New natural gas discovery in Australia

I have just picked up this news on a new natural gas discovery off the coast of Western Australia. The idea is for the gas to be cooled in order to liquefy it. They do not state the volume of this discovery but the text at the top of the figure states that 21 discoveries since 2009 together amount to 10 trillion cubic feet of resources”. Recalculated as oil equivalents this is around 1,900 million barrels. We will see how significant this discovery is when they convert these resources into reserves.

At the end of the blog my translator Michael Lardelli from Australia will make a comment.

Article i PennEnergy

Chevron Corporation (NYSE: CVX) today announced further drilling success by its Australian subsidiary in the Exmouth Plateau area, located in the Carnarvon Basin.

The Elfin-1 exploration discovery well encountered approximately 132 feet (40 meters) of net gas pay in the upper Mungaroo sands. It is Chevron’s 21st discovery offshore western Australia since mid-2009.

Located in the WA-268-P permit area, the well is located approximately 106 miles (170 kilometers) northwest of Barrow Island and was drilled in 3,570 feet (1,088 meters) of water to a total depth of 11,909 feet (3,630 meters).

“Elfin-1 is a demonstration of our continued industry-leading exploration success,” said George Kirkland, vice chairman, Chevron Corporation. “These discoveries build a platform for future growth for Chevron.”

Melody Meyer, president, Chevron Asia Pacific Exploration and Production Company said “This remarkable series of exploration discoveries in the Carnarvon Basin has created a robust gas portfolio in Australia. The growth of this portfolio positions the company to supply future LNG demand in the Asia Pacific region.”

Chevron Australia is the operator of WA-268-P with a 50 percent interest while Shell Development Australia and Mobil Australia Resources each hold a 25 percent interest.

Comment from ML: These discoveries of gas do not add significantly to Australia’s fuel security since they are developed by international oil companies (unlike many other hydrocarbon-producing nations Australia lacks a national oil company) and are destined primarily for export.

Interestingly, the Elfin-1 discovery is in significantly deeper water than developed projects such as Northwest Shelf, Gorgon and Wheatstone that are all much closer to shore and in water depths of 200m or less.

The gas industry (and the politicians riding the back of the WA resource boom) are currently reeling from the recent decision by the Australian company Woodside to abandon building a LNG plant at James Price Point due to (it said) spiraling costs. However, environmentalists and indigenous groups in the area were overjoyed at the news. There is now talk of using floating LNG processing facilities. If Elfin-1 was ever to be developed we might imagine that a floating LNG facility would be used due to the distance of this field from the WA coast.

If costs have killed the James Price Point development one wonders if development of the Elfin-1 discovery would ever be economic.