Feb 13 - Australia Pacific LNG Review Confirms Accelerated Schedule and Costs Revised

Source Press Release
Company ConocoPhillipsOrigin Energy LimitedSinopec 
Tags LNG & Gas Storage/Processing
Date February 21, 2013

Origin Energy Limited (Origin) today announced the results of Australia Pacific LNG's comprehensive schedule and cost review for its CSG to LNG project.

The review reaffirmed the strength and quality of the Australia Pacific LNG project, which is based on Australia's premier 2P CSG reserves base.

The review concluded that to date, Train 1 is on track to be completed on or ahead of schedule, with the first LNG cargo expected in mid 2015. Train 2 is expected to be completed at least three months earlier than the FID schedule, and start up is now expected in the fourth quarter of calendar 2015. As a result of the improved schedule, revenues from this Train are expected to be generated earlier than previously anticipated.

The estimated cost of the project at the FID2 announcement in July 2012 was $23 billion. The current estimate is now $24.7 billion, a 7 per cent increase on the previously announced estimate.

Origin Managing Director Mr Grant King said, "The increase in cost reflects increased certainty around well and gathering locations for gas for Train 2, enabling more accurate cost estimates, changes to CSG water management scope to align with revised government policy, cost increases for third party LNG projects in which Australia Pacific LNG has an interest, and an increased allowance for project contingency."

Gathering estimates have increased given approximately 90 per cent of Phase 1 operated wells and gathering line routes have now been scouted. This increase also reflects more extensive consultation with landholders to ensure the optimal location of wells, while minimising any impacts on farming operations.

In parallel with recent changes to government CSG water policy, the project has updated its plans to manage associated water to improve alignment with stakeholder expectations. Australia Pacific LNG's approach will increase water distribution to landholders for irrigation of commercial crops, increase the amount of water that will be reinjected, and maintain the flexibility to release treated water into watercourses where necessary.

Additional allowances have also been made for project contingency.

"It is important to note that project contingency now exceeds 10 per cent of the forecast cost to complete," Mr King said.

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It has always been the plan for Australia Pacific LNG to undertake a thorough review of the project when 20-30 per cent complete. All major contracts are awarded, civil works on Curtis Island are essentially complete, the majority of wells are located and planned, and a substantial amount of work has been undertaken on both the Upstream and Downstream components of the project.

"For the above reasons we believe that our revised project estimate is an appropriate guide for the completed project's schedule and cost," Mr King said.

Source: EvaluateEnergy® ©2020 EvaluateEnergy Ltd