Evolution is Speeding up at Darwin LNG
Monday 10 October 2016
ConocoPhillips and Inpex are putting their foot on the pedal in the Timor Sea off northern Australia, where they are developing offshore gas resources as feedstock for their liquefied natural gas facilities in Darwin, while also looking at exploration opportunities and third-party gas supplies.
ConocoPhillips is well into the early engineering phase of its Caldita-Barossa development, while Inpex is immersed in peak construction of the huge offshore facilities and onshore LNG plant for its Ichthys project.
Both companies have just revealed their latest ideas and aspirations for the region.
ConocoPhillips has unveiled plans to deploy two large floating production, storage and offloading vessels over its Caldita-Barossa and Greater Poseidon resources.
One, or possibly both, will provide backfill gas into Conoco-Phillips’ Darwin LNG plant.
Steve Ovenden, ConocoPhillips Australia’s vice president for growth, says the VLCC-sized floaters are being designed to separate gas, condensate and water, and to remove bulk carbon dioxide.
Lean gas from Caldita-Barossa will be exported via a 260-kilometre, 26-inch subsea pipeline to a tie-in point on the Bayu-Undan pipeline, also operated by ConocoPhillips.
The FPSO for Greater Poseidon will be almost identical, with gas to be exported to Darwin LNG onshore via a 640-kilometre, 26-inch subsea pipeline to a tie-in point on the Bayu-Undan line.
Timing of first gas from both developments will be dictated by the availability of spare capacity at Darwin LNG, says Ovenden, adding that capacity should become available in 2022 with the tail-off of production from the Bayu-Undan field.
For cost reasons, the US operator is prioritising backfill into Darwin, rather than the construction of a second LNG train.
Whether both fields are needed for backfill is uncertain. “It’s a good time to progress with a new upstream development during a downturn to capitalise on market deflation,” says Ovenden.
Discoveries The operator intends to move into the front-end engineering and development phase on Caldita-Barossa in late 2017.
Before that happens, the company and its joint venture partners will use the semi-submersible drilling rig Atwood Osprey to drill two appraisal wells, starting in early 2017.
ConocoPhillips says it has also identified five other third-party gas discoveries in the Bonaparte and Browse basins that could be brought into Darwin LNG.
A new LNG train is currently not economic, but is very much an option in the future “and will be key to monetising further stranded gas beyond the backfill resource”, says Ovenden. ConocoPhillips has government approvals to expand Darwin’s capacity to 10 million tonnes per annum, up from the current 3.5 million tpa.
The Caldita-Barossa field is located in the Bonaparte basin in water depths averaging 250 metres. The field owners are operator ConocoPhillips with 37.5%, SK Energy on 37.5% and Santos on 25%.
The Greater Poseidon fields are in the Browse basin in average water depths of 500 metres.
The co-owners are Conoco-Phillips with 40%, Origin Energy on 40% and PetroChina on 20%.
Meanwhile, Inpex is working intensely on its US$34 billion Ichthys LNG project, and, according to the company’s director of corporate co-ordination, Hitoshi Okawa, the project is almost 90% complete. “People talk about the Ichthys project coming to an end, but that couldn’t be further from the truth. We are in fact racing to the start,” says Okawa.
Expansion of the Ichthys project — while premature — is a worthy consideration, he adds. “The Ichthys project is designed with expansion in mind. Once constructed, it will offer the opportunity to unlock gas resources in the Browse and Bonaparte basins, and also a means of commercialising onshore discoveries in the Northern Territory.”
The Ichthys offshore gas pipeline has five hot-tap tie-in points that will facilitate the development of more gas, “either ours or third-party gas”, says Okawa.
The LNG site at Bladin Point has sufficient land to support up to four additional LNG trains.
“But let’s not get too far ahead of ourselves. Our focus is firmly on the foundation project,” says Okawa.
Inpex owns a 66.07% operating stake in the Ichthys project. Its partners are Total on 30% and its LNG buyers Tokyo Gas, Osaka Gas, Chubu Electric and Toho Gas, which split the remaining 3.93%.