to focus more Bennett Resources, owned by A joint venture of Clough and ment is of growing importance. A 2017 document by the state
on decarbonisation. US company Black Mountain Saipem has been selected for Northern Endeavour’s chal- government suggests 600 fields
Woodside has signalled it Metals, has lodged environmen- engineering and construction, lenge has highlighted the in the Asia Pacific will reach the
could sell down its share of tal documents for up to 20 wells while Woodside has signed on expected surge in decom- end of their lives in the follow-
Pluto train 2 to about 50 per cent in the basin. to supply gas. missioning work across the ing decade.
and has been testing the market That could signal a renais- Coogee had been considering industry in the next decade, Deloitte has said decommis-
to dilute its interest in the Scar- sance in the basin, which is in a $1 billion methanol plant in with the government con- sioning in Australia could cost
borough upstream resource. the Kimberley. the Burrup, which had faced firming in December it would $US21 billion over 50 years.
An improvement in market The basin is estimated to have challenges securing gas, while decommission the platform. That means sealing up wells,
conditions in recent months 225 trillion cubic feet of gas, but Strike Energy revealed a $2.3 Woodside formerly owned removing and towing equip-
had helped make a sale more its remote location has previ- billion fertiliser plant called that floating production oper- ment, and environmental
attractive, Woodside told ously impaired developments. Project Haber earlier this year. ation, but sold it in 2016 when it remediation.
investors. Downstream, four businesses Strike’s move was particularly was nearing the end of its life. It also means big bills for pro-
are hoping to construct chem- illustrative of the potential. Separately, the offshore oil jects that reach the end of their
What next? icals projects, worth about $12 The company’s board includes and gas regulator started a com- operating lives, and a threat to
A decision on Santos’s Dorado billion combined. resources executive Nev Power pliance action against Woodside the social licence of the indus-
oil development, off the Pilbara Derby Fertilizer and Petro- and Perth dealmaker John for decommissioning issues at try if the process is not done
coast, is expected next year. chemical Complex would use Poynton. Enfield’s Nganhurra FPSO. effectively.
March 1, 2021 | 31
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extends far beyond offering products The Robe Valley project exemplifies by standardising equipment and In a time of uncertainty, UON
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monitoring, labour-hire and all manner solution, UON is still able to deliver on-going; Keogh says, “The business has seen
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OIL AND GAS FEATURE
Data & Insights WA’s LARGEST OIL AND GAS PRODUCERS
Ranked by WA Revenue most recent financial year ($m)
WA Revenue WA Revenue
Year most recent previous
est. in Balance financial year financial year
Rank Name Senior WA executive and title WA date ($m) ($m) WA oil and gas interests
Mr Mark Hatfield
1 Chevron Managing director, Chevron Australia 1952 31-Dec-19 11,400 11,100 Gorgon (47.3%), North West Shelf (16.67%), Wheatstone (64.14%)
Mr Peter Coleman North West Shelf (16.67%), Browse (30.6%), Greater Enfield (60%),
2 Woodside Petroleum Managing director 1954 31-Dec-20 5,000 6,400 Wheatstone (13%)
Mr Tony Nunan Prelude (67.5%), North West Shelf (16.67%), Gorgon (25%), Browse
3 Shell Australia country chair 31-Dec-19 4,100 4,700 (27%)
Ms Geraldine Slattery North West Shelf (16.67%), Pyrenees (62.36%), Macedon (71.43%),
4 BHP President, operations petroleum 1968 30-Jun-20 2,140 3,000 Minerva (90%), Scarborough (26.5%), Jupiter and Thebe (50%)
5 ExxonMobil 2013 31-Dec-19 1,700* 2,800 Gorgon (25%)
Mr Frederic Baudry
6 BP Australia President 31-Dec-20 1,400* 2,000 North West Shelf (16.67%), Browse (17.33%)
Mr Kevin Gallagher
7 Santos Managing director 1954 31-Dec-20 1,100 1,300 John Brookes, Harriet, Spar-Halyard, Reindeer, Van Gogh, Pyrenees
Mr Susumu Koike
8 Mitsui & Co General manager, Perth office 1956 31-Dec-20 1,100* 1,300 North West Shelf (8.33%), Greater Enfield (40%), Browse (7.2%)
Mr Masayuki Moroi North West Shelf (8.33%), Browse (7.2%), Wheatstone (4% fields, 3.2%
9 Mitsubishi Corporation Director 31-Dec-20 880* 1,300 plant)
Mr Hitoshi Okawa Ichthys (66.2%), Prelude (17.5%), Coniston Van Gogh (47.5%),
10 Inpex President director, Australia 31-Dec-19 800* Ravensworth (28.5%, part of Pyrenees)
11 KUFPEC 31-Dec-20 730* 1,000 Wheatstone (13.4%)
Mr Jun Takei
12 Tokyo Gas Director, Tokyo Gas Australia 31-Dec-19 240* Pluto (5%), Gorgon (1%), Ichthys (1.6%)
Mr Troy Baxter
13 Total Oil Australia Sales & operations manager - Perth 31-Dec-19 209* Ichthys (26%)
Mr Bruce Lake
14 Vermilion Energy Managing director, Australia 2005 31-Dec-19 191 149 Wandoo field
15 JOGMEC 31-Dec-20 182* 250 Wheatstone (4.2% fields, 3.4% plant)
Mr Satoshi Kakemoto
16 Kansai Electric Power Director, Kansai Electric Power 31-Dec-19 167* Pluto (5%), Ichthys (1.2%)
Company Holdings Australia
Mr Yo Otsuka
17 Osaka Gas General manager, Australia 31-Dec-19 96* Ichthys (1.2%), Gorgon (1.25%)
Mr Hideki Yukimura
18 JERA Australia Director 31-Dec-19 83* 80 Wheatstone (0.8% fields, 0.64% plant), Gorgon (0.417%)
Mr Takahiro Seki
19 Kyushu Electric Director, Kyushu Electric Australia 31-Dec-20 79* 110 Wheatstone (1.8% fields, 1.5% plant)
Mr Hongha Seo
20 Kogas Australia Director, Kogas Prelude 31-Dec-19 52 Prelude (10%)
21 *Estimates based on annual reports of Woodside, Kogas Prelude, Tokyo Gas Gorgon, and ATO’s 2018-19 report of entity tax
Data & Insights GET THE FULL LIST ONLINE businessnews.com.au/bniq/oil-and-gas
23
All information compiled using surveys, publicly available data and contact with industry sources. Other companies may be eligible for inclusion. If you believe your company is eligible, please email: claire.byl@businessnews.com.au
All $US figures have been converted to $A using average exchange rate for the calendar year.
March 1, 2021 | 33
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