Torres Strait pipeline matches reserves with markets

The proposed pipeline from Papua New Guine a to Australia will cover 265 km of seabed across the Torres Strait [38,478 bytes]. With crude oil potential drying up in Papua New Guinea, Chevron and its partners are looking at options for exploiting the country's massive gas reserves. While local demand is slim, the market in nearby Australia is apparently large enough to justify an ambitious pipeline project.

PNG-to-Australia line moves large gas reserves

William Furlow
Technology Editor
With crude oil potential drying up in Papua New Guinea, Chevron and its partners are looking at options for exploiting the country's massive gas reserves. While local demand is slim, the market in nearby Australia is apparently large enough to justify an ambitious pipeline project.

Chevron Nuigini, which operates all Chevron activities in Papua New Guinea (PNG), has formed a joint venture to develop dry gas from PNG's southern highlands. The gas will be piped from a coastal processing facility over 2,600 km to industrial customers in Australia.

This will be the longest pipeline in the Southern Hemisphere, according to Chevron. About 500,000 tons of steel will be used in the construction. The projected cost of this undertaking is $2 billion and includes a pipeline from the Kutubu oil and gas fields in the Southern Highlands to the south coast of PNG.

A coastal gas processing facility will be built in the Gulf of Papua to separate out the dry gas for transport to Australia and produce LPG to be sold in PNG or exported to Japan, China, Australia or other markets. The main pipeline will cross the Torres Strait and down Cape York to Gladstone via Townsville.

Chevron said this major undertaking is justified in order to exploit the PNG gas reserves that have been lying dormant for the past 10 years. Currently, there is no domestic market for gas in PNG.

Operators there have traditionally reinjected this gas, but as the oil fields become depleted the development of these neglected gas resources has become more attractive. The PNG Gas Project estimates that it currently has approximately 6 tcf of gas available for the project. This figure puts the country's gas reserves at three times larger than its know oil reserves.

Chevron said the Kutubu oil is starting to run out, which is a serious concern for the oil company, but also a major problem for the state. PNG relies on the oil from Kutubu for nearly 20% of its national income. These oil fields also account for 30% of PNG's income from exports.

Because of the size and breadth of this massive gas line project, Chevron has taken on some big partners, including BHP Petroleum, Chevron Asiatic, Mitsubishi Oil Co., Mobil E&P Australia, Oil Search, Orogen Minerals, and Petroleum Resources Kutubu.

Major challenges

The construction of this pipeline will require various engineering solutions tailored to different types of terrain. The most challenging portion of the line will be the 265 km laid across the seabed of the Torres Strait. The overall construction project will require a half-million tons of specially made steel pipe. The line will be delivered in 12 meter or 18 meter lengths. These joints will have to be X-rayed, and wrapped in an anti-corrosive coating before being buried in a trench. Once a section is laid the pipeline will be hydrostatically pressure tested.

The onshore portion of the pipeline will follow the route of an existing oil pipeline that runs from the PNG Southern Highlands to the coast. This will help save the time and trouble of clearing a new right-of-way.

The downstream portion of the project, from the PNG offshore processing facility to Townsville and Gladstone, includes the offshore sales gas pipeline and all of the onshore Australian pipeline and facilities. This portion of the project is being designed by South Pacific Pipeline Co., owned by Chevron and its PNG partners.

Chevron said the majority stake in this company will be taken over by one of two gas pipeline consortia currently bidding for the selection as the pipeline owner and operator. Once the successful consortia is chosen, it will operate under the SPPL company name to build, own, and operate the pipeline. The upstream section of the project, which includes all facilities and pipelines in PNG will continue to be designed, built, owned, and operated by Chevron and its partners.

Offshore route

From landfall on the PNG coast, the pipeline will cross the Gulf of Papua, a crescent-shaped region bordering the coast of PNG. The western shoreline of this area is low-lying swampland. From the Gulf of Papua, the pipe will cross the Torres Strait, a shallow marine region extending about 165 km from Cape York to the southern coast of PNG.

The Strait is studded with reefs and more than 100 small islands, ranging from sandbanks to the 205 sq km Prince of Wales Island. The pipeline will then pass parallel to the Warrior Reefs complex which runs north-south and occupies a central position in the Torres Strait.

The pipeline must go around or through the reef complex. Three alternative alignment options have been identified, all of which would avoid coral reefs. From the Warrior Reefs, the pipeline would makes landfall on Cape York, most likely at Peak Point, but Chevron said other options also are being considered. In all, 465 kms of the 2,644 km line will run offshore.

Offshore pipeline and facilities costs are estimated at $1 billion, almost half of the overall costs. Construction start is projected for next January with completion and first gas scheduled for 2001.

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