abce certificate
LIVE

Search >>  

Monday, 08 September, 2008, 18:10 GMT | more prices >>

Australia's MEO floats Timor LNG plan



By Upstream staff 

Australian gas minnow MEO will begin a drilling campaign in the Timor Sea next week that could pave the way for the world's first offshore liquefied natural gas (LNG) plant, a company official said today.

MEO, which focuses on developing reserves with high carbon dioxide content, hopes to prove up enough gas to begin preliminary design work early next year and make a final decision on an estimated $3 billion project by end-2008, managing director Chris Hart told Reuters.

The 3 million-tonnes-per-year plant would be the world's first offshore liquefaction plant, lying 275 kilometres north of Darwin, offering lower development costs and sidestepping environmental restrictions that have threatened to snare other LNG projects in Australia.

"We're avoiding Australian construction costs, that is a 30-40% saving, and by our location adjacent to the gas fields we're avoiding pipelines to shore which would add in the order of $1 billion to the overall capex," Hart said in an interview.

The jack-up rig West Atlas is due to spud the first of two wells in MEO's NT/P68 exploration permit in the Australian sector of the Timor Sea to appraise gas reserves, some of which were first discovered and abandoned over 30 years ago.

"The estimated contingent resource for high-quality gas for LNG production and lower-quality, high carbon dioxide gas for methanol is 11 trillion cubic feet," he said.

Analysts estimate that proven reserves of only 2-3 Tcf could make the development commercially viable.

The high content of carbon dioxide found in Timor Sea gas has until recently deterred developers due to the high costs involved, but higher LNG prices now make it feasible. Long-term LNG deals were agreed at as low as $3 per million British thermal units five years ago, but are now treble that.

The LNG plant will be built alongside a facility to produce methanol, primarily used as a chemical intermediate or feedstock but also finding some favour as a fuel additive.

MEO expects to sell stakes to LNG and methanol customers in South Korea and Japan, and is also in talks with a European energy trading company, Robert said.

It hopes production can begin by 2011-2012, a quick start given the delays facing other big LNG projects such as Chevron's Gorgon project, which analysts now expect to deliver first gas in 2015-2016.

Robert said MEO had not decided who to award the front-end engineering and design contract to, although Aker Kvaerner and WorleyParson have provided some services.

"In terms of EPC (engineering, construction and procurement), we have spoken with various parties: Leightons, John Holland, Technip, Chicago Bridge & Iron and Fluor," he said.

The entire plant will be built and pre-commissioned in Southeast Asia before being towed to the site. But given the scale of the project, the methanol and LNG plants will most likely be built in separate locations.

The methanol plant needs to be built by a workforce with petrochemical industry experience, most likely in a yard in Thailand or Batam island, Indonesia.

"We are working with Arup Energy, the designer of the gravity-based structures to source a suitable fabrication yard in Asia," said Hart.

MEO shares fell 3.7% on Thursday, but have jumped 27% since mid-August.

Thursday, 04 October, 2007, 17:25 GMT  | last updated: Thursday, 04 October, 2007, 17:25 GMT

Casting the net: Australia's MEO plans to produce LNG at a floating plant in the Timor Sea
 

Related companies


Grenland AsIs North America
MarSol
Jim Rohr & Associates
Litre Meter Ltd
TECNA Engineering
view all
live
hardcopy
to top
print article

e-mail this article to a colleague


to email:  from:
comments: