Oil and gas production
Despite China’s recent slowdown, the long-term growth of many Asian countries is shifting the balance of economic power from west to east. However, to grow further, these countries will need more energy. To fuel their rapidly expanding economies, they are looking to Australia to provide them with the oil and (more especially) the gas they need.
China and many South-East Asian countries have an active hydrocarbon industry. In particular, oil and gas companies in China and Malaysia are acquiring assets all over the globe, while Brunei and Malaysia are net exporters. But the region as a whole is not self-sufficient in fossil fuels. If they are to sustain the spectacular growth rate of recent years, the countries of East Asia will have to rely on Australia – and perhaps, in the future, New Zealand.
Australia derives 85% of its energy from coal and exports a great deal of it to East Asia. However, the discovery and development of its offshore gas reserves, along with environmental concerns, is likely to lead to a shift in favour of natural gas. The development of these reserves is largely driven by anticipated demand from Asia. This interdependence will increase as a result of the free-trade agreement Australia has just signed with China.
Australia’s hydrocarbon activities are dominated by two companies which are also active in several locations round the world. Woodside is Australia’s largest oil and gas producer, with a large share of the LNG business and additional LNG interests in North America. Santos is Australia’s largest domestic gas producer, and supplies oil and liquids to domestic and international customers. A third company, BHP Billiton, combines oil and gas extraction with mining. In addition, several international giants are active, including BP, Chevron, ExxonMobil, Shell, Total, along with companies from China and Japan.
Up to now, Australia’s activities have largely been concentrated in the North West Shelf, where oil and gas has been flowing since 1989. Much of this offshore gas is handled at the Karratha Gas Plant, where LNG, domestic gas, condensate and LPG are produced. Nearby, on the Burrup peninsular, is Pluto LNG, which went on line in 2012 after a six-month delay. Pluto hopes to expand up from one to five trains, depending on the results of recent drilling.
Discoveries are still being made in the area. These include the Balnaves oilfield and the Greater Gorgon gas field, both in the Carnavon basin. Santos has discovered shale gas at Cooper Basin in the north-east.
Key to Australia’s gas export drive is the series of LNG export terminals that are being built in tandem with the development of Australia’s offshore gas fields. Most of these are located on the west coast, though BG’s Queensland Curtis LNG export plant, which went on line in 2014, is in the north-east, on Curtis Island off Gladstone in central Queensland. This is the world’s first LNG terminal to handle coal seam gas. It will soon be joined by two more plants, both on Curtis Island: Santos GNLG and Australia Pacific LNG. Several more terminals will start up in the next few years: Gorgon (Barrow Island, Western Australia, due on line later in 2015); Wheatstone (near Onslow, also in Western Australia); and Ichthys, operated by Japan’s Inpex (due on line late in 2016).
Since these projects were conceived, natural gas prices have plunged because of competition from shale gas. Australian companies must therefore cut costs. One way to achieve this is to adopt the revolutionary technology developed by Shell, the floating LNG terminal, which dispenses with expensive onshore liquefaction facilities. Shell’s Prelude FNLG, to be deployed in the Browse Basin, has already hit the headlines for its size and advanced design (Stainless Steel World January 2015). And it is inspiring similar projects in the south east: Woodside’s Browse FLNG and two FLNGs from Malysia’s Petronas. To read the full article on this topic.