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 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.

Operations

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.