Woodside Petroleum wants to push ahead with design studies for an expansion of the $12 billion Pluto liquefied natural gas project within weeks, in the clearest sign yet it is close to securing third-party gas from one of its North-West rivals.
The Perth company said yesterday it expected to award the front end engineering and design contract for Pluto's expansion within the next two months, despite having had no more luck discovering new gas reserves around the original Pluto find.
However, it is understood Woodside's long-running talks with the owners of nearby gasfields, including Apache Corp and Hess Corp, are approaching a successful conclusion that would enable Woodside to justify Pluto's expansion. A spokesman would not comment on the expansion beyond Woodside's admission in its second-quarter report yesterday that "it expects to be in a position to award a FEED contract for the Pluto expansion" before the end of September.
Woodside raised the expectation despite having had no exploration success on its Greater Pluto acreage since the discovery of the Martell field, 100km north-west of the five trillion cubic feet Pluto-Xena gasfield, in February.
Woodside's exploration efforts in the area have been hampered by a delay in the arrival of the semi-submersible rig Maersk B281, which was to focus on finding more gas for Pluto. The rig was scheduled to arrive this year but the timetable is now in doubt.
Woodside chief executive Don Voelte is under pressure to push ahead with Pluto's expansion as soon as possible to cash in on the workforce already on the Burrup Peninsula site and improve project economics. Work at Pluto is 65 per cent complete. Infrastructure including pipeline and storage tanks will be able to accommodate two LNG trains.
Mr Voelte, however, wants to combine FEED for trains two and three and has talked of a desire to use both Woodside's own and third-party gas to underpin the expansion.
Analysts expect Martell to contain one trillion cubic feet while Apache has admitted it is looking to process its 4tcf Julimar gasfield through Pluto. A combination of accelerated Pluto-Xena production, Martell's gas and Julimar could be enough to justify the expansion.
Meanwhile, Woodside yesterday also said second-quarter sales revenue had plummeted 14 per cent to $938 million, in part because of lower output but mainly because of falling gas prices and a strong Australian dollar.
Woodside gained 79¢ to $44.90.
PETER KLINGER