CAITLYN GRIBBIN: Woodside has this morning told the Australian Stock Exchange it plans to process gas out of the Kimberley's Browse Basin, using floating LNG technology.
In April, Woodside abandoned plans to process the gas onshore at a proposed hub at James Price Point, north of Broome.
That project was always controversial and yesterday, the WA Chief Justice Wayne Martin ruled that some of the approvals for the development were unlawful.
Now, with the approval from joint venture partners, Woodside will proceed with floating LNG technology, which analyst Peter Strachan says will process gas on a huge platform.
Photo Damian Kelly
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Chad suspends China's CNPC unit over environment
ReplyDeleteN'DJAMENA (Reuters) - Chad has suspended all activities of a China National Petroleum Corporation subsidiary for violations of environmental standards while drilling for crude oil in the south of the country.
Chad's oil minister Djerassem Le Bemadjiel told state radio late on Tuesday that a decision had been taken to indefinitely suspend CNPC's operations after a visit at the Koudalwa field about 200 km (124 miles) south of the capital.
"We found flagrant violations of environmental standards by the company ... CNPC's behavior was unacceptable," said Le Bemadjiel.
"Not only do they not have facilities to clean spilled crude, there were also intentional spillages in order reduce costs," the minister said.
Le Bemadjiel said China National Petroleum Corporation International Chad (CNPCIC) dug trenches and dumped crude without safeguards and then later asked local Chadian workers to remove the crude without giving them protective gear.
CNPC's Chad subsidiary was not immediately available to comment. Calls placed to CNPC's office in Beijing were not picked up. The firm has been operating in Chad since 2003 and recently won rights to begin exploration on new blocks in the south of the Central Africa state.
The dispute is the latest in a rocky relationship between Chad and CNPC. The government shut down their joint venture 588-million-euro ($780 million) 20,000 bpd refinery for several weeks in January 2012 in a row over prices for the local market.
Chad became a crude producer in 2003 and production peaked at about 176,000 barrels per day in 2005 before declining primarily due to ageing wells in the country's Doba oil field.
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Chinese company investigated for Chad environmental disaster
.......Oil Minister Djerassem Le Bémadjiel said the CNPC unit's activities will remain suspended until it fulfils the environmental requirements.
CNPC "did not even have a truck to suck the spilled crude. They dug trenches and poured the crude and then asked Chadian employees to scoop it with cups. In which other country have you seen such practices?" said Le Bemadjiel.
The minister said the administration will use the opportunity to carry out an audit and reassess all operators to ensure that environmental management plans signed with the government were being respected.
A senior official at the Chadian Oil Ministry told Reuters that auditors Alex Stewart International has been appointed to carry out the audit, and experts from the company arrived in N'Djamena on Thursday.
CNPC's officials who attended a meeting with Chad's Oil Ministry technicians on Thursday, declined to comment. A source at the firm who requested not to be identified told Reuters that CNPC executives including the company's president would be arriving in Chad by weekend to meet with Chadian authorities.
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Virunga National Park - critically endangered mountain gorillas under threat from oil drillers.
ReplyDelete.
Report: European oil exploration threatens Congo world heritage site
Africa’s oldest national park is in danger of environmental destruction because of mushrooming oil concessions that now cover some 85% of its territory, according to a new WWF report by the consultants Dalberg.
Virunga National Park in the east of the Democratic Republic of Congo is a Unesco World Heritage Site and treasure trove of biodiversity, offering a home to critically endangered mountain gorillas, dormant volcanoes and permanent glaciers.
But an exemption in the Congo’s Conservation of Nature law for “scientific activities” in protected areas is being exploited by the UK-based Soco International PLC through a local subsidiary.
Tony Long, the director of WWF’s European policy office, said that this could threaten forest clearance, environmental degradation and a loss of biodiversity.
“Current and past investments are in danger of being wiped out if oil exploration is allowed to happen,” he said. “Safeguarding this legacy means the EU should uphold the integrity of the Park and fully support the DRC government in developing sustainable energy alternatives.”
The European Commission has provided financial support for Virunga’s conservation for a quarter of a century.
Developed sustainably, the park could add €830 million to the Congolese economy each year and generate 45,000 permanent jobs, according to the new report, ‘The Economic Value of Virunga National Park’.
It says that investments in hydropower, the fisheries industry and ecotourism could positively transform the UN World Heritage Site.
By contrast, in places such as the Bas Congo and Niger Delta, oil spills, pipeline leaks and gas flaring have contaminated the air, water and soil with toxins.
“Pollutants from exploratory drilling include oxides of nitrogen, carbon monoxide, sulphur dioxide and volatile organic compounds. Exploratory wells may provide a path for surface contaminants to come into contact with ground water,” the report says.
“Exposure to these pollutants can cause health problems, such as an increase in respiratory infections or poisoning from contaminated water.”
Anti-social playgrounds
Areas cleared for oil drilling can also be playgrounds for illegal forces such as loggers, poachers and warlords.
WWF is using the report’s launch today (1 August) to call for the Congolese government, international administrations and shareholders to force oil companies to stop all exploration and drilling activities in Virunga.
The French company Total and the South African firm Sacoil have also been granted oil concessions by the Congolese government. But at its annual meeting on 17 May 2013, Total’s chairman, Christophe de Margerie, announced a “commitment to respect the current limits” of Virunga and all Unesco World Heritage Sites.
To date, Soco is the only company that has indicated an intention to prospect for oil in the park.
In an emailed comment to EurActiv, the chairman of Soco International's board, Rui de Sousa, wrote that changing the park's borders was an issue for the Congolese government alone.
"Despite the views of WWF, Soco is extremely sensitive to the environmental significance of the Virunga National Park," he said. "Development and environmental sustainability are not mutually exclusive."
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HIGHLY RECOMMENDED PICTURES - SURE TO BRING BACK MEMORIES.
ReplyDeleteFracking protests in UK: 48 hours of direct action - in pictures
Climate change activists have conducted 48 hours of direct action against the energy firm Cuadrilla, targeting its exploratory drill site in the village of Balcombe, West Sussex, its headquarters in Lichfield, and the offices of its PR company Bell Pottinger in London
Caroline Lucas released on bail after fracking arrest in Balcombe
http://www.theguardian.com/environment/gallery/2013/aug/20/fracking-protests-uk-48-hours-in-pictures
Shale Protesters Invade Cuadrilla Offices as U.K. Action Spreads
ReplyDeletehttp://www.bloomberg.com/news/2013-08-19/shale-protesters-invade-cuadrilla-offices-as-u-k-action-spreads.html
Anti-shale protesters chained themselves to filing cabinets at the head office of U.K. explorer Cuadrilla Resources Ltd. as they widened their campaign against drilling.
Demonstrators broke into Cuadrilla’s head office at Lichfield in central England, the company said in a statement, while another group reportedly superglued themselves to the office block housing the company’s public relations advisers. Arrests were made at Balcombe, the village in Southern England where Cuadrilla has an exploratory well.
“Shale gas is essential to improve our energy security, heat our homes, and create jobs and growth,” Cuadrilla said. “What we are doing is legal, approved, and safe.”
Protests forced Cuadrilla to suspend drilling work at Balcombe last week on the advice of police. Campaigners are concerned that exploring for shale will cause noise pollution, water contamination and increased road traffic.
“This is seen as the frontline fight for the environmental movement,” Andrew Tobert, a protester, said by phone from London. “Acting now will have more of an impact than say protesting when fracking comes to your area in six months time.”
“There’s definitely an escalation” in the protests, said the 29-year old who was arrested more than a week ago for blocking access to Cuadrilla’s site in Balcombe.
A camp organized by the group No Dash for Gas began Aug. 16 and will last until Aug. 21.
“Police are managing and monitoring” the protests, Christian Cubitt, a spokesman for Prime Minister David Cameron, told reporters in London. “People have a right to protest but that must be within the law.”
Shale Grab in U.S. Stalls as Falling Values Repel Buyers
ReplyDeleteOil companies are hitting the brakes on a U.S. shale land grab that produced an abundance of cheap natural gas -- and troubles for the industry.
The spending slowdown by international companies including BHP Billiton Ltd. (BHP) and Royal Dutch Shell Plc (RDSA) comes amid a series of write-downs of oil and gas shale assets, caused by plunging prices and disappointing wells. The companies are turning instead to developing current projects, unable to justify buying more property while fields bought during the 2009-2012 flurry remain below their purchase price, according to analysts.
The deal-making slump, which may last for years, threatens to slow oil and gas production growth as companies that built up debt during the rush for shale acreage can’t depend on asset sales to fund drilling programs. The decline has pushed acquisitions of North American energy assets in the first-half of the year to the lowest since 2004.
“Their appetite has slowed,” said Stephen Trauber, Citigroup Inc.’s vice chairman and global head of energy investment banking, who specializes in large oil and gas acquisitions. “It hasn’t stopped, but it has slowed.”
North American oil and gas deals, including shale assets, plunged 52 percent to $26 billion in the first six months from $54 billion in the year-ago period, according to data compiled by Bloomberg. During the drilling frenzy of 2009 through 2012, energy companies spent more than $461 billion buying North American oil and gas properties, the data show.
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As overseas buyers moved in, booming production soon led to oversupplies, and gas prices plunged to a 10-year low in 2012, forcing companies to write-down the value of some of their assets. Companies were also hurt when some fields thought to be rich in oil proved to contain less than anticipated.
Write Downs
That shortfall caused Shell to write down the value of its North American holdings by more than $2 billion last quarter. Shell, based in The Hague, paid $6.7 billion for North American energy assets in seven transactions since 2009, according to data compiled by Bloomberg.
The company told investors this month that it expects its North American oil and gas exploration to remain unprofitable until at least next year. “The major acreage deals are behind us now,” Shell Chief Executive Officer Peter Voser said in a conference call with analysts.
BHP said it would cut the value of its Arkansas shale assets by $2.8 billion. During a May 14 conference presentation, CEO Andrew Mackenzie said capital and exploration spending will “decline significantly” to around $18 billion in 2014, and continue to fall after that.
As companies reassess holdings, they’ve begun curtailing drilling in some fields, selling off lackluster properties and redirecting investments to storage terminals and gas processing plants.
Anti-coal seam gas campaigners fear water safeguards will be dumped
ReplyDeleteLock the Gate study reveals 39 projects have not undergone environmental assessments
New environmental safeguards aimed at protecting water resources could be ditched before they are applied to more than a handful of coal and gas projects, with a new analysis showing nearly 40 developments have yet to be assessed for their impact on water.
A study by the Lock the Gate alliance, a coalition of anti-coal seam gas campaigners, shows that of 43 coal and gas developments likely to impact water supplies, just four of them have had the so-called "water trigger" assessment applied to them.
The government agreed to introduce the trigger, as proposed by independent MP Tony Windsor, in the dying days of the Gillard administration. It demands that the federal government assess any coal or gas development likely to impact on water resources.
Anti-coal seam gas campaigners say the states cannot be trusted to protect the water table from practices such as fracking, while the gas industry claims that the law adds unnecessary red tape. The Coalition will look to bypass the law should it win power, in its bid to devolve environmental approvals to the states.
Lock the Gate said that the 39 projects to not have the water trigger applied included a number of contentious proposals, including the Camden gas project in Western Sydney and the Santos coal seam gas extraction in the Darling Downs in Queensland.
The group points to a new environmental impact assessment of mining magnate Clive Palmer's giant proposed Waratah coal project in the Galilee Basin in Queensland as proof that federal oversight of water is required.
The assessment states that "information and data required for the adequate assessment of many aspects of the proposed project are lacking, in particular information relating to: groundwater and surface water monitoring".
Under the amended Environment Protection Biodiversity Conservation Act, the government has to make a decision within 60 days of the water trigger coming into force. This means that the deadline for environment minister Mark Butler is 13 September – shortly after the federal election.
Carmel Flint, campaign co-ordinator with Lock the Gate, told Guardian Australia that communities needed to know if the projects would be assessed for water impact beforew the election.
"People should know if this will apply before the election, to help them know how to vote," she said. "The states have really let the side down badly on water quality. In NSW, Barry O'Farrell's whole policy platform on this is a complete mess and his new proposals (which place the economic advantages of mining within the assessment criteria for new mines) just make things worse.
"We want to see proper assessments and water studies done. It's clear that the mining industry's modelling isn't good and that they don't understand groundwater. We're surprised that only four projects have been assessed so far under the trigger.
A spokesperson for the Department of the Environment said: "Consideration of whether the 'water trigger' applies to any large coal mining or coal seam gas proposals that had not yet been determined to be a controlled action by 22 June, will be undertaken as a matter of course in the normal standard practice of the department."
Buswell pleads over fishing zone laws
ReplyDeleteThe WA Government has made a last-ditch bid to change the Federal Government’s ambitious marine park system, urging Canberra to scrap or reduce areas where fishing is banned.
With Federal plans announced last year not due to come into effect until next year, Fisheries Minister Troy Buswell has asked for reserves off WA to be significantly reduced.
In a letter to Federal Environment Minister Mark Butler this month, Mr Buswell also said the $100 million assistance package for affected commercial fishers should be boosted.
Under Federal Labor’s agenda, more than 20 areas from the Kimberley to the south coast will be declared sanctuary or "no-take" zones, banning all fishing and oil and gas activity. Other areas will have less restriction.
Fukushima operator reveals leak of 300 tonnes of highly contaminated water
ReplyDeleteSpillage is most severe since March 2011 as Tepco says it does not know how the water leaked out or where it has leaked to
Frantic efforts to contain radioactive leaks at the wrecked Fukushima Daiichi nuclear power plant have been dealt another blow after its operator said about 300 tonnes of highly contaminated water had seeped out of a storage tank at the site.
The leak is the worst such incident since the March 2011 meltdown and is separate from the contaminated water leaks, also of about 300 tonnes a day, reported recently.
Tokyo Electric Power Co (Tepco) said it did not know how the water leaked out or where it had leaked to, but it believed that the spillage had not flowed into the Pacific ocean.
Tepco's spokesman, Masayuki Ono, said the water had seeped into the ground after breaching a concrete and sandbag barrier around the tank. Workers were pumping out the puddle and removing the remaining water from the tank, he added. Despite efforts to contain the spillage, the leak is already the most severe since the crisis began.
News of the leak, which was discovered on Monday morning, comes after Tepco admitted that up to 300 tonnes of highly contaminated water from the site was seeping into the sea every day. Government officials said they could not rule out the possibility that the site had been leaking radioactive matter since the plant suffered a triple meltdown on 11 March 2011.
An official from Japan's nuclear regulation authority said: "We have instructed Tepco to find the source of contaminated water – from which tank the water is leaking – and to seal the leakage point.
"We have also instructed them to retrieve contaminated soil to avoid a further expansion of toxic water, and to strengthen monitoring of the surrounding environment."
The authority classified the latest leak as a level one incident on the International Atomic Energy Authority's scale of nuclear and radiological accidents. The level is the second lowest on the scale.
The 2011 meltdowns in three of Fukushima Daiichi's six reactors – caused when the plant was struck by a powerful tsunami that had been triggered by a 9.0 magnitude earthquake off Japan's north-east coast – were given the highest severity rating of seven, the same level given to the Chernobyl disaster 25 years earlier.
It is the first time Japan's nuclear regulator has deemed an incident serious enough to warrant an international classification since the country's triple disaster almost two and a half years ago.
Tepco, which faces renewed criticism over its handling of the water leaks, has admitted that water in a puddle that had formed near the steel storage tank was emitting a radiation dose of 100 millisieverts an hour – five times the annual exposure limit for nuclear plant workers in Japan.
Hundreds of tanks have been built at the site to store contaminated water that is being fed into reactor buildings to cool melted fuel rods, as well as underground water running into reactor and turbine basements.Tepco suspects that the water may have leaked through a drain valve connected to a gutter around the tank, which is located about 500 metres from the shore.
Japan's prime minister, Shinzo Abe, recently suggested he had lost faith in Tepco's ability to handle the water crisis without government help. The firm's failure to prevent leaks could frustrate his attempts to relaunch further reactors in Japan. The leaks are also causing concern abroad. On Tuesday, South Korea said it had asked Japanese officials to explain the leaks of contaminated water into the Pacific.
Japan upgrades Fukushima tank radiation leak to 'serious incident'
DeleteJapan has raised the severity of the latest leak at the Fukushima nuclear plant, now describing it as a "serious radiation incident".
The plant's operator, TEPCO, has revealed 300 tonnes of highly radioactive water has leaked from a tank at the plant.
The water is so contaminated that TEPCO says a worker standing near it for just one hour would receive a dose five times above what it regards as the safe annual limit.
The company yesterday revealed the highly radioactive water had leaked from a storage tank and had formed puddles on the ground, with fears it could contaminate groundwater flowing into the Pacific.
After declaring it a level one incident on the International Nuclear Event Scale, Japan has now raised it to level three, which is defined as a serious incident involving severe contamination.
The company has faced a growing catalogue of incidents at the plant including several leaks of radioactive water, more than two years after the worst nuclear disaster in a generation which was triggered by a huge quake and tsunami in March 2011.
The company - which faces huge clean-up and compensation costs - has struggled with a massive amount of radioactive water accumulating as a result of continuing water injections to cool reactors.
The embattled utility in July admitted for the first time that radioactive groundwater had been leaking outside the plant and this month started pumping it out to reduce leakage into the Pacific Ocean.
The problems have led the Japanese government and its nuclear regulator to say they would get more directly involved in the cleanup at Fukushima plant, which had largely been left in the hands of the company.
While no one is officially recorded as having died as a direct result of the meltdowns at Fukushima's reactors, large areas around the plant had to be evacuated, with tens of thousands of people still unable to return to their homes.
India on the brink of its own financial crisis
ReplyDeleteIn a reprise of the 1997-98 Asian crisis, India's stock market is plunging, bond yields are nudging 10% and capital is flooding out of the country
India's financial woes are rapidly approaching the critical stage. The rupee has depreciated by 44% in the past two years and hit a record low against the US dollar on Monday. The stock market is plunging, bond yields are nudging 10% and capital is flooding out of the country.
In a sense, this is a classic case of deja vu, a revisiting of the Asian crisis of 1997-98 that acted as an unheeded warning sign of what was in store for the global economy a decade later. An emerging economy exhibiting strong growth attracts the attention of foreign investors. Inward investment comes in together with hot money flows that circumvent capital controls. Capital inflows push up the exchange rate, making imports cheaper and exports dearer. The trade deficit balloons, growth slows, deep-seated structural flaws become more prominent and the hot money leaves.
The trigger for the run on the rupee has been the news from Washington that the Federal Reserve is considering scaling back - "tapering" - its bond-buying stimulus programme from next month. This has consequences for all emerging market economies: firstly, there is the fear that a reduced stimulus will mean weaker growth in the US, with a knock-on impact on exports from the developing world. Secondly, high-yielding currencies such as the rupee have benefited from a search for yield on the part of global investors. If policy is going to be tightened in the US, then the dollar becomes more attractive and the rupee less so.
But while the Indonesian rupiah and the South African rand are also feeling the heat, it is India – with its large trade and budget deficits – that looks like the accident most likely to happen. On past form, emerging market crises go through three stages: in stage one, policymakers do nothing in the hope that the problem goes away. In stage two, they cobble together some panic measures, normally involving half-baked capital controls and selling of dollars in an attempt to underpin their currencies. In stage three, they either come up with a workable plan themselves or call in the IMF. India is on the cusp of stage three.
Woodside challenges critics
ReplyDeleteWoodside Petroleum chief executive Peter Coleman has called for an end to the "hollow discussion" about whether the State is missing out on a jobs-and-revenue bonanza because of the axed James Price Point processing hub, describing it as a redundant conversation based on a land-based LNG dream that was not viable.
And he challenged critics of Woodside's plan to develop Browse Basin gas fields through floating LNG technology, such as Premier Colin Barnett, to accept that significant long-term job creation was more important than a short-term, construction boom.
"It's not an either or situation," Mr Coleman said yesterday. "It's not a situation of choosing James Price Point versus floating.
"We spent almost $2 billion to get James Price Point to work. I don't know how people can expect companies to spend any more money than that trying to make a development commercially viable.
"James Price Point simply didn't work. Period. So talking about local content in the context of a project that won't get built is kind of a hollow discussion."
Mr Coleman was talking after handing down Woodside's $US873 million ($966.1 million) interim net profit, up 7.5 per cent on the six months to June 30, 2012. Woodside declared an US83¢ interim dividend. Woodside shares fell 60¢ to $38.10.
The result was below analysts' expectation though most of the focus was on Mr Coleman's update on the Browse project.
Mr Coleman said front-end engineering and design work on the massive undertaking could start in the middle of next year for a final investment decision on a phased FLNG operation by mid-2015. Mr Coleman did not discuss a first-gas target for Browse though the FEED and FID schedule suggests maiden LNG cargoes could sail by 2019.
He also remained coy on the likely scale of the Browse FLNG concept other than confirming for the first time that Woodside was using a three-floater FLNG development as a reference case for a project covering three gas and condensate fields - Calliance, Brecknock and Torosa.
Mr Coleman reiterated that the operational employment opportunities from the FLNG concept, including during support and maintenance periods, would likely be greater than for an equivalent land-based gas processing plant, and he urged WA's manufacturing and fabrication sector to offer its services.
"Our view is to maximise the use of local industry, and we want local industry to develop themselves so they are competitive, not just in WA but internationally," Mr Coleman said.
WORLD OF WOODSIDE *
·Israel - waiting on regulators before finalising farm-in into 19tcf Leviathan LNG project
·Burma - acquired 3D seismic over offshore acreage, more seismic planned
·Ireland - waiting on environmental nod for seismic work in Porcupine Basin
·Korea - assessing unsuccessful offshore exploration well
·Spain - aiming to drill off Canary Islands next year
·Brazil - assessing results
·Canada - continuing search for suitable LNG plant site location in British Columbia
Source: Woodside Petroleum
Right men at the right times as Woodside consolidates its expansion
ReplyDeleteWHEN Peter Coleman was appointed chief executive of Woodside Petroleum in 2011 it was clear a new era had begun for the group.
After the frenetic, expansionary seven-year period of his predecessor Don Voelte, Coleman brought a more conservative, more measured and more capital-focused approach to the group.
Both men were, with hindsight, appropriate for their times. Voelte's dash for growth, while not without its issues -- the Pluto project now powering Woodside's cashflows was well over budget and time -- came in that initial phase of the LNG dimension to the broader resources boom.
Coleman's more conservative style was imposed before Woodside could get too caught up in the cost escalations that have afflicted the resources sector generally and the liquefied natural gas sector in particular as they competed for resources to build their projects.
The de-risking of Woodside's exposure to the Browse project through the $US2 billion sell-down of its interests to Mitsui and Mitsubishi was a case in point, as was the decision to resist the pressure from the West Australian government and walk away from the controversial $US45bn-plus proposed onshore LNG facility for Browse at James Price Point. That decision was further validated by this week's WA Supreme Court finding that the environmental approvals for the proposed gas processing hub were unlawful.
Yesterday Woodside reported record revenue and earnings, with earnings rising 7.5 per cent to $US873 million ($966m) in the June half. More impressive, however, is the group's underlying financial position. It halved its gearing to 26.4 per cent and built up its cash reserves from $US611m to $US1.8 billion.
It generated $US1.5bn of cashflow.
Where commodity producers are struggling to reconcile shareholder demands for bigger cash returns with their plummeting profitability, Woodside has previously announced a $520m special dividend and an increase in its payout ratio to 80 per cent of its underlying net profits.
As it pays its dividends in US dollars, Australian shareholders will get an extra boost from the depreciation of the Australian dollar.
Those increased cash returns to shareholders have been made possible by a tapering of the group's capital expenditures.
It invested only $US500m in the half and has cut its previous guidance for full-year investment spending by $US300m to $US2.3bn. The withdrawal of the James Price Point option for developing Browse has created something of a hiatus in the Woodside development pipeline, which underwrites those increased returns for shareholders in the near term, although Woodside has now embraced Shell's floating LNG platform technology for the project, saying it will recommend it as the concept for commercialising the three Browse gas fields.
The FLNG technology, although resisted by the WA government, which wants the bulk of the spending onshore, should enable cheaper, faster and lower-risk development of the project, with Woodside targeting a final investment decision by mid-2015.
While the surge in returns to shareholders may suggest Woodside has reached some level of maturity, it does have a range of potential expansion projects within its existing portfolio and has also expanded its international exploration program.
Within the $US2.3bn of investment spending this year is an estimated $US1.1bn for the Leviathan LNG project in Israel, although the group's 30 per cent interest in the project, which Coleman has described as a "once-in-a-decade" opportunity, has not yet been finalised.
Woodside's expansion internationally -- it also has exploration interests in Myanmar and off Ireland -- is a deliberate strategy to exploit its skill base and diversify its exposure to what is now a very high cost domestic environment.
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Woodside says phased plan for floating LNG project 'best option'
ReplyDeleteby: Paul Garvey
WOODSIDE Petroleum has spelt out an ambitious development timetable for its proposed Browse floating liquefied natural gas development as it looks to rebuild strained relations with the West Australian government and reinforce its growth potential to investors.
A day after the company confirmed it would push to develop the Browse gasfields off northern WA via Royal Dutch Shell's floating LNG technology, chief executive Peter Coleman yesterday detailed his plan for a staggered, three-stage FLNG project that would minimise capital expenditure and project risk while bringing the resources into production as quickly as possible. The plans for Browse were at the centre of Woodside's efforts to use its half-year results to reaffirm its growth credentials.
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While the company yesterday committed to maintaining its higher dividend payments for the next "several" years, Woodside said it was aiming to make a final investment decision on the first of three proposed FLNG vessels by mid-2015, ahead of first production in 2017. That would see the field in production largely in line with the original production schedule of the scrapped James Price Point plan.
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Completion of the deal, which was announced late last year, has dragged on due to uncertainty over Israel's evolving gas export policy and rumours of divisions among the existing project partners over the best means of developing the field.
The company also confirmed it had secured two drilling rigs for the next two years as it looked to reinvigorate exploration efforts in Western Australia under the recently appointed exploration head, Phil Loader.
Mr Coleman said the three FLNG vessels proposed for Browse would be staggered at 15-month intervals, which would allow the partners to funnel cashflow from the first stage into the subsequent vessels.
"This ability to stage the capital expenditure and build the production profile reinforces the benefits of the FLNG technology in managing project risk," he said.
"It combines lower upfront capex with earlier cash generation to make the project more attractive for our shareholders. In short, it's clearly the best option we have to unlock the Browse resource to the benefit of our shareholders and the broader community."
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The FLNG ships, which will be the largest vessels ever built, will be constructed in Korean shipyards.
Yesterday, Mr Barnett said Woodside had let WA down after receiving more government support than any other company in the state's history.
In response, Mr Coleman said he shared Mr Barnett's disappointment about James Price Point, but believed the company's relationship with the state remained strong.
"(James Price Point) offered us the earliest development option at the time that it was first agreed that we'd move forward on it. Unfortunately, it's just not commercially attractive," he said.
"Our commitment and our requirement under the retention leases is the earliest commercial development, and that's what we believe floating will offer for us."
Woodside's half-year results yesterday came in slightly below analyst consensus estimates, which contributed to the stock's 1.55 per cent fall to $38.10.
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UBS analyst Nik Burns said it was "pleasing" to see some real momentum behind Browse..
"They're generating significant cashflow at the moment and if you look at the timing for Browse, you wouldn't expect a large amount of cash to go out the door until 2016, and even then they will look to debt fund a large proportion of their exposure," Mr Burns said.
"The fact this is phased now, and there's three vessels and at least 15 months between each one, they'll end up with the capex spread over a longer period."
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Mr Coleman said alignment between the project partners was the best it had been in years.
Mermaid lifts profit by 18.2pc
ReplyDeleteMermaid Marine has lifted its full-year profit by 18.2 per cent to $60.3 million and will pay a final dividend of seven cents a share fully franked.
The oil and gas sector services company said the result was achieved on revenue of $449.5 million, also up 18.2 per cent on the previous year.
The annual dividend was 12.5 cents a share, up 13.6 per cent from the previous year's dividend of 11 cents.
Mermaid chairman Tony Howarth said offshore oil and gas activity in Australia continued to be strong with four major LNG projects under construction in the North West of WA.
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"Activity in the Browse Basin is picking up with both major projects now secured on Mermaid's Broome Supply Base, and major vessel scopes currently being tendered.
"MMA's success is based on working with its clients to provide unique marine logistics solutions with a combination of vessels and supply bases."
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Managing director Jeffrey Weber said the company had secured a number of significant long term production support contracts during the year providing a secure earnings base for the company.
"We continued to focus on diversifying our service offering, broadening our international footprint and securing our first exploration support contract," he said.
"Whilst cargo volumes and activity associated with the downstream component of the Gorgon project is expected to taper in 2014, the outlook for Mermaid's services remains positive, based on anticipated vessel demand in the region."
"The overall outlook for 2014 remains positive based on increased demand for vessel services and ongoing demand for supply base services in Dampier and Broome," the company said.
Mermaid shares were off eight cents, or 1.97 per cent, to $3.99 at 11.50am in a broadly weaker market.
Origin Energy profit slumps 61%
ReplyDeleteOrigin Energy's net profit fell 61 per cent to $378 million for the year to June 30 from $980 million.
Its underlying profit of $760 million was down 15 per cent from $893 million in the previous year, coming in at the bottom end of guidance.
Australia's largest electricity utilities group blamed the heavy drop in net profit on falls in the value of financial instruments, including derivatives in electricity and currencies it uses for hedging.
It also cited spending on newly-acquired NSW energy assets and a lower contribution from its wholesale electricity Energy Markets business.
Origin also said it had secured a $7.4 billion bank loan facility to help fund the massive $A24.7 billion Australia Pacific LNG (APLNG) project it is operating.
It has refinanced all of its existing debt with the new facility terms including maturity dates of August 2017 and August 2018.
The debt is underwritten by ANZ, Bank of America Merrill Lynch, Goldman Sachs, JP Morgan and UBS.
Gas is set to significantly grow Origin's revenue when the APLNG project in Queensland comes online in 2015 and is now 45 per cent complete, chairman Kevin McCann said.
Tougher competition and discounting in electricity and gas retailing drove down profit, with earnings before interest, tax, depreciation and amortisation in its core energy markets business down 15 per cent to $1.3 billion.
The company said in a statement that due to those current market conditions, it would not provide specific earnings guidance.
The company declared a 25 cent per share unfranked dividend, the same as last year's.
The company's shares have opened 59 cents, or 4.8 per cent, higher at $A12.86 with investors reacting well to the securing of funding.