Nam Con Son step closer to fruition
The much anticipated $1.5 billion Nam Con Son gas project off Vietnam has finally been approved by Vietnamese Prime Minister Phan Van Khai, bringing the project one step closer to fruition. In late June, the Prime Minister provided the government guarantee. The project involves the Lan Tay and Lan Do fields in block 06.1 in the Nam Con Son Basin off the southern coast, with reserves of 59 bcm.
The companies in the venture, BP Amoco and Statoil, plan a gas pipeline to an onshore receiving station and gas going to three power plants (one completed, one under construction, and one planned) with first production during 2002. Each stage of the project is estimated to cost upwards of $500 million with BP Amoco and Statoil already committing $600 million.
The companies had been seeking the GGU for the past 18 months, which covers foreign exchange conversion, investor interest guarantees, and other legal matters. With the GGU finalized other matters still need to be addressed.
On the side of the BP Amoco-Statoil alliance, the companies contend that they will initial the GGU, but not sign until Vietnam's newly amended Foreign Investment Law takes effect.
The government and the companies have expressed a desire to finalize agreements within the next few months in order to meet the 2002 projected startup.
Fletcher doubles mean reserves off New Zealand
New Zealand's Fletcher Challenge Energy has doubled its reserves estimate of the Pohokura gas-condensate discovery offshore Taranaki, New Zealand. Following the second test from the second well on the field, Pohokura-2, the company said that the discovery has a mean estimate of reserves of 750 bcf of gas and 40 million bbl of condensate.
"The field is still in the early appraisal stage," said Fletcher chief Operating Officer Lloyd Taylor, "However, it is clearly a commercial discovery by virtue of the reserves established to date, high condensate yield, relatively low potential development cost, and proximity to market."
The company tested a 21-meter interval (3,582-3,603 meters) of Kapuni Group C sands and flowed at 30.7 MMcf/d and 2,670 b/d of condensate on a 1-in. choke, which Fletcher said was limited due to test equipment capacity. The company said that based on the rate in conjunction with the low drawdown, the absolute open flow potential has been assessed to be up 5-10 times greater.
The largest and greatest source of gas to New Zealand is the onshore Maui gas field, whose commercial life has begun to dwindle over the past years. Taylor said that Pohokura will help extend gas supply beyond the life of Maui and generate foreign earnings from the export of the condensate.
Fletcher believes that development of the field will be between $350 million for the mean reserves and $500 million for the upside reserves, with first gas in 2004. Pohokura is located in PEP 38459 in the Taranaki region off the west coast of the north island. Fletcher operates with 33.3%. Partners include: Preussag Energie (33.3%), Shell (18.3%), and Todd Petroleum Mining (15%).
Timor Gap ZOCA talks to begin
Negotiations for the demarcation line of the Zone of Cooperation Area (ZOCA) in the Timor Gap area of the Timor Sea shared between Australia and the new nation of East Timor are expected to begin this month or next. Following the split from Indonesia, East Timor leaders have called to Australia for a re-negotiation of the Timor Gap Treaty, which governs activity in the area, including a new split of the area.
The East Timorese are asking for the boundary line to be drawn to the midpoint of the area. This would give East Timor the greater share of the petroleum revenue of the area. A spokesman for the government contends that the country has legitimate claim to the area. He said that international law allows 200 miles for each country. However, because the distance is less than 400 miles, the midpoint should be used. The proposed midpoint would run through the southern end of ZOCA Area A, which holds the Elang, Kakatua, and Kakatua North fields which produce about 16 million bbl annually, and the massive Bayu-Undan gas liquids project.
The East Timorese added that while it would bring significant revenue to the country, Australia would not be greatly affected because it would take the majority of the downstream development due to a deepwater trench that runs to East Timor prohibiting pipelines.
The countries will further discuss the treatment of gas under the new treaty as it was not addressed in the original treaty with Indonesia. Companies see this as the greatest potential for project delay. Companies have expressed that they do not foresee problems with the new treaty as long as the tax rate remains unchanged and officials from Australia, East Timor, and the United Nations have reassured companies operating in that area that their projects will not be impacted. Formal negotiations on the treaty are expected to begin this month or next.
The race to Australia
The race is on for Australian gas. Two major offshore projects in the Timor Sea are seeking the same gas market - Australia. Woodside and Shell's North Australian Gas Venture (NAGV) and Phillips' Bayu-Undan are both planning to send gas to Darwin and then to markets in south and eastern Australia at about the same time.
Phillips recently committed $1.4 billion on the Bayu-Undan project and entered into an alliance with Epic Energy, a pipeline company, to analyze delivering gas to eastern and central Australia in 2004.
Reserves for the NAGV are pegged at 16.9 tcf while Bayu-Undan holds about 3.4 million tcf. Analysts have said that there really isn't room for both projects and the first one to shore wins with the second having to tie in.
But adding to the race is Chevron's Papua New Guinea to Queensland gas pipeline project (PNG). That project has begun to feel the heat, especially if Timor Gas eats into its Queensland market. This project is also expected to begin delivery in 2004. Chevron, however, has said that it sees no threat from the other projects and said they are complimentary. The company said that the markets will be secured by the PNG project and further added that gas demand in Queensland is expected to rise. The companies have also expressed an openness to work together on the projects, but no talks have been held as of yet.
