Energy supply chain reinforces links

LEADING Australian integrated energy company Origin Energy has diverse operations spanning the full energy supply chain: from gas exploration and production to power generation and retail, the company is involved in every aspect of the domestic market.
Origin has a strong focus on ensuring the sustainability of its operations. It is the largest ‘green’ energy retailer in the country and has invested heavily in renewable sources and technology. In order to meet ongoing demand for energy in Australia, Origin operates several offshore exploration permits – including areas of the Bowen, Surat and Cooper/Eromanga basins in Central Australia; areas of the Otway and Bass basins in Southern Australia; and interests in the Perth Basin in WA and
the Bonaparte Basin in the Northern Territory – as well as a portfolio of onshore gas processing facilities.
Origin also generates renewable energy from the Cullerin Range wind farm in NSW and has invested in a portfolio of other renewable energy opportunities including wind, hydro, geothermal and solar photovoltaic technologies.
In its March quarterly report for 2012, Origin stated that its total gas production for the quarter was 31 petajoules equivalent: a 6 per cent increase on the corresponding period of the previous year. Origin chief executive officer, upstream Paul Zealand attributed this to increased production from the company’s key involvement in the Australia Pacific LNG joint venture partnership and its Otway gas project. “Sales volumes of 33PJe during the quarter were consistent with those achieved during the same period in 2011,” Mr Zealand said.
“However, higher commodity prices pushed sales revenues up by 2 per cent to $203 million when compared with the March quarter last year.”
Otway gas project, Victoria The Otway gas project comprises two offshore gas fields: Thylacine, in Tasmanian waters about 70km south of Port Campbell in Victoria; and Geographe, 15km north of Thylacine in Victorian waters. The venture also includes an onshore production facility near Port Campbell that produces natural gas, condensate and liquified petroleum for sale.
Thylacine and Geographe were both discovered in 2001; the Otway project’s development was sanctioned in 2004, and production began in mid 2007.
In March 2010, Origin increased its interest in the Otway project from 30.75 per cent to 51.55 per cent when it acquired Woodside Energy’s controlling stake in the project for $712.5 million.
Origin’s acquisition included production licences containing the Thylacine and Geographe fields plus associated offshore production facilities, pipelines and an onshore gas processing plant, together with adjacent exploration permits.
The Otway gas project is now made up of three joint ventures between Origin, Benaris International and CalEnergy: Development Joint Venture, in which Origin holds 67.23 per cent, Benaris 27.77 per cent and CalEnergy 5 per cent; Exploration Joint Venture (T/30P and VIC/P43), in which Origin holds 67.23 per cent, Benaris 27.77 per cent and CalEnergy 5 per cent; and Exploration Joint Venture (T/34P), in which Originholds 82.30 per cent, Benaris 12.70 per cent and CalEnergy 5 per cent.
Raw gas from the Otway project’s fields is extracted using an offshore platform, and the gas is then transported via offshore and onshore pipelines to the processing plant.
The project was designed for average production of 60PJ per annum of natural gas, together with about 100,000t of LPG and about 800,000 barrels of condensate.
The maximum operating capacity of the onshore plant is about 205 terajoules per day, equivalent to 75PJ/a.
The Otway plant is part of a local gas industry hub that includes processing capabilities for Santos’s Minerva and Casino developments and the Iona underground gas storage facility.
The hub is also the junction of natural gas pipelines to Adelaide, Melbourne and Origin’s new Mortlake gas-fired power station, about 70km to the north.
A number of discovered and as yet undeveloped fields are also present in the Otway Basin region, including the Halladale and Black Watch fields.
Both of these are owned by Origin and are being assessed for production viability.
On April 19, Origin announced on behalf of its VIC/P43 JV partners that the Thistle 1 exploration well, 16km north-northwest of the Geographe field, had spudded and was targeting about 500 billion cubic feet of gas in place.
In May, Origin reported that the well had reached a total depth of 2265m below the rotary table, drilled using the semi-submersible Stena Clyde rig.objective Waarre sandstones [and] plug and abandonment planning is underway,” the company stated.
BassGas project, Victoria Development of the BassGas project began in 2001, and it was officially launched by then-Victorian Premier Steve Bracks in October 2006.
The project’s development was led by Origin subsidiary Origin Energy Resources and its original JV partners AWE, CalEnergy and Wandoo Petroleum Mitsui: combined, the partners invested a total of $750 million in the project’s development.
Today, BassGas operates as a JV between Origin Energy Resources (42.5 per cent and operator), AWE (46.25 per cent) and Toyota Tsusho Gas E&P Trefoil (11.25 per cent). CalEnergy divested its original 15 per cent holding in the project to AWE in 2010.
The BassGas project’s Yolla offshore platform sits in 80m of water in the Bass Strait. Gas and liquids are extracted from a sandstone reservoir more than 3km deep through two wells.
Once extracted, the gas and liquids from the Yolla field are transported 150km via an undersea pipeline to the Lang Lang gas processing plant, 70km south of Melbourne.
The gas is processed for sale before being transported through an onshore underground gas pipeline to the Victorian Principal Gas Transmission Pipeline near Pakenham.
Since its launch, the BassGas project has provided a significant supply of gas to the Victorian market: it was designed to produce about 20PJ/a of natural gas, along with 1 million barrels of condensate and 65,000t of LPG.
With demand for gas in south-eastern Australia set to increase, work is under way to extend the life of the BassGas project through the Yolla Mid-Life Enhancement (MLE) project.
Origin reported that the first stage of funding formally approved by the BassGas JV for the Yolla MLE enabled an offshore construction campaign during the summer of 2011-2012.
In April this year, the company reported that a significant milestone had been reached with the successful lifting and connection of a new accommodation and controls module to the Yolla A platform.
In a statement on April 23, Mr Zealand said that offshore construction for stage one of the Yolla MLE project was well advanced.
“The safe installation of the accommodation module is an important part of the platform upgrade, which will continue with the addition of gas compression and new condensate pumping capabilities,” he said.
“The MLE will improve operational efficiencies at BassGas and access remaining gas reserves to allow the continuing supply of gas to help meet Victoria’s energy needs.”
According to the statement, the successful installation of the accommodation module and associated controls equipment “paved the way” for further critical work on the Yolla MLE construction program, including the lifting into place of the compression and condensate pump modules and commissioning works to complete stage one of the project.
“The joint venture is targeting to restart production from Yolla inJuly, with project commissioning and completion during the September quarter,” Origin reported in the statement.
“Unique offshore construction challenges associated with working on the remote Yolla platform, together with some minor scope changes, have led to an extension of the time required to complete the project.
“This has resulted in an increase in total costs for stage one from approximately $360 million to approximately $460 million.
“Evaluation of the program for stage two of the…MLE project continues. This will include the drilling of the Yolla 5 and Yolla 6 development wells, and is currently expected to be undertaken during the summer of 2013-2014.”
Queensland CSG
As part of the Australia Pacific LNG joint venture with ConocoPhillips (37.5 per cent) and China Petrochemical Corporation (Sinopec Group, 25 per cent), Origin (37.5 per cent) is working to develop one of Australia’s largest CSG to LNG projects, focussed on the Spring Gully and Walloons areas of Queensland.
Australia Pacific LNG is already the largest producer of CSG in Australia: from its existing CSG fields in the Surat and Bowen basins it supplies gas to power stations to produce lower-emissions electricity for major industrial customers, homes and
businesses in South East Queensland.
The CSG to LNG project will increase domestic gas production to further supply gas-fired power stations, major industrial customers and residents throughout Queensland.
It consists of three key parts: further development of Australia Pacific LNG’s gas fields in the Surat and Bowen basins; construction of a 520km gas transmission pipeline from the gas fields to an LNG facility on Curtis Island, off the coast of Gladstone; and construction of an LNG facility on Curtis Island, with two initial gas production trains processing up to 9 million tonnes per annum.
Origin is responsible for construction and operation of the project’s gas fields and main gas transmission pipeline, and ConocoPhillips is responsible for the construction and operation of the project’s LNG facility. Sinopec, which joined the project
in April 2011 as both its foundation customer and part equity owner, signed a sale and purchase agreement with Australia Pacific LNG for the supply of 4.3mtpa of LNG for 20 years plus an agreement to subscribe for an interest in Australia Pacific LNG.
In December of the same year, a heads of agreement (HOA) was signed that established non-binding key commercial terms between Australia Pacific LNG and Sinopec for the sale and purchase of an additional 3.3mtpa of LNG through to 2035.
The first train of Australia Pacific LNG’s CSG to LNG project was sanctioned in July 2011, and was followed by the signing of a binding HOA with Japan’s Kansai Electric Power Company in November of that year for the sale and purchase of about 1mtpa of LNG for 20 years from 2016.
On May 24 this year, Australia Pacific LNG announced that it had secured a US$8.5 billion project finance facility signed by the Export-Import Bank of the United States (US EXIM), The Export-Import Bank of China (China EXIM), and a syndicate of Australian and international commercial banks.
Australia Pacific LNG reported at the time that the commercial banks and US EXIM had executed finance agreements for 16 and 17-year terms respectively, while China EXIM had signed a commitment letter agreeing to the key terms of the project finance facility.
On June 8, Australia Pacific LNG reported that China EXIM had signed final definitive project finance documentation.
It stated that the financing would provide funding for the downstream parts of its CSG to LNG project, including the liquefaction facilities on Curtis Island, and would underpin the ongoing development of the project.

 

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