Japan’s Mitsui E&P has taken a final investment decision on the next phase of development at the Waitsia gas field, in Western Australia’s onshore Perth basin.

Mitsui’s Australian subsidiary, Mitsui E&P Australia, confirmed the milestone had been reached following the finalisation and signing of key commercial agreements with the Woodside Petroleum-led North West Shelf joint venture.

North West Shelf lifeline

The agreement could see the export of up to 1.5 million tonnes per annum of liquefied natural gas from Waitsia via the North West Shelf facilities.

The agreement, which was first announced in August, will help plug a growing supply gap at the North West Shelf’s 16.9 million tpa Karratha gas plant, with the offshore fields that have traditionally fed the plant now nearing depletion.

Woodside’s senior vice president of operations, Fiona Hick, warned last month that the North West Shelf joint venture could need to consider shutting down at least one of the plant’s five trains as early as 2024 if the agreement with the Waitsia joint venture was not finalised.

The agreement was also made possible with the Waitsia joint venture securing an exemption from the recent amendment to the state’s domestic gas policy preventing the export of onshore gas overseas or even to other Australian states.

Still subject to government approvals

Mitsui noted that the final investment decision on Waitsia was still subject to obtaining the necessary government approvals, including the formal environmental impact assessment approval, which it said was in the final phase.

“Detailed engineering and procurement work will now ramp up with initial construction activities planned to commence from July 2021. Production is expected to commence in the second half of 2023,” Mitsui said in Wednesday’s statement.

“The project will generate royalty payments to the Western Australian government and opportunities for local spending during the three-year construction phase and during the following operations phase.”

The Japanese operator also noted that roughly 60% of the project’s greenhouse gas emissions were planned to be reduced or offset from the start of production, in alignment with the state government’s greenhouse gas policy.

It also claimed an average of 125 workers will be employed during the construction phase, peaking at about 200 workers, with the long-term operational workforce to total around 12 to 15 people, in addition to 20-30 Perth based operational and engineering support personnel.

The Waitsia Phase 2 development involves the drilling of up to six wells, construction of a new 250 terajoule per day gas processing facility, planned with preferred contractor Clough, and associated gas gathering infrastructure.

Total capital expenditure to first production is anticipated to be between A$700 million and A$800 million (US$529.6 million and US$605.3 million).

Mitsui operates Waitsia in a 50:50 joint venture with Beach Energy.

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