Tuesday, January 22, 2013

Santos’ Crown gas could feed LNG projects

Santos’ Crown gas could feed LNG projects:
"We're talking very significant volumes of gas - LNG scale volumes of gas if this is successful," Mr Knox said. "It's between two important LNG projects, the Browse project and the now-sanctioned Ichthys project, and, of course Prelude is very close as well.

"So, it's got a fantastic street address and if it comes in, it's going to be a very interesting piece of acreage for us in the future."


  1. "It's between two important LNG projects, the Browse project and the now-sanctioned Ichthys project, and, of course Prelude is very close as well.

    The company has also previously noted the potential for Crown and other nearby Santos-operated prospects to be developed on a stand-alone basis."


    Odds on after their recent lessons on cost blowouts it wont be onshore Australia,except maybe for Darwin.

    A few headlines for Santos.

    The company's main LNG development project is the $18.5 billion Santos-operated Gladstone LNG project on the Qld central coast, which is part of a suite of coal seam gas-to-LNG projects in the region.

    Its cost blew out by $2 billion last year, is only 45 per cent complete and due to come online in 2015.


    Santos has hiked the cost of its Gladstone LNG project in Australia by 15 per cent to $US18.5 billion ($18 billion) to fund increased drilling for coal seam gas to supply its plant in Queensland in time for the planned start-up in 2015.

    Santos said the extra $US2.5 billion in spending had been slated for after 2015 but was being brought forward in order to drill 300 extra wells before the end of 2015.


    EXXON Mobil, the world's largest listed oil company, said today the cost of building a massive natural gas-export project in Papua New Guinea has blown out to $US19 billion, from a previous estimate of $US15.7bn.

    Foreign exchange fluctuations accounted for $US1.4bn of the increase, while delays from work stoppages and land access issues added a further $US1.2bn, Exxon Mobil said.

    Another $US700 million was pinned on adverse logistics and weather conditions including rainfall that exceeded historical norms. The capacity of the liquefied natural gas, or LNG, plant has been increased to 6.9 million tonnes per year from 6.6 million tonnes, Exxon said.

    It is the second cost blowout announced by the joint venture, which also includes Australia's Oil Search and Santos as major shareholders.

    Last year, it increased the cost estimate to $US15.7bn from $US15bn due to foreign exchange movements.


    Santos : ..the company agreed the nation's high-cost environment would threaten new projects, particularly as potential new LNG exports threaten to emerge from places such as the onshore shale gas fields of the US and offshore gas fields of east Africa.


    Wood Mackenzie head of upstream research, Iain Brown, said Australian cost inflation had been close to 20 per cent in the past year alone.

    "There are clear signs that increased costs of materials and manpower are now threatening the viability of new projects," Mr Brown said.


    LNG window closing as costs rise

    by: Paul Garvey
    From:The Australian
    December 11, 201212:00AM

    Macquarie analyst Adrian Wood says Australian capital expenditure on LNG projects may peak next year, with the recently approved Ichthys development increasingly likely to be the country's last new project to move into construction.

    The forecasts challenge widely held government and corporate expectations that LNG investments will make Australia the world's largest producer and help sustain the national economy over the coming decade.

    The ExxonMobil-led PNG LNG project (which also involves Australian duo Oil Search and Santos), BG Group's Queensland Curtis LNG, the Santos-led Gladstone LNG and the Chevron-operated Gorgon LNG project have all announced cost blow-outs in recent months, further straining project economics that are already coming under pressure from shifting market dynamics.

    Mr Wood said Australia's five most advanced LNG projects were on average more than 32 per cent over budget and six months behind schedule despite being only 60 per cent complete.

    The blowouts mean the forecast internal rates of return for the projects have fallen from 14.9 per cent to 11.7 per cent, which, he said, "provided scant reward for the considerable development risks endured".

  2. For JPP the last paragraph says it all :

    "The blowouts mean the forecast internal rates of return for the projects have fallen from 14.9 per cent to 11.7 per cent, which, he said, "provided scant reward for the considerable development risks endured"."

  3. Australian Magnolia LNG export project In US is launched by Louisiana Governor

    Monday, 21 January 2013

    LNG Ltd. and the Governor of the US State of Louisiana held a launch meeting for the Magnolia LNG project, signalling what the Australian company said was its formal entry into the dynamic US LNG market.


    Fatal vehicle accidents high in US oil and gas industry

    Oil and gas industry workers in the United States are 8.5 percent more likely to die in a motor vehicle accident while on the job than those working in other sectors, according to a recent study published online by Accident Analysis & Prevention. Vehicle accidents accounted for 28 percent of all work-related deaths among workers in the industry between 2003 and 2009, Fuel Fix reported.

    The article stated this may be due to the fact many of oil and gas workers are young, male, work long hours anddrive pickup trucks on rural highways. According the to study, those working for smaller companies, like well-service companies, are especially at high risk for fatal car accidents.

    ...more than a third of the oil field workers killed in accidents between 2003 and 2009 were working in Texas.

    “Texas had by far the largest number of rigs,” he said, according to Fuel Fix. “At the time the study was done, North Dakota didn't have many at all, but they are growing at a fast, fast pace. It is definitely an issue that needs to be addressed in North Dakota.”

    Oil and gas exploration isn't expected to slow down in the United States. The Globe and Mail recently reported the booming industry could experience a "glory year" in 2013, reaching record activity levels.


  4. Climate change moves to forefront in Obama's second inaugural address

    Obama did not stint on the language, suggesting it was a religious and patriotic duty to deal with the challenge.

    "We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations," Obama said. He made a carefully calibrated appeal to Republicans, situating a transition from fossil fuels to clean energy in a religious and conservative framework of God and constitution.

    "That is how we will preserve our planet, commanded to our care by God. That's what will lend meaning to the creed our fathers once declared," Obama said.

    "Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms," Obama said.

    The language and reaffirmation of climate science won praise from environmental groups. "This is a call to action against the climate chaos that is sweeping our nation and threatening our future. Now it's time to act," Frances Beinecke, the president of the Natural Resources Defense Council, said in a statement.


    What is causing Australia's heatwave?

    Does the country's record-breaking heatwave have something to do with climate change?

    The most significant thing about the recent heat has been its coverage across the continent, and its persistence.


    It is not that common for the Australian-average temperature to exceed 39°C for even two days in a row. A run of three days above 39°C has occurred on only three occasions, and a run of four days just once, in 1972.

    The current heat wave has seen a sequence of Australian temperatures above 39°C of seven days, and above 38°C of 11 days straight.

    The sequence of Australian mean temperature has been just as impressive. As things currently stand, the first two weeks of January 2013 now hold the records for the hottest Australian day on record, the hottest two-day period on record, the hottest three-day period, the hottest four-day period and, well, every sequential-days record stretching from one to 14 days for daily mean temperatures.

    The number of records that have tumbled for individual sites are now too numerous to catalogue here, and the Bureau of Meteorology has prepared a Special Climate Statement with a detailed analysis the temperature records broken. The list of records is limited to just those stations with at least 30 years of records.

    So, does all this have something to do with climate change?


    The lead-in climate conditions for this event were four months of very warm temperatures across Australia. September to December 2012 was the warmest such period on record (since 1910) for daily maximum temperatures.

    During November, a precursor of the January heat wave affected many parts of the country for a prolonged period.


    Within the past decade, the number of extreme heat records in Australia has outnumbered extreme cold records by almost 3:1 for daytime maximum temperatures and 5:1 for night-time minimum temperature.

    It is worth noting the summer just gone in the US was the warmest on record, with extreme heat records broken at a rate never previously seen before. Studies here and overseas are now showing that many of the recent extreme summer heat events around the world — such as the European heat wave of 2003, the Russian heat wave of 2010, and US heat waves during 2011 and 2012

    Of great concern in Australia is the substantial increasing trend in severe fire weather — weather conducive to the spread and intensification of bushfires and grass fires


    These changes will result in weather events which are increasingly beyond our prior experiences.

    And it's not just temperature extremes. Climate model projections indicate that the frequency of many different types of extreme weather will change as the planet warms.

    • This article was first published on The Conversation


    Brickworks managing director Lindsay Partridge told the Australian Financial Review that his company could not secure gas contracts further than two years out, while the price of gas has tripled in the LNG-producing states of WA and Queensland.

    “I call it the ‘delivered to Tokyo’ price,” he said.

    “It would be cheaper to import gas from the United States to Australia than buy locally. You ask yourself: How did Australia get its gas policies so totally wrong?”


    THERE appears to be consensus emerging that the country will not likely meet its target of producing 6.5 billion cubic metres of shale gas by 2015, but the country appears to be on its way to being one of the world’s largest shale gas producers.


    Things appear to be heating up on the western coast of Canada, with BC LNG reportedly agreeing to sell 700,000 tonnes of LNG to Asia with pricing linked at US and Canadian prices.

    “What we’re seeing is that the Asian marketplace is now beginning to embrace the North American gas indicies as the pricing forum,” BC LNG managing director Tom Tatham was quoted by the Globe and Mail as saying.

    According to Platts, North American gas traded at $US3.57 per million British thermal units last week while LNG from Japan and South Korea sold for $17.35/MMBtu.

    “I think what we’re doing will have a positive effect on the gas market.


    IT may sound like something out of an Ian Fleming novel, but Belgium is reportedly considering building an “island of wind” to help move it away from nuclear energy.

    Concept art for the 'Island of Wind': Image from APZI news agency

    According to Reuters reports, the nation is considering building an artificial doughnut-shaped island in the North Sea to help store energy created from wind.

    While the main problem with renewable energy is seen as the intermittency of the power source, Belgium’s North Sea minister Johan Vande Lanotte says the island would help counteract this effect.

    Belgium is planning a complete weaning from nuclear power as soon as enough energy from alternative sources becomes available. In 2011, about 57% of Belgium’s energy came from nuclear energy.

    1. CHINA :

      THERE appears to be consensus emerging that the country will not likely meet its target of producing 6.5 billion cubic metres of shale gas by 2015, but the country appears to be on its way to being one of the world’s largest shale gas producers.

  6. Santos have a few choices here.

    Inpex/Total have planned spare capacity in their pipeline to Darwin.

    Santos have an LNG plant in Darwin with room to expand trains.

    This from 2010 :

    TOTAL Oil eyes Asia in local LNG venture

    by: Andrew Burrell
    From:The Australian
    September 30, 201012:00AM

    ...Mr Guillermou extinguished any hope that the Ichthys gas, located in the Browse Basin off the West Australian coast, would be processed at the Kimberley LNG hub proposed by the WA and federal governments.

    INPEX and TOTAL decided in 2008 to build a 900km pipeline to a Darwin processing plant due to doubts over the availability of land in the Kimberley, but WA Premier Colin Barnett has refused to give up hope the project could return to his state.

    The proposed site at James Price Point, 60km north of Broome, is backed by Woodside Petroleum but has been thrown into doubt by native title claims.

    "There's absolutely no way we could change the decision" to go to Darwin, he said.


    The ICHTHYS PIPELINE could also be used to move gas to DARWIN from any future discoveries -- by TOTAL OR OTHER EXPLORERS -- off the Kimberley coast as it was likely to have SPARE CAPACITY, Mr Guillermou said.


    Last month, TOTAL surprised the market by emerging with a 15 per cent stake in SANTOS'S Gladstone Liquefied Natural gas project in Queensland.

    Mr Guillermou said the investment was part of TOTAL'S plan to work with local partners to develop opportunities in Australia.

    "This partnership with SANTOS has opened a way to become more Australian," he said.

    "We need to better understand this country and have better access to the opportunities."


    Mr Guillermou said Total had not considered buying stakes in the Chevron-operated Gorgon or Wheatstone projects in WA.


    Maps of Crown and Dufresne-1,(to be drilled q1 2013),and (Bassett West-1 to be drilled q3 2013) show very clearly their proximity to the Inpex pipeline,marked with a heavy red line.

    But of course in any negotiation it is nice to go in with options.