Woodside developing Timor Sea interests
Late in November 2000, Woodside Petroleum Ltd. and Phillips Petroleum Company Australia announced they had reached in-principle agreement to pursue cooperative development of their Timor Sea gas resources. Phillips, the operator of the Bayu-Undan venture, will buy additional equity from Woodside to achieve a 30% equity interest in the Greater Sunrise project, operated by Woodside.
This initiative will involve development of a major domestic gas and liquefied natural gas (LNG) export project based in Darwin, Australia. The venture is welcomed by the United Nations Transitional Administration in East Timor because the cooperative development approach is likely to maximize the economic returns of Timor Sea gas developments in the neophyte nation of East Timor.
Sharing offshore and onshore facilities makes financial sense because it reduces gas development costs for both the Bayu-Undan and Sunrise ventures. The likelihood of significantly larger Timor Sea gas development is considerably higher with resultant greater volume and earlier production of resources from the Zone of Cooperation (ZOC) production sharing contracts. Maximizing upstream capital investment will enhance field development and will provide for better financial outcomes for all of the governments involved. Dr. Alan Parsley, CEO of Shell Development (Australia), said he looks forward to working with Phillips, Woodside, and the other Timor Sea joint venturers to implement arrangements.
As Woodside works to build up cooperative efforts in the area, the company is pursuing a parallel development project in its Vincent, Enfield, and Laverda oil discoveries. According to Bob Carrol, CFO, exploration and appraisal results in Woodside's wholly owned WA-271-P in the Exmouth sub-basin suggest reserves and scope for recovery volumes of 200 million bbl. Published scope for recovery volumes for Vincent are 61 million bbl, while Laverda expectation volumes are 50 million bbl. Woodside is targeting Enfield production of 100,000 bbl/d in 2005.
Meanwhile, having encountered further gas in its large Gaea discovery, Woodside is conducting wireline testing on the gas columns encountered and is looking to drill past the initial planned total depth of 3,950 meters to a depth where the gas water contact is intersected. Testing has confirmed the tremendous potential of the discovery, with initial interpretation of the wireline logging data indicating two separate gas accumulations. The Gaea-1 exploration well is located between the North West Shelf Joint Venture's Goodwyn 1 and North Rankin A platforms off Western Australia. All indications point to a significant addition to the world class gas reserves.
Timor Sea attracts other attention
Other companies also are finding the Timor Sea attractive:
- Nippon Oil is following up on a major oil and gas discovery identified when the Crux-1 well (Timor Sea permit AC/P23) encountered a gross pay column of 280 meters and tested at a combined rate pf 65.5 MMcf/d of gas and 1,921 b/d of condensate. Nippon Oil will drill the same permit early this year.
- InterOil is expected to pay $21 million for BHP Petroleum's (North West Shelf) interest in the Buffalo oil field in the Timor Sea. The WA-19L and WA-21-L licenses are about 560 km from Darwin. At present, BHP holds this license in a joint venture with partner Nexen Petroleum Australia (50%).
Processing facilities open new doors
The commitment documentation for the Overseas Private Investment Corporation's (OPIC) debt financing for InterOil's planned oil refinery in Port Moresby, Papua New Guinea (PNG) has been made. According to Phil Mulacek, Chairman and CEO of InterOil Corporation, "final and security documentation of this facility is expected to be complete and signed within the next couple of months."
Mulacek said that "having OPIC, an agency of the United States Treasury Department, supporting the project is an endorsement of both the merits of the project and the confidence in investing in PNG." In March 2000, the OPIC Board of Directors announced its approval of a US $85 million credit facility.
Completion of the refinery is expected in the first half of 2002. When the refinery is operational, PNG will be refining local crude oil at home for the first time.
Singapore petroleum invests in Korea firm
Korea experienced a downstream first at the end of 2000. In early December, the Singapore Petroleum Company Limited (SPC) acquired a 40.2% interest in Tiger Oil Corporation, an independent oil company engaged in the downstream petroleum marketing business in South Korea. The purchase, made through SPC's wholly owned subsidiary, Singapore Petroleum Venture Private Limited, amounts to nearly US $28.8 million.
This acquisition positions SPC with a foot in the door of the recently deregulated Korean domestic petroleum market as the country's domestic petroleum market opens to foreign investment for the first time.
Vietnam building LPG facility
A joint venture between British Petroleum and the state-run Vietnam Petroleum Import-Export Corp. has moved into the first stage of construction of a liquefied petroleum gas plant in Ho Chi Minh City. Much of the feedstock for this facility will come from Nam Con Son field, which is operated by BP and Statoil off Vietnam's southern coast.
CNOOC, Phillips partner
China National Offshore Oil Corp. (CNOOC) signed a development agreement with Phillips China Inc., a unit of Phillips Petroleum Company, on December 1 for the Peng Lai (PL) 19-3 field. Approval, which is expected this month, will allow the final design, procurement, and construction of Phase I production facilities and drilling and completion of development wells.
In late November, Shell Overseas Invest-ments BV signed a Strategic Alliance Agreement with CNOOC to jointly develop a range of opportunities in oil and gas exploration and production gas marketing. The agreement covers exploration and joint development and production of some oil and gas fields in Bohai Bay and the exploration, development and production of gas reserves in part of the Xihu Trough in the East China Sea.