Australia Pacific LNG (APLNG) — a joint venture (JV) of ConocoPhillips and Australia’s Origin Energy — said Thursday it has approved the final investment decision for the first of two liquefied natural gas (LNG) trains, part of a $20 billion project to transport 24 Tcf of coal seam gas (CSG) to its LNG facilities on Curtis Island, Queensland.
The APLNG project, as well as another in Australia being undertaken by Royal Dutch Shell plc, could affect global LNG prices and plans for North American LNG export facilities in Western Canada and the U.S. Gulf Coast.
APLNG said the first phase of the project would involve building infrastructure to supply the first LNG train, namely development in the Surat and Bowen basins, construction of a transmission pipeline from the onshore gas fields to Curtis Island and unspecified infrastructure commitments to support the second LNG train.
The company said the first train should be online in 2015 and will be used to satisfy a binding sales agreement with China Petroleum & Chemical Corp., also known as Sinopec Corp., for 4.3 million metric tons per year of LNG.
According to ConocoPhillips CEO Jim Mulva, APLNG has one of the largest CSG reserve positions in the world, and his company is the world’s largest producer of CSG.
“The final investment decision reinforces our commitment to deliver safe and reliable energy to the world, and this world class project is well placed to help meet the growing demand for LNG in Asia,” Mulva said. “With the strengthening LNG market and [APLNG’s] superior natural gas resource position, we expect to sanction the second train in time for early 2016 deliveries.”
Most of the Surat Basin is in New South Wales, but a portion is in Queensland. The Bowen Basin is entirely in Queensland.
Under the terms of the JV, the final investment decision being made satisfies the final precondition for Sinopec becoming a 15% partner in APLNG. The Australian and Chinese governments must still approve the move, but this is expected to occur by early August. Once approved, ConocoPhillips and Australia’s Origin Energy will each have a 42.5% interest in APLNG.
Meanwhile, Shell is developing the world’s first floating LNG (FLNG) facility — expected to cost $20 billion — which will be moored about 124 miles off the coast of Western Australia (see Daily GPI, May 23).
“$20 billion is not such a bad cost considering where oil prices are today,” Shell CFO Simon Henry said during an earnings conference call Thursday (see related story). “We have to look at the commercial terms, the contracts, to get the economics. Yes, the first [FLNG facility] costs a bit more, but the second, third and fourth will be a bit cheaper.”
The Prelude FLNG Project will take gas from the Prelude and Concerto fields, located in the Browse Basin, which contain about 3 Tcfe of resources. Production aboard the FLNG is expected to begin by 2017. Shell said the facility should produce 110,000 boe/d underpinned by at least 5.3 million metric tons/year of liquids. The liquids total would include 3.6 metric tons/year of LNG, 1.3 metric tons/year of condensate and 0.4 metric tons/year of liquefied petroleum gas.
Energy market analysts from Douglas-Westwood predicted last month that worldwide demand for LNG will continue to grow in the long term, especially in Asia (see Daily GPI, June 27). The analysts said liquefaction projects in Australia would help meet that demand, and said investment in LNG projects worldwide could reach $26 billion annually by 2015.
Other analysts have disagreed over when a worldwide oversupply of natural gas would end, which would affect LNG prices as well (see Daily GPI, June 23). Researchers with Wood Mackenzie believe the oversupply will end as early as the winter of 2012, citing political unrest in the Middle East and North Africa, and the earthquake and nuclear disaster in Japan. But the International Energy Agency said a gas glut could last another 10 years.
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