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Majors Agree to Jointly Develop Australian Gas Fields for LNG

ChevronTexaco Corp., ExxonMobil Corp. and Royal Dutch/Shell Group agreed last week to jointly develop some natural gas fields off the Australian coast, which eventually would result in sending liquefied natural gas (LNG) exports to Asia and the North American West Coast.

The combined field, which includes the Gorgon and Io-Jansz fields, holds an estimated 40 Tcf of recoverable gas, which makes it one of the largest in the world. No gas has been booked as undeveloped reserves yet because final sales agreements are not in place.

Under the agreement, ChevronTexaco will hold a 50% stake and will operate the field. ExxonMobil and Shell will each hold a 25% stake. By working together, the majors expect to have lower overall development costs, fewer drilled wells and better prospects for the gas.

The gas will be liquefied and brought by tankers to overseas markets. For ChevronTexaco, the gas would likely be sent to its proposed LNG import terminal to be located off the coast of Baja California, Mexico. ChevronTexaco was awarded a permit for the import terminal from Mexican authorities last January (see NGI, Jan. 10). Terminal GNL Mar Adentro de Baja California will have the capacity to store 250,000 cubic meters of LNG, the company said.

Once regasified, the natural gas would be transported to shore through a new underwater pipeline at a rate of approximately 700 MMcf/d. The pipeline will then connect with Baja California's existing gas pipeline system.

Although its construction plans have recently hit a snag (see related story), Sempra also has begun construction of another likely target of LNG from Australia, a receiving terminal at Energia Costa Azul in North Baja California, about 12 miles north of Ensenada (see NGI, March 14). Expected to be operational in 2008, the terminal has all of its 1 Bcf/d capacity under contract through a combination of a 20-year capacity agreement for up to 500 MMcf/d with Shell International Gas Ltd. and a separate contract for 500 MMcf/d of Indonesian supplies that Sempra has purchased in a 20-year deal.

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