Wednesday, 12 October 2011

Santos LNG project delayed

Sydney Morning Herald
Friday 7/10/2011 Page: 5

PLANS by Santos and its French partner GDF Suez to develop a floating liquefied natural gas project off Western Australia's northern coast appear to be slipping, with the Bonaparte venture not expected to be operational until 2018. But the partners have also flagged that output from Bonaparte, based in the Joseph Bonaparte Basin 250 km west of Darwin, may be increased from an initially planned two million tonnes of LNG a year to "between two and three million tonnes".

The partners are yet to put a price on Bonaparte, which would become the second floating LNG project off WA's coast after Royal Dutch Shell's world-first Prelude development. Submitting referral documents to the federal government's Department of Sustainability, Environment, Water, Population and Communities. Santos and GDF Suez said they expected to make a final investment decision on the development in late 2014.

The decision target date is at the tail-end of previous guidance from Santos of a sign-off in 2014, while only last year Santos was aiming for an approval in 2013. Bonaparte LNG will involve a floating LNG processing vessel moored over the Petrel, Tern and Frigate gas fields. In addition to LNG there should also be condensate production. The gas fields have a CO₂ content of up to 5.2%, considerably lower, Santos and GDF Suez say, than in the nearby fields being developed by Inpex Corp and PTTEP.

Unlike land-based LNG plants, floating ventures cannot reinject the greenhouse gas. The CO₂ needs to be removed, and disposed of, from the gas before it can be converted to LNG. Santos and GDF Suez said they would formulate a proper greenhouse gas abatement strategy at least a year before Bonaparte became operational. GDF Suez has already paid Santos $US200 million as part of a 2009 farm-in deal and has to pay the Adelaide-based company a further $US170 million upon the final investment decision.