Top End interest bringing top results

THE Northern Territory is in the perfect position to become an important gas hub, according to the NT Government: it already has a solid plan for the next 20 years through the Territory 2030 strategy.
The NT Government’s Department of Business website states that the Timor Sea “holds great potential for future oil and gas exploration opportunities”. In 2006, LNG was exported for the first time from the new $1.75 billion, 3.24 million tonne per annum LNG plant in Darwin Harbour.
During the 2010 to 2011 financial year, the value of gas and liquids production in the NT  rose 8 per cent to $2.1 billion.
NT Department of Resources director of energy Alan Holland said the Territory had a good chance of being the country’s most important oil and gas hub.
“It’s certainly a possibility because of how close we are to the Asian markets and also to the rest of the world. We’re 4000 kilometres closer than the rest of Australia. We have a great port and plenty of land to look at for further production plants,” he said.
“We’ve got great support services; the businesses here are very proactive, and oil and gas savvy. I can’t see any reason why it would not be [the centre of gas development] at some stage.
“The Top End of Australia seems to be going that way. We certainly are leading that with access and facilities currently available.” Part of the Government’s economic focus is oil and gas because, according to Mr Holland, “that’s where there is a future”.
The territory is home to a growing list of gas projects that will contribute to the NT Government’s Territory 2030 target of establishing Darwin as its hub of oil and gas operations.
In operation
Although there are many projects in the pipeline for the NT, it is currently home to only a small number of operating gas assets.
These came online during the past 20 years, through gas discoveries and the completion of facilities, to serve the international gas market and supply gas to the domestic market.
Bayu-Undan and the Darwin LNG plant About 500km offshore Darwin and 250km south of Timor-Leste in the Timor Sea sits the Bayu-Undan gas field: a joint venture between operator ConocoPhillips (about 57.2 per cent), Santos (about 11.5 per cent), Inpex (about 11.3 per cent), Eni (about 11 per cent) and Tokyo Electric Power and Tokyo Gas (about 9.2 per cent).
Bayu-Undan was discovered in 1995, in the Timor Sea’s Joint Petroleum Development Area, and the project is managed by both Australia and Timor-Leste.
By 2004, the field was producing 60,000 barrels of LNG per day.
With an expected field life of 25 years, Bayu-Undan was determined to have an estimated recoverable hydrocarbon resource of 4 trillion cubic feet of gas and 550 million barrels of condensate and LPG.
The Bayu-Undan project comprises: three offshore facilities; a central production and processing complex with a drilling, production and processing platform plus a compression, utilities and quarters platform; an unmanned wellhead platform; and a floating storage and offloading facility.
The project was constructed in two phases. The first focussed on processing wet gas; separating, storing and offloading condensate, propane and butane; and constructing a gas recycle facility. The second involved piping the dry gas to a facility in Darwin and converting it into LNG for sale.
The Bayu-Undan facility is connected to the Darwin LNG plant at Wickham Point by a 502km subsea pipeline that was completed (after three years of construction) in early 2006, following the signing of an LNG sales and purchase agreement with Japan’s Tokyo Electric and Tokyo Gas.
Mr Holland said the Darwin LNG plant benefitted the NT economy through employment opportunities and oil and gas support.
“The actual pipeline into Darwin and the plant has obviously injected a huge amount of money into our economy,” he said.
“I couldn’t give you a dollar value but it has certainly been a major boost for us and once [Inpex’s Ichthys project] comes online it will be another major boost for us, particularly in the support services for small businesses.”
The Darwin LNG plant can process 3.24mtpa but has government environmental approvals to produce up to 10mtpa.
In February 2012, Santos chief executive David Knox was quoted on energy website Platts as saying that it was likely that the plant would be expanded through the provision of a second LNG train.
“It is clearly a prime piece of real estate with a good operator and a good track record, so there’s every likelihood it will [expand]” he said. “It’s just a matter of pulling together a development that really makes sense and is economic. That’s what we and other partners have been working on for some time.” Meanwhile, ConocoPhillips Australia-West president Todd Creeger told the South East Asia Australia Offshore Conference in September that there could be an opportunity
to feed an expansion of the plant with gas from the Browse Basin.
The Blacktip gas field is in the Timor Sea, 315km off the coast of Darwin and within the Southern Bonaparte Basin.
It was discovered in 2001 via the Blacktip-1 well and by September 2009, the field was in production.
Owned 100 per cent by Eni, Blacktip was developed to supply domestic gas for the NT market through a 25-year gas sales agreement with the Power and Water Corporation (PWC).
According to a statement by the Australian Pipeline Trust, PWC and Eni entered into an agreement to supply gas to “meet the Northern Territory’s long-term power generation requirements”.
With an estimated 1.1tcf of recoverable reserves, production from the field is expected to rise to 18,000bbls per day.
Domestic gas from the Blacktip field is pumped along a 107km pipeline for processing onshore at a plant near Wadeye, and is then supplied to PWC.
A 275km gas pipeline runs from the gas plant to the pipe that joins the Amadeus Basin to Darwin. Linking the plant to the rest of the NT, the pipeline is capable of delivering 30 petajoules per year.
Helium in Darwin
BOC’s Darwin Helium Plant, the first in the southern hemisphere, was opened in 2010.
It is next to the Darwin LNG facility, which supplies the raw helium from a previously unused vent stream.
Helium is useful for medical, industrial and electronic applications.
“The new plant will produce 150 million cubic feet of helium annually, enough to supply all of Australia’s needs with additional capacity available for export to other world markets,” BOC managing director Colin Isaac said at the time of the plant’s official opening.
“Australia’s helium requirements were previously met by importing product from overseas, typically from the USA and the Middle East.”
Planned projects
The NT Government has been busy showing countries and companies why it believes the Top End is the best Australian location in which to conduct operations.
Mr Holland said the vast amounts of space and resources in the Territory meant that it was attractive to exploration companies.
“Although we don’t have a [large] domestic market, producing or finding gas somewhere in the territory [is easier because] you’ve already got a production plant to be able to export [from],” he said.
Mr Holland attributed the steady stream of new developments to positive interactions between companies.
“The Government is certainly getting out there to promote the opportunities here butit’s also word of mouth,” he said. “One company starts sniffing around the
area and buzzing around, and they start exploring while other companies take note, and they start to come in and look at the areas as well.”
He said that a number of projects directly and indirectly involved with the NT had come into existence through this process.
Marine Supply Base
Next to Darwin’s East Arm Wharf are 8.55 hectares of vacant land.
The $110 million Marine Supply Base that will be built on the land will cater for growth at the wharf intended to meet the future needs of the resources sector.
“The main idea from my oil and gas point of view is to have a dedicated base that is specifically set up for loading, support services, tugs, supply boats, doing maintenance [and] doing general installation work for the oil and gas industry but also for other industries that are around,” Mr Holland said.
“That was the whole idea of the Marine Supply Base: to have a dedicated area for that type of industry.”
The investNT website states that “the facility is well placed to secure business from exploration, development and operational activities in the Arafura and Timor Seas and the Browse Basin”.
After the construction contract was signed in February 2012, NT chief minister Paul Henderson said that the facility would cement Darwin’s position as an important oil and gas hub.
“Already major players have come on board to take advantage of our world-class Marine Supply Base, with ConocoPhillips to use it for their existing operations, Inpex confirming they will be using the base during their multi-billion dollar gas development and Shell confirming they will use it to service their floating LNG [FLNG] plant in the Browse Basin,” Mr Henderson said.
According to the NT Government’s website, the base will be the first of its kind in northern Australia and will provide a facility for vessels that supply offshore oil and gas projects.
Following consultation with a number of interested companies, locally-based Macmahon was selected to build the facility, which will be operated by ShoreASCO during its first 20 years of operation.
The base will comprise three marine berths with water, fuel, chemical and drilling mud connections; hardstand and lay down areas; a waste management facility; warehousing and office space; and storage for drilling mud, chemicals, fuel and water.
It is expected that the facility, which will be able to service 1000 vessels per year with a turnaround of 12 hours, will be completed in October 2013.
“It will be a great advantage to Darwin and also a great international focus for Darwin,” Mr Holland said.
According to Inpex, the Ichthys field within the Browse Basin represents the largest discovery of hydrocarbon liquids in Australia in the last 40 years: it contains more than 500mmbbls, and is expected to produce 8.4mt of LNG and 1.6mt of LPG each year. It will also produce about 100,000bbls of condensate per day at its peak from a floating central processing facility (FCPF). In total, the field holds resource estimates of more than 12tcf of gas.
Ichthys covers an 800 square kilometre area 220km off the coast of WA and 820km southwest of Darwin, and comprises the Brewster and Plover reservoirs.
Fifty wells will be drilled in the field during its 40-year life under the Ichthys JV between operator Inpex (76 per cent) and Total (24 per cent).
In good news for the NT, the Ichthys LNG plant is being constructed at Blaydin Point on Middle Arm Peninsula in Darwin Harbour.
The onshore plant will be capable of producing 8.4mt of LNG from two LNG trains, 1.6mt of LPG per year, and 15,000bbls of condensate per day: all received directly from the field after being processed at the FCPF.
The pipeline connecting the offshore platform to the gas plant in Darwin will be the longest in the southern hemisphere at 883km.
The dredging of an LNG shipping channel began in October 2012, and is expected to shift 15 million cubic metres during the two-year operation.
Once completed, Royal Dutch Shell’s US$12.6 billion Prelude FLNG project, about 475km northeast of Broome offshore WA, will be longer than four soccer fields laid back to back.
Shell’s FLNG technology was described by Shell Australia head Ann Pickard at the Deep Offshore Technology Conference in Perth in November as the possible “saviour” of Australia’s LNG industry.
When production is in full swing, Shell expects the 100 per cent owned and operated venture to produce at least 3.6mt of LNG, 1.3mt of condensate and 0.4mt of LPG each year of its 25-year life.
The Prelude field was discovered in 2007: two years before Concerto, the second field within the WA-371-P permit, was found.
The project’s FLNG facility, currently under construction in a Korean shipyard, will be mounted on a large vessel and moored directly above the field. Support for Prelude will be shared between Broome and Darwin, with the gas field serviced from Broome but maintenance work carried out from Darwin.
Prelude’s primary supply base, marine support operation, and maintenance and inspection services will be housed on 5ha of land in the East Arm Industrial Area. Facilities will include a purpose-built warehouse and office and will be finished in 2014.
In October 2012, two years after receiving environmental approval, Shell began cutting the steel for the mammoth project that will eventually consist of 260,000t of steel and weigh 600,000t.
According to a statement by the Federal Government, Prelude would add more than $45 billion to Australia’s gross domestic product, create about 1000 jobs, contribute $12 billion in tax revenue, spend $12 billion on Australian goods and services, and improve Australia’s balance of trade by at least $18 billion.
It is expected that production will begin in 2017.
The Bonaparte Basin, which straddles the border between the NT and WA, is receiving considerable attention.
The Bonaparte LNG project, 250km from Darwin in the Timor Sea, is a joint venture between GDF SUEZ Bonaparte (60 per cent) and Santos (40 per cent) that will extract natural gas from three remote offshore fields: Petrel, Tern and Frigate.
A two-year, 22-well development drilling program will begin in 2016, comprising wells 16 in Petrel, five in Tern and one in Frigate. Once Bonaparte is fully operational, the project will produce between 2mtpa and 3mtpa of LNG and will be serviced out of Darwin. An FLNG facility will be moored within the Petrel field for the entirety of the project’s 25 to 30-year life.
Federal environmental approval for the project was received at the end of October 2012, and front end engineering and design will begin in 2013.
A final investment decision is due in 2014, and first commercial gas is expected in 2018.

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