BHP unveils plans for Australian LNG plant
Thu Sep 2, 2004 07:21 AM ET
By Joanne Collins
MELBOURNE, Sept 2 (Reuters) - BHP Billiton Ltd./Plc. (BHP.AX: Quote, Profile, Research) unveiled plans on Thursday for a multi-billion dollar liquefied natural gas (LNG) plant in Western Australia to supply the U.S. west coast or Asia.
The plan would tap a further 8 trillion cubic feet of Australia's estimated 150 trillion cubic feet of gas reserves for delivery to the world's number one energy consuming nation and fast expanding Asia.
Australia-based BHP, the world's biggest diversified mining company, said the offshore Scarborough gas field would supply the first BHP-operated LNG plant at Pilbara, around 4.5 km (2.8 miles) southwest of Onslow in northwest Australia.
"BHP Billiton's pre-feasibility study is examining a number of concepts for the field development that would connect a single train with capacity of approximately 6 million tonnes per annum," the company said in a statement.
The project is near the existing giant North West Shelf LNG venture, which is set to start supplying China from 2006 under a $25 billion, 25-year deal.
BHP has a one-sixth interest in the North West Shelf development, operated by Australia's top oil and gas firm, Woodside Petroleum Ltd. (WPL.AX: Quote, Profile, Research)
LNG is natural gas compressed until it liquefies for easier transport. It is sent in special ships to markets were it can supplement or replace gas brought via pipelines.
BHP has a 50 percent stake in the Scarborough field, where the balance is held by operator U.S.-based Exxon Mobil Corp. (XOM.N: Quote, Profile, Research)
ATTRACTIVE RESOURCE
The Scarborough resource is estimated to have proven and probable reserves of 8 trillion cubic feet of gas, slightly more than the 7.6 trillion cubic feet in the A$6.6 billion Greater Sunrise development in the Timor Sea.
Proven and probable reserves have an around 70 percent chance of existing.
Australia -- with an estimated 150 trillion cubic feet of proven and probable gas reserves -- is eager to get a foothold on the U.S. west coast, where scores of LNG import terminals have been proposed, including BHP's planned Cabrillo Port project off the coast of southern California.
A decision on the California project is not expected until mid 2005, and analysts expressed some caution over the BHP plans, saying it was very early days.
"It's the first step of a number that will be largely dependent on whether they can get their approvals for the receiving terminal," said ABN Amro energy analyst Paul Ashby.
BHP Billiton group president for energy, Philip Aiken, said regulatory and environmental approvals were needed from state and federal governments before an investment decision could be made.
While the Pilbara LNG plant would be the first to be operated by BHP, the company is looking at participating in as many as seven LNG import projects proposed for energy-hungry China by the end of the decade.
Australia has signed two LNG supply deals with China in the last two years worth around A$55 billion.
BHP spokeswoman Tania Price said the pre-feasibility study was due to be completed by the first quarter of 2005 and, if the project was sanctioned, construction could begin in early 2006.
"It is too early to estimate the cost of such a project but it would be several billion dollars," Price told Reuters, adding there would be potential to expand the project beyond 6 million tonnes a year.
BHP shares closed one percent higher at A$13.34 in a firmer overall market. ($1=A$1.43) |
