AS one of the world’s top 10 independent oil and gas companies, BHP Billiton Petroleum accounts for one fifth of parent company BHP Billiton’s total annual earnings: it made US$6.33 billion before interest and tax in the last financial year.
The company, based in Houston, Texas, is poised for 10 per cent year-on-year volume growth; it replaced 376 per cent of its reserves during the last year after producing 222.34 million barrels of oil equivalent.
Due to the company’s further development of its onshore US shale liquids and gas assets there was a 40 per cent increase in petroleum production during the 2011-2012 financial year.
In a presentation to the Australian Petroleum Production and Exploration Association conference, BHP Billiton Petroleum chief executive Michael Yeager said that natural gas was one of the
fastest growing commodities in the world and was becoming increasingly more available.
Mr Yeager added that “our US and Western Australian position remain key parts of our longer-term forward gas development plan”.
With exploration interests across the globe, particularly in the US, the Gulf of Mexico, Australia, Southeast Asia and Latin America, BHP Billiton Petroleum is continuing to expand and WA is an increasingly vital part of its business.
BHP Billiton Petroleum in WA Although its headquarters are based on the other side of the world, BHP Billiton Petroleum’s Australian assets are showing great promise.
The company’s WA assets, in particular, are at the centre of its future plans.
In WA, BHP Billiton Petroleum holds significant acreage in the Carnarvon Basin, with interests in three large exploration blocks opposite large gas fields intended to supply major LNG ventures currently under development.
The $1.5 billion Macedon gas development project is in offshore production lease WA-42-L in the Exmouth sub-basin, about 100km west of Onslow in the Pilbara.
Opeator BHP Billiton Petroleum has a 71.43 per cent interest in Macedon while joint venture partner Apache Northwest has a 28.57 per cent interest.
With first production expected in 2013, the project was given a two-year construction period that began last year. The completed venture will see the Macedon gas field’s four subsea wells connected to an onshore gas plant, designed to produce 200 million standard cubic feet per day, at the Ashburton North strategic industrial area and to the Dampier to Bunbury Natural Gas Pipeline (DBNGP) for the sale of domestic gas to the WA market.
Mr Yeager said in a statement that the Macedon project boded well for BHP Billiton Petroleum’s future.
“Macedon will be a valuable asset for our company, and will improve the security for domestic gas supplies in both the short and medium term for Western Australia,” he said.
“It will be the first development in the important Ashburton North area and will make a strong contribution to the overall growth of our petroleum operations in Western Australia.”
In its June quarter Exploration and Development Report the company stated that Macedon was “on schedule and budget” and was 71 per cent completed.
The North West Shelf Venture
The $27 billion North West Shelf Venture (NWSV) is Australia’s largest oil and gas development, accounting for more than 40 per cent of the country’s total oil and gas production.
It supplies about 65 per cent of WA’s domestic gas market and has sold gas to customers in the Asia-Pacific region since 1989.
Operated by Woodside, the venture is shared between BHP Billiton Petroleum, Chevron Australia, BP Developments Australia, Shell Development and Japan Australia LNG.
BHP Billiton Petroleum has a 16.67 percent working interest in the NWSV’s LNG production and 8.33 per cent working interest in its natural gas.
The North Rankin A platform is the main hub for the NWSV’s offshore gas production, provided with gas and condensate from the North Rankin and Perseus fields. Gas is processed at the Karratha gas plant and delivered to domestic customers in southern WA through the 1600km DBNGP.
One third of the NWSV’s gas comes from the Perseus field, which is an important long-term resource for the project.
In March 2008, the proposed $5 billion North Rankin Redevelopment Project was approved by all NWSV participants. It will recover remaining low-pressure gas from the North Rankin and Perseus gas fields, and extend their lives to 2040.
The completion of the project will see the installation of a new second platform, North Rankin B, which will have gas compression facilities, low-pressure separators, utilities and accommodation.
According to BHP Billiton Petroleum’s most recent quarterly report, North Rankin B is 94 per cent complete and expected to begin production in 2013.
The NWSV’s second construction development is in the Greater Western Flank, which consists of 16 fields estimated to hold up to 3 trillion cubic feet of recoverable gas and up to 100mmbbl of recoverable condensate. Approved in December last year, phase one of the project has begun and will develop the Goodwyn GH and Tidepole fields via a subsea tie-back to the existing Goodwyn
The Greater Western Flank venture, which is 15 per cent complete and running to budget, represents the next biggest development for the North West Shelf.
With development under way and expansion in the pipeline, the NWSV is an important WA asset for BHP Billiton Petroleum and is steadily growing.
The US$1.7 billion Pyrenees venture, BHP Billiton Petroleum’s third WA asset, lies within production permit WA-12-R in the Exmouth sub-basin.
BHP Billiton Petroleum holds a 71 per cent interest and Apache Corporation has a 29 per cent share in the Pyrenees venture.
The project is capable of processing 96,000bblper day, has a combined gas lift/re-injection capacity of 60 million cubic feet per day and has an oil storage capacity of about 850,000 barrels.
In 2007, during the early stages of the Pyrenees project, Mr Yeager said it was a worthy asset for BHP Billiton Petroleum. “The Pyrenees development presents another solid opportunity for the company to commercialise reserves in the Exmouth Sub-basin, an important oil region in Australian waters,” he said.
According to Mr Yeager, the “world-class Pyrenees floating production storage and offloading facility in Western Australia had a successful first year, producing nearly 20 million barrels of oil”.
First oil was produced from the Pyrenees project in February 2010, and it has been continuously producing since from the Crosby, Ravensworth and Stickle oil fields.
The Pyrenees field is expected to produce gas for 25 years.
At a depth of 825m, Stybarrow is Australia’s deepest oil field development and is estimated to contain recoverable reserves of between 60 and 90mmboe.
The field was discovered in 2003, about 20km west of Pyrenees in the Exmouth sub-basin’s WA-255-P permit.
The development of Stybarrow was approved in November 2005. In a JV with Woodside, BHP Billiton Petroleum owns 50 per cent of the project.
After production began at Stybarrow in late 2007, Mr Yeager said he was pleased with its results.
“BHP Billiton’s Stybarrow development is exceeding expectations,” he said.
“The wells have ramped up to full capacity in record time and the processing capability on the vessel has been highly reliable.”
However, according to Woodside’s second quarter report released in July this year, Stybarrow was beginning to exhibit “natural reservoir declines” resulting in a reduction in production figures.
The field is producing an average of 21,250 barrels per day and is estimated to have 10 years of economic field life.
The Scarborough project is a JV between BHP Billiton Petroleum and operator ExxonMobil in the Carnarvon Basin’s WA-1-R permit, about 300km offshore. ExxonMobil said that it was “committed to trying to find a commercial development of Scarborough as soon as possible”.
Scarborough was described by an Exxon spokesperson as “one of the most remote Carnarvon Basin gas resources”.
A number of options are being considered for Scarborough, including the construction of a floating LNG facility; an onshore facility in Onslow; or contributing gas to other LNG ventures such as Pluto or Wheatstone.
The Scarborough field has estimated recoverable reserves of 10tcf of dry gas. According to The Australian newspaper, BHP Billion Petroleum will make a decision on its plans for Scarborough this year.
One of the most controversial and highly-publicised gas developments in WA, the Browse LNG project is a JV between operator Woodside (31.3 per cent stake), Shell (35 per cent), BHP Billiton Petroleum (8.33 per cent), Mitsubishi-Mitsui (14.7 per cent) and BP (undecided).
Still in its concept stages, the project will commercialise the JV’s three gas and condensate fields – Brecknock, Calliance and Torosa – 425km north of Broome.
A gas plant proposed for construction at James Price Point to process gas from the Browse Basin is anticipated to cost between $36 billion and $45 billion, based on non-Woodside estimates.
The LNG development is facing local opposition on indigenous and conservation grounds, in addition to fears for local pursuits such as eco-tourism, and that a rise in population and demand for housing will cause housing prices to increase.
However, the project was given approval by the WA Environmental Protection Authority in July this year.
The Browse Basin contains 30.4 billion cubic feet of gas and 600mmbbl of condensate. Exploration off the WA coast Despite operating and having a share in a large number of assets in Australia and around the world, BHP Billiton Petroleum is continuing to explore offshore WA.
In the 2011 to 2012 financial year, the company spent US$2.5 billion on petroleum exploration and development globally. Since June last year, BHP Billiton Petroleum has drilled offshore WA several times for the purposes of exploration and appraisal.
However, all wells have since been abandoned.
The Banambu Deep-1 well offshore WA was found to be dry, while Tallaganda 1 was plugged and abandoned after hydrocarbons were encountered.
Exploration continues on the NWS but the Seraph-1 and Tidepole East wells have been plugged and abandoned.
Argus-2 in the Browse Basin was temporarily abandoned in September last year, and there are no plans for further drilling there.
North Scarborough was explored this year but was also plugged and abandoned. According to BHP Billiton Petroleum’s latest annual report, the Black Pearl-1 development near Macedon is in the appraisal stage after being drilled in 2010.
Despite having had little success during the last year, the company is continuing to invest in exploration. Australian crude oil and condensate BHP Billiton Petroleum’s Australian projects
are focussed on crude oil and condensate. During the last financial year, these produced 94.2mmboe.