Netting the Northern Territory’s biggest fish

WITH a well-balanced portfolio of LNG exploration and production assets, Inpex Corporation is set to emerge as a global force in the LNG sector by 2016.
Ranked in the top 100 global energy companies, Inpex has a strong international presence and is involved in more than 70 projects in 26 countries.
The company, which is listed on the Tokyo Stock Exchange and operates from headquarters in Tokyo, has been a part of the Australian business community since 1986.
Its primary LNG interests are in Indonesia and Australia – locally, it is operator of the Ichthys LNG project, offshore WA. Inpex reportedly considers the US$34 billion project – for which it will develop the Ichthys gas and condensate field – to be one of the largest and most challenging projects it has ever embarked on. The project will also include the development of an LNG plant and associated facilities that are under construction by JKC Australia LNG on behalf of Inpex in joint venture with major partner Total group companies and the Australian subsidiaries of Tokyo Gas, Osaka Gas, Chubu Electric and Toho Gas. Ichthys Inpex has interests in a string of offshore ventures in WA and the Northern Territory, including the Kitan oil field, in which it has a 35 per cent stake; the Bayu-Undan gas-condensate field/Darwin LNG plant (11.3 per cent); the Van Gogh project (47.5 per cent); the Coniston oil field (47.49 per cent); and the Ravensworth project (28.5 per cent).
The company’s journey toward developing the Ichthys LNG project began in 1998, when it acquired petroleum exploration permit WA-285-P in the Browse Basin, about 820km southwest of Darwin.
Today, Inpex owns 66.07 per cent of the project. Total joined the project in 2006 with a 24 per cent interest, which was increased to 30 per cent in July last year, and the remaining interests are held by Tokyo Gas (1.575 per cent), Osaka Gas (1.2 per cent), Chubu Electric (0.735 per cent) and Toho Gas (0.42 per cent).
Named after the Greek word for ‘fish’, the Ichthys field was discovered after three exploratory wells were drilled during 2000 and 2001. The field’s most likely resource estimates are 12.8 trillion cubic feet of gas and 527 million barrels of condensate, to be produced during an operational life of more than 40 years.
Set for production start-up in 2016, Ichthys field gas will undergo preliminary processing at an offshore central processing facility (CPF) to remove water and raw liquids, including a large proportion of condensate. This condensate will then be pumped to a floating production storage and offloading (FPSO) facility, and transferred to tankers for delivery to various markets.
The gas will be transported from the CPF through a subsea pipeline more than 885km long to the onshore LNG processing plant to be built at Blaydin Point on Middle Arm Peninsula in Darwin. The gas will be cooled to below minus-161 degrees Celsius to become LNG.
In addition to the CPF, the FPSO and the export pipeline to Darwin, the offshore facilities will also include umbilicals, risers and flow lines.
The onshore facilities will comprise: two LNG trains with the capacity to produce 8.4 million tonnes per annum; LPG and condensate processing plants; LNG, LPG and condensate storage tanks; administration facilities; utilities and services; power generation infrastructure; and a product offloading jetty.
In a statement, Inpex chairman Naoki Kuroda said that the Ichthys final investment decision announced in January 2012 signalled the beginning of construction for one of the world’s largest LNG facilities. “In delivering this important project into production, we will be securing vital long-term energy supply to Japan and our other customers while delivering sustainable economic and social benefits across Australia,” Mr Kuroda said.
He said that the Ichthys LNG project was the cornerstone of the company’s growth strategy into the 21st century, and that it would be Inpex’s first time acting as operator of such a world-scale project.
“Ichthys production volumes represent more than 10 per cent of Japan’s LNG imports at current levels,” Mr Kuroda said.
“Ichthys will provide a long-term stable supply of cleaner energy to Japan, and help Japan diversify its energy sources.” Mr Kuroda said the project’s commercial strength would help Inpex to achieve its objective of doubling its oil and gas production during the next decade.
In January, Inpex announced that the first steel had been cut for the 150m by 110m Ichthys CPF – a development that the company stated was an indication that progress was on track for Ichthys to achieve first gas by the end of 2016.
When completed, Inpex stated that the CPF would be the world’s largest semisubmersible platform, with a peak gas export rate of 1657 million standard cubic feet of gas per day.
“This is one of the most exciting parts of the project — the first materialisation of what has been many years of hard work; it’s when the design comes to life,” Inpex president director Australia Seiya Ito said.
“The CPF hull size is nearly at the limit of what the biggest shipyards can build in their dry docks today. It will be moored by 28 mooring lines, representing more than 25,000 tonnes of anchor chain.
“Vicinay in Bilbao, Spain will supply the anchor chains for the mooring lines, together with an additional 15,000 tonnes of anchor chain for the project’s floating production storage and offloading vessel.
The total represents more than the yearly worldwide production of large-scale anchor chains.”
In the same week as the announcement, Inpex reported that it had achieved another milestone with the cutting of first steel for the turret of the FPSO vessel in Singapore. “The turret is the mooring point for the FPSO and the means by which it is able to weathervane in response to prevailing weather conditions,” the company said in a statement.
“The FPSO will be capable of storing approximately 1.2 million barrels of condensate.”
Mr Ito said both the CPF and FPSO would be world-class facilities.
“This has been a momentous week for the Ichthys LNG project as it takes its first big step towards reaching its goal of watching the facilities sail…to Australia in late 2015,” he said.
“We are thrilled to be on schedule to deliver first gas by the end of 2016.” The entire volume of LNG to be produced from the Ichthys project has already been allocated to sales contracts, with 70 per cent to be delivered to Japan. Ichthys LNG, a company jointly owned
by Inpex and Total, signed a legally binding sales and purchase agreement (SPA) with a consortium of five major Japanese utilitycompanies in December 2011 under which Ichthys LNG will sell the companies a total of 4.0mtpa of LNG for 15 years, starting in 2017.
Tokyo Electric Power and Tokyo Gas will each receive 1.05mtpa, The Kansai Electric Power Company and Osaka Gas will both be given 0.80mtpa, and Kyushu Electric Power Company will receive the remaining 0.30mtpa. Inpex also has LNG sales agreements with Chubu Electric Power Company, Toho Gas and CPC Corporation (Taiwan) for a total of 2.52mtpa; Inpex and a Total affiliate will also take a combined 1.8mtpa of LNG from the project. Economic benefits The Ichthys LNG project is set to be the largest oil and gas development to be serviced by the Northern Territory, and will deliver significant social and economic benefits throughout Australia. It will showcase the Northern Territory as a region that is capable of supporting the construction and operation of a major development.
“Ichthys will truly be an international collaboration. An estimated 3000 jobs will be needed in Darwin during the peak of construction, with a further 1000 offshore.
Once the project is in operation, we will require approximately 700 permanent positions,” Mr Kuroda said.
Inpex and Total have committed to a $91 million environmental and social benefits package for the project, which will provide long-term benefits for the community during the life of the project and beyond, including a $3 million contribution to Charles Darwin University for the North Australian Centre for Oil and Gas.
In 2009, Inpex agreed to the Ichthys Project Australian Industry Participation Plan with the Northern Territory and Federal Governments to create mutual benefits through business and employment opportunities.
The key objectives of the plan are to: ensure that Australian industry is provided full, fair and reasonable opportunities to participate in the Ichthys project; develop long-term relationships that ensure innovation, effective cost management and value-added  solutions are delivered; encourage and facilitate local business participation and development in the oil and gas industry; identify and increase the number of local people with the skills to work in the oil and gas industry; and increase livelihood opportunities for local Aboriginal and Torres Strait Islander communities through direct employment and business engagement.
In March 2012, the largest contract to have ever been awarded in the Northern Territory was won by local companies Macmahon Contractors and John Holland in a 50/50 joint venture for the construction of the onshore facilities at Blaydin Point. In a statement, Northern Territory chief minister Paul Henderson said that both were well-known businesses that had been subcontracting, employing and training in the state for years.
“This $340 million contract is just the beginning of many local opportunities the multi billion dollar Ichthys gas project will bring,” he said.
“The Territory has a very bright future as we move into a period of significant economic growth that will bring with it high-skill, high-wage job opportunities.”

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