Beach Energy to be next Western Australia LNG company with equity production from onshore Perth Basin

Thursday, 24 December 2020
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Australian company Beach Energy and Mitsui and Co. of Japan have taken a positive final investment decision for stage-two development of the Waitsia onshore natural gas field that will contribute to equity LNG production in Western Australia by 2023.

Beach and Mitsui each own 50 percent of the venture and the operator of the Waitsia field in the onshore Perth Basin is Mitsui subsidiary, Mitsui Exploration and Production (Australia).

Beach and Mitsui said they had finalized and signed key commercial agreements with the North West Shelf LNG plant shareholders, the State of Western Australia and the pipeline and project company, Australian Gas Infrastructure Group (AGIG).

The Beach-Mitsui venture and Woodside Petroleum subsidiary, Woodside Burrup Pty Ltd, with gas from the Pluto gas fields, become the inaugural third parties to sign binding commercial access agreements with the North West Shelf LNG partners.

The six NWS LNG partners are Australia’s Woodside and BHP, UK major BP, Chevron Corp., Royal Dutch Shell and a Japanese partnership comprising Mitsubishi Corp. and Waitsia gas shareholder Mitsui.

“First equity LNG sales from Waitsia Stage 2 are expected to commence in in the second half of 2023,” said a statement from Beach.

“The Gas Processing Agreement and related agreements signed with the NWS LNG will enable up to 1.5 million tonnes of LNG per annum - 0.75MTPA of LNG to Beach) of Waitsia gas to be tolled and processed into LNG through the NWS facilities in Karratha between the second half of 2023 and the end of 2028,” stated Beach.

Beach and Mitsui will each market their respective LNG equity interest independently of the NWS LNG plant partners.

Beach Managing Director Matt Kay said the approval of the project delivers on a core element of Beach’s five-year growth strategy aimed at delivering annual production of more than 37 million barrels of oil equivalent by 2025.

“Waitsia is a world class, low cost, onshore gas resource and we are thrilled to be growing the Beach portfolio in Western Australia,” Kay explained.

“We believe the project offers material value to Beach’s shareholders and, through the agreement to export through the North West Shelf facilities, makes Beach an LNG player for the first time in the company’s 60-year history,” stated Kay.

“In addition to royalties, Waitsia will deliver approximately two hundred jobs for Western Australians through the development of our resources, construction of the new gas facility and its ongoing production,” he stated.

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

Total capital expenditure to first production is expected to be within the range of A$700M (US$530M) and A$800M, with funding to be supported from the company’s operating cash flows and facilities.

Delivery of gas to the NWS facilities will occur via the Dampier-Bunbury pipeline.

The pipeline connection to the Waitsia facilities is already in place, following its construction as part of the Waitsia Gas Project Stage 1 expansion, announced in July 2019.

The Waitsia partners have also entered into a DCA with the State of Western Australia, which includes the approval to export up to 7.5MT of LNG until the end of calendar year 2028.

That accord specifies domestic gas marketing obligation of 20 terajoules per day during the export period, which they are currently meeting through their existing gas sales from the Waitsia Gas Project Stage 1 facilities and the Xyris gas processing plant.

Other agreements signed by Beach and Mitsui include a Project Development Deed with the State of Western Australia, as well as accords with NWS LNG relating to gas processing, tie-ins, product allocation and cargo lifting and offtake.

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