LNG

Australian LNG operator Woodside has awarded a European-US grouping comprising units of Europe’s Subsea 7 and Houston-based Schlumberger, a significant contract for the subsea development of the Scarborough gas field to provide feed gas for the Pluto LNG plant expansion.

The Scarborough field is located about 380-kilometres offshore northwest Australia and is one of just two such feed-gas projects under way in Australia, with the other being the Barossa field to extend the lifespan of Darwin LNG.

Subsea 7 said the project work scope covered the engineering, procurement, construction, and installation (EPCI) of subsea pipelines and production systems.

The development will include 45 kilometres of rigid flowlines, six flexible flowline risers, 42 kilometres of umbilicals and eight trees, as well as associated subsea equipment, in water depths of about 950 metres.

The Subsea Integration Alliance team established during the initial front-end engineering and design phase, awarded in January 2019, will now transition into the full EPCI phase.

Project management and engineering will take place in Perth, Australia, with support from Subsea 7’s Global Project Centre’s offices in Malaysia, UK and France and various OneSubsea offices.

Offshore activities are targeted to take place from 2023 to 2025 using Subsea 7's reel-lay and flex-lay vessels.

Joint effort

“This award is the result of a strong and collaborative early engagement process with Woodside, working with a high level of transparency and cooperation during the pre-tender and FEED phases,” said Olivier Blaringhem, Chief Executive of the Subsea Integration Alliance.

“It demonstrates the potential value of Subsea Integration Alliance and its optimised and integrated offering capacity. We look forward to working with Woodside to deliver the project successfully and safely while maximising the client’s production objectives,” stated Blaringhem.

David Bertin, Vice President for Subsea 7 Global Projects Centre and Asia Pacific, said the group was proud to be awarded this contract by Woodside.

“This builds on our long-standing relationship with the client and our successful track record of projects executed offshore Australia,” explained Bertin.

“Our local office in Perth will be supported by Subsea 7’s Global Projects Centre, underlining the strength and breadth of our project management capabilities and the capacity to deliver complex projects,” added Bertin.

Subsea noted that it defined a large contract as being between US$300 million and US$500M and the value range refers to Subsea 7’s share of the contract.

The Subsea Integration Alliance is a non-incorporated strategic global alliance between Subsea 7 and OneSubsea, the subsea technologies, production and processing systems division of oil and gas services company Schlumberger.

The alliance brings together field development planning, project delivery and total lifecycle solutions under an extensive technology and services portfolio.

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.

Australian energy company and LNG operator Woodside Petroleum said it had made operational advances in 2020 in the midst of several challenges and was also progressing with its project development offshore Senegal in West Africa.

US energy major Chevron Corp. has signed an agreement to supply mining giant BHP’s Nickel West facilities in Western Australia with domestic natural gas from the Chevron-operated Wheatstone LNG export plant.

The LNG Marine Fuel Institute formed in Australia to help improve access to bunkering has praised the first move by the Pilbara Port Authority in Western Australia to issue a ship-to-ship LNG bunkering licences to plant operator Woodside.

LNG MFI Chief Executive Margot Matthews said Pilbara Port and Woodside had executed non-exclusive licences to provide ship-to-ship LNG bunkering services at the ports of Port Hedland and Dampier, the first licences of their type issued in Australia.

“Since 2017 LNG MFI has worked to bring together key players to develop a cleaner marine fuel industry in Australia as we lower emissions for a better future and it’s exciting to see this now moving full steam ahead,” Matthews explained.

LNG MFI is an independent not for profit organisation established to enable LNG, the cleanest alternative available, to be a primary fuel for marine transportation.

The body is also supporting the plans by commodities giant BHP to use LNG as fuel for future iron ore carriers on the Australia-Asia trade route.

LNG MFI’s position is that Australia can meet and exceed the new International Maritime Organization 2020 regulations by establishing early adoption of LNG as a transition marine fuel and providing the Australasian maritime industry with a superior and cost effective fuel source

Pilbara Ports Authority’s General Manager Development & Trade, Lyle Banks, said the Authority has issued three licences for LNG bunkering operations in the Pilbara.

“In addition to Woodside’s ship-to-ship licences, a truck-to-ship LNG bunkering licence was issued to Evol LNG in early 2017,” added Banks.

“Western Australia is well-placed to become an LNG bunkering hub, with LNG production facilities close to large iron ore mining operations and the many hundreds of ocean-going vessels that use ports in the Pilbara region,” stated banks.

Woodside Executive Vice President Marketing for Trading and Shipping, Reinhardt Matisons, described working with Pilbara Ports Authority to finalise LNG bunkering licences “as a key step in developing an LNG fuels industry” in Western Australia.

“Woodside is finalising plans for an LNG bunkering operation in the Pilbara to capture the significant environmental and economic benefits of using LNG, instead of fuel oil, for the busy iron ore shipping trade,” added Matisons.

“We continue to work with potential customers on this opportunity,” he said.

LNG MFI’s CEO Matthews expects Australia to play a leading regional role in LNG fuel.

“While there’s no single pathway to a low emissions future, expanding the use of LNG as a transition marine fuel is one way to help reduce greenhouse gases from shipping and help reduce this country’s environmental footprint,” said Matthews. 

Woodside, the Australian LNG export plant operator, has received a regulatory permit for the Scarborough gas field development offshore Western Australia, even as the final investment decision has been deferred until 2021.

Woodside, the Australian LNG plant operator, said it awarded a contract to the local subsidiary of Dutch dredging and heavy-lift company Boskalis to undertake seabed intervention and excavation works for the proposed Scarborough natural gas pipeline.