MEO reassesses northern Australia gas project

MEO Australia has terminated its 2004 Joint Development Agreement (JDA) with Air Products concerning the proposed Tassie Shoal Methanol Project (TSMP) offshore northern Australia.

Offshore staff

MELBOURNE, Australia – MEO Australia has terminated its 2004 Joint Development Agreement (JDA) with Air Products concerning the proposed Tassie Shoal Methanol Project (TSMP) offshore northern Australia.

The termination also applies to the subsequent 2006 amendment agreement that effectively suspended the JDA.

MEO will pay Air Products a termination fee of $1 million and a contingent payment of $6 million from the sale of an interest in the TSMP.

When the JDA was formed in 2004, MEO expected the TSMP would attract third party gas and monetize high CO2 gas in the region by converting it into methanol. However, the company says this business model has not been successful, and it intends to pursue a fresh approach.

It plans to re-structure the Tassie Shoal gas processing projects during the first part of next year to facilitate separate ownership of each of the two 1.75 Mtpa methanol plants and also the proposed 3 Mtpa LNG plant.

MEO will invite participation from interested parties in 2Q 2012.

Tassie Shoal is a shallow water area (up to15 m, or 49 ft) in the Timor Sea, around 275 km (171 mi) northwest of Darwin. There are numerous large, undeveloped gas fields in the area, some with high CO2 levels (up to 10%).

The TSMP is designed to enable commercialization by converting high CO2 raw gas into methanol via the conventional steam methane reforming process.

In conjunction with MEO’s Tassie Shoal LNG Plant (TSLNGP), and depending on the quality of the raw gas and size of the field, the company says an optimized production stream could enable the production of both LNG and methanol. This would eliminate the need for costly CO2 reinjection facilities.

A single TSMP train would require up to1.4 tcf of raw gas with up to 25% CO2 for 20 years of operation.

12/19/2011

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