Pluto Gas

The Pluto LNG project is at the cen­tre of Wood­side’s de­vel­op­ment plans as the oil and gas pro­ducer looks to com­mit to its Scar­bor­ough project and in­crease do­mes­tic gas sup­ply to the WA mar­ket.

The Australian Energy Review - - CONTENTS - CAMERON DRUM­MOND

THE Pluto LNG project is a joint ven­ture be­tween Wood­side, the oper­a­tor, which has a 90 per cent in­ter­est, and off­take part­ners Tokyo Gas (five per cent) and Kan­sai Elec­tric (five per cent).

It took just seven years from the dis­cov­ery of the Pluto gas field in 2005 to com­plete the off­shore and on­shore in­fra­struc­ture and be­gin pro­duc­tion from its first LNG train.

A 5.1 mil­lion tonnes per an­num (mtpa) pro­cess­ing fa­cil­ity is fed from the Pluto and Xena gas fields, which are es­ti­mated to con­tain a com­bined 5 tril­lion cu­bic feet (Tcf) of dry gas.

Dur­ing 2017, Wood­side and its part­ners had been en­gag­ing with third-party re­source own­ers in the re­gion about the po­ten­tial to process gas through Pluto in­fra­struc­ture as part of ex­pan­sion plans laid out in early Fe­bru­ary last year.

Ini­tial stud­ies for a small-to-medium scale 0.7mtpa to 3.3mtpa se­cond LNG train and con­nect­ing the plant to the North West Shelf (NWS) LNG com­plex were con­cluded, broad­en­ing Wood­side’s ex­pan­sion op­tions.

Dubbed the “Bur­rup Hub”, the Pluto-nws In­ter­con­nec­tor is in­tended to un­lock in­cre­men­tal value for both Pluto LNG and the North West Shelf project, of which Wood­side owns a 25 per cent stake.

The com­pany said sub­ject to joint ven­ture, reg­u­la­tory and other ap­provals, de­vel­op­ing a pipe­line con­nec­tion be­tween the two plants would ac­cel­er­ate Pluto area gas re­serves, and lever­age ex­ist­ing Pluto off­shore ca­pac­ity and emerg­ing pro­duc­tion from the NWS.

Then, in Fe­bru­ary, Wood­side sur­prised the mar­ket with a mas­sive $2.5 bil­lion cap­i­tal rais­ing for a re­vamped LNG ex­pan­sion ini­tia­tive which in­cluded the ac­qui­si­tion of Exxonmo­bil’s 50 per cent share of the un­de­vel­oped 7.3Tcf Scar­bor­ough gas field for $US744 mil­lion – giv­ing the com­pany a 75 per cent stake in the project.

The funds will also be used to­wards the Pluto fa­cil­ity ex­pan­sion, Pluto-nws In­ter­con­nec­tor and first-stage de­vel­op­ment of the SNE dis­cov­ery off the coast of Sene­gal.

Wood­side chief ex­ec­u­tive Peter Cole­man pegged the cost of the Scar­bor­ough project, in­volv­ing the off­shore de­vel­op­ment, pipe­line and se­cond Pluto LNG train, at up to $Us9.7bn, with a po­ten­tial cost of $Us7.9bn for Wood­side.

“At Pluto, we have done thor­ough ground­work on op­tions for ex­pand­ing pro­duc­tion, which we are now able to use in our de­vel­op­ment plan­ning for Scar­bor­ough, tak­ing ac­count of our in­creased eq­uity and the cer­tainty this de­liv­ers,” Mr Cole­man said.

Wood­side has set a 2020 fi­nal in­vest­ment de­ci­sion (FID) date on de­vel­op­ment.

Do­mes­tic Gas

Wood­side com­menced stud­ies this year to in­crease do­mes­tic gas sup­ply to WA un­der an obli­ga­tion penned with the State Gov­ern­ment to feed a por­tion of to­tal LNG pro­duc­tion to the do­mes­tic mar­ket, five years af­ter first gas flow from Pluto.

Un­der the reser­va­tion pol­icy, 15 per cent of LNG pro­duc­tion from cer­tain gas fields has to be of­fered to WA cus­tomers.

Com­pa­nies are obliged to re­serve and mar­ket the gas, how­ever not re­quired to sell if it is not com­mer­cially vi­able.

Wood­side’s five year grace pe­riod ex­pired in May last year, and ac­cord­ing to the WA De­part­ment of Jobs, Tourism, Sci­ence and In­no­va­tion, the com­pany is re­quired to com­mit 110 TJ/D at Pluto’s cur­rent ex­port ca­pac­ity.

Wood­side how­ever, said that do­mes­tic sup­ply short­ages were not an im­me­di­ate con­cern for WA.

“For now the mar­ket has sig­nif­i­cant ex­cess of sup­ply and ca­pac­ity,” a Wood­side spokesper­son said.

“Wood­side is propos­ing Pluto projects that could ad­dress this by creat­ing new de­mand, for ex­am­ple trucked LNG, and will also study op­tions that could sup­ply more, as and when vi­able de­mand emerges.”

While no do­mes­tic sup­ply – nor Gov­ern­ment in­ter­ven­tion to force its pol­icy – had yet sur­faced, the oil and gas pro­ducer said it was pro­gress­ing stud­ies for the in­stal­la­tion of a com­pres­sor at Pluto that would be ca­pa­ble of de­liv­er­ing LNG into the Dampier-bun­bury Nat­u­ral Gas Pipe­line at rates of be­tween 10 ter­a­joules (TJ) and 25 TJ per day.

Prepa­ra­tions were also un­der­way for the first de­liv­ery of trucked LNG with the con­struc­tion of a truck-load­ing fa­cil­ity at Pluto to dis­trib­ute gas to min­ing and marine in­dus­tries through­out the Pil­bara re­gion.

Po­ten­tial ap­pli­ca­tions for the gas in­clude re­mote power gen­er­a­tion and heavy trans­port fuel.

Pri­mary ap­provals were pro­gress­ing for con­struc­tion, and the com­pany an­tic­i­pated both projects would be able to start sup­ply­ing WA’S do­mes­tic mar­ket in the se­cond half of 2018.


Wood­side said a fo­cus on “op­er­a­tional ex­cel­lence” had driven an im­prove­ment in Pluto’s plant ca­pac­ity, re­sult­ing in record daily, weekly and monthly pro­duc­tion rates dur­ing 2017.

The com­pany said the re­sults were achieved fol­low­ing the com­ple­tion of high-rate pro­duc­tion tri­als in Q2 2017.

Pluto pro­duced 41.1 mil­lion bar­rels of oil equiv­a­lent (Mm­boe) at a unit pro­duc­tion cost of $3.9/boe, achiev­ing 100 per cent re­li­a­bil­ity dur­ing Q4 and av­er­ag­ing 94 per cent re­li­a­bil­ity across the 12 month pe­riod.

The fa­cil­ity de­liv­ered 66 LNG car­goes, of which 44 were sold un­der foun­da­tion con­tracts, 14 un­der mid-term con­tracts and eight on the spot mar­ket.

Wood­side chief ex­ec­u­tive Peter Cole­man said the fourth quar­ter was un­der­scored by a strong op­er­a­tional per­for­mance at Pluto and first ship­ment from Wheat­stone.

“Pluto LNG de­liv­ered ex­cel­lent pro­duc­tion on the back of out­stand­ing fa­cil­ity re­li­a­bil­ity and higher op­er­at­ing rates,” Mr Cole­man said.

This year, Wood­side said the fa­cil­ity would tar­get main­tain­ing higher rates through on­go­ing process im­prove­ments us­ing 4D seis­mic data col­lec­tion.

The data would also be used to con­sider the op­ti­mal off­shore gas sup­ply se­quence for Pluto LNG through to end of field life.

No ma­jor main­te­nance or turn­around cam­paigns had been sched­uled for 2018, how­ever prepa­ra­tions were un­der­way for a sched­uled ma­jor turn­around in 2019 prior to Wood­side mak­ing an FID for Scar­bor­ough and the Pluto de­vel­op­ments.

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