Exxon, BHP Billiton to invest $1 billion in Longford plant for Bass Strait gas production


Exxon, BHP Billiton to invest $1 billion in Longford plant for Bass Stait gas production


SYDNEY -- ExxonMobil and BHP Billiton will spend more than $1 billion on natural gas processing facilities in southeastern Australia to handle new supplies of natural gas from offshore fields in the Bass Strait. The investment builds on the billions of dollars major international energy companies are pumping into gas projects in Australia that are targeting an expected jump in demand in the coming decades domestically and from energy hungry consumers in Asia.

BHP in a statement said it had approved a $520 million investment in new facilities at the jointly owned Longford plant in the Gippsland Basin of Victoria state, while Exxon separately said it would spend a similar amount. The gas will flow from the Kipper, Tuna and Turrum fields in the Bass Strait, which the two companies and a third partner, Santos, are developing as part of a more than $4 billion project.

The gas conditioning plant is being designed to process about 400 MMcfd and reduce carbon dioxide content of treated gas to less than 3%. Reservoirs at the Turrum field contain between 5% and 22% carbon dioxide in the produced gas, and the Kipper reservoirs from 10%-18% carbon dioxide.

Michael Yeager, CEO of BHP's petroleum division, said the new facilities are a necessary extension of the companies Bass Strait infrastructure, allowing gas reserves in the region to be developed and meet long term energy supplies in southeast Australia. The Longford gas plant has been operating for more than 40 years and is one of country's biggest oil and gas developments.

Australian energy consumption will continue to grow during the next 20 years. The gas conditioning plant will process gas to help meet this expected increase in demand, Mr. Dashwood said. Building work is expected to begin in the third quarter of next year, and the new facility is set to be operational in 2016, the companies said.

BHP's investment comes a day after it agreed to sell a minority stake in the Browse LNG project offshore Western Australia to PetroChina for $1.63 billion cash. It brings the total from BHP's sale of small operations and minor positions in resources operations to more than $4 billion in recent months.

Dow Jones Newswires

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