Quad­rant as­sesses gas sup­ply is­sue

Pilbara News - - News - Peter Milne

Mac­quarie and Brook­field will have to sell ex­plo­ration po­ten­tial in their planned $4 bil­lion float of Quad­rant En­ergy amid con­cern its do­mes­tic gas plants could run dry in as lit­tle as six years.

With Quad­rant’s ex­ist­ing fields hav­ing peaked, it faces tough com­pe­ti­tion from ri­val new sup­plies and ques­tions over whether cus­tomers can pay a gas price high enough to sup­port de­vel­op­ments.

Mac­quarie and Brook­field bought the WA do­mes­tic gas and oil in­ter­ests of US firm Apache in April 2015 for $2.7 bil­lion when the oil price was $US56/bar­rel. Brent oil was $US52 last week.

The Gas State­ment of Op­por­tu­ni­ties for WA is­sued by the Aus­tralian En­ergy Mar­ket Op­er­a­tor in De­cem­ber pre­dicted only the Gor­gon, Wheat­stone, North West Shelf and the small on­shore Xyris plants had suf­fi­cient gas from ex­ist­ing fields to pro­duce past 2023.

Quad­rant’s pro­duc­tion comes from its Varanus Is­land and Devil Creek plants and a mi­nor­ity stake in the BHP-op­er­ated Mace­don plant.

Paul Taliangis, chief ex­ec­u­tive of Ade­laide-based en­ergy con­sul­tant Core En­ergy, said pro­duc­tion from the fields sup­ply­ing Quad­rant’s cus­tomers had peaked, but the area was prospec­tive for dis­cov­er­ies.

Mr Taliangis said the chal­lenge for Quad­rant would be to de­velop the fields at a low enough cost to be eco­nomic. For a new gas field to break even, it needed $5.50 to $6 a gi­ga­joule and an oil price of more than $50 a bar­rel, he said.

Last year, Quad­rant supplied 22 per cent of the WA gas mar­ket, with three-quar­ters com­ing from the two Quad­rant-op­er­ated plants where San­tos takes the re­main­ing 45 per cent of pro­duc­tion, ac­cord­ing AEMO WA gas bul­letin board.

Wood Macken­zie an­a­lyst Saul Kavonic said Quad­rant was po­si­tioned to cap­i­talise on in­creased gas prices from its in­fra­struc­ture, as well as any gas pro­duc­tion de­vel­oped be­yond its com­mit­ments to ser­vice its Al­coa con­tract.

A Quad­rant spokesman said it did not pub­lish re­serve out­looks.

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