US company Hess Corporation has moved closer to developing its large Equus gas field off the WA coast, after striking an agreement to process the gas through the North West Shelf venture’s Karratha plant.
US company Hess Corporation has moved closer to developing its large Equus gas field off the WA coast, after striking an agreement to process the gas through the North West Shelf Venture’s Karratha plant.
Under the toll treatment agreement, Hess would retain responsibility for marketing the liquefied natural gas to customers in the Asia Pacific region.
This marks a significant new development for the Woodside Petroleum-led NWS venture, which to-date has exclusively processed its own gas through the Karratha plant.
Today’s announcement follows long-running speculation over the future of the Equus gas field, which was discovered in 2008.
Hess commenced negotiations in 2011 with potential liquefaction partners, with speculation initially focused on Woodside’s Pluto LNG project and Chevron’s Wheatstone project.
Instead its subsidiary Hess Exploration Australia has signed a non-binding letter of intent with the NWS venture.
Woodside’s senior vice president NWS Niall Myles said in a statement that the letter of intent forms the basis for the negotiation of binding agreements in 2015.
“The letter of intent with Hess is an important step indicating the Karratha gas plant is ‘open for business’ – it provides an attractive option for third party gas owners to commercialise their resources in proximity to existing LNG infrastructure.”
Woodside said an agreement on tie-in and operational integration front-end engineering and design (FEED) studies was expected to be executed in early 2015.
It is envisaged that Hess will deliver gas to the NWS project’s offshore infrastructure, and will market and deliver its own volumes.
The Equus gas field is located 180 kilometres off the WA coast in permits WA-390-P and WA-474-P, which cover about 1 million acres, in water depths of approximately 3,600 feet.
Between 2008 and 2010, Hess had an outstanding run of exploration success at Equus, drilling 16 wells and discovering natural gas in 13 of them.
In December 2011, it awarded FEED contracts for a semi-submersible production platform, subsea gas gathering system and export pipeline.
Engineering firm Wood Group Kenny, which won the FEED contract for the sub-sea development, said at the time that "Equus is a complex development and one of the key challenges for us will be engineering the export pipeline that is to be routed up the North West Shelf escarpment”.
Hess president and chief operating officer Greg Hill said the NWS agreement provides an attractive option to commercialise the Equus gas resource “in a manner that delivers secure, reliable energy supplies into Asia Pacific LNG markets and creates value for our shareholders”.
“This arrangement would bring together Hess’ strong deepwater drilling and development capabilities with NWS’s proven track record in natural gas processing and liquefaction,” Mr Hill said in a statement.
Hess said a final investment decision on Equus is not expected before 2017.
For the NWS partners, the Hess agreement will help to ensure long-term utilisation of the Karratha gas plant, which has been operating for 30 years.
The NWS venture has approved a series of major offshore developments to extend the life of its own gas fields.
The $5 billion North Rankin B development has recently been completed, the $2.5 billion Greater Western Flank Phase 1 project is underway, and last month the $1.2 billion Persephone project was approved.
Persephone involves a two-well, seven kilometre subsea tieback from the Persephone gas field to the existing North Ranking gas complex.
The NWS is a joint venture between BHP Billiton, BP Developments Australia, Chevron Australia, Japan Australia LNG (MIMI), Shell Australia and Woodside,
Hess Corporation is a global independent energy company engaged in the exploration and production of crude oil and natural gas.
Its other Australian assets include exploration interests in onshore fields in the Kimberley region’s Canning Basin and in the Northern Territory.
