Ann: Nicolay No 1 Weekly Drilling Update , page-8

Interesting developments.

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WA find switches BHP's gas focus


BHP Billiton's Houston-based oil and gas unit has shifted the focus of its offshore exploration to Western Australia's Carnarvon Basin after a big gas discovery bolstered the miner's commitment to the nation's chief gas-producing region.

The miner will now give equal billing to WA and the US Gulf of Mexico as the two main regions where it will search for offshore oil and gas.

"The Tallaganda (gas) discovery in Australia's Carnarvon Basin marks our biggest discovery in 2012 and opens up a large area of captured acreage with many potential follow-up opportunities," BHP said in its just-released 2011-12 annual petroleum review.

The find was announced in April, but BHP had given no previous indication of whether it believed the find would lead to more drilling or could be commercially developed.

The company stressed the area Tallaganda had opened up was close to BHP's existing fields.

"We have two (exploration) focus areas based on BHP Billiton Petroleum's production heartlands -- the Gulf of Mexico and offshore Western Australia," the review said.

BHP, which produces more than twice as much oil and gas as Australia's biggest standalone oil company, Woodside Petroleum, is still evaluating Tallaganda, in which Perth-based Tap Oil has a 20 per cent stake and US oil company Apache has a 25 per cent stake.

Tap, which earlier this year was reported by WA media as looking to sell its stakes in Tallaganda and the nearby Zola discovery, could not be contacted yesterday.

BHP has previously given few details about Tallaganda, which sits between the BHP's domestically focused Macedon gasfield and the big Scarborough field it owns with Exxon Mobil.

No indication has been given by Tap nor BHP as to whether the discovery could hold 1.3 trillion cubic feet of gas, the potential claimed by Tap before drilling.

BHP's talking up of Tallaganda's exploration significance comes after petroleum chief Michael Yeager last month gave the most upbeat assessment of his offshore WA acreage, which includes interests in Scarborough and the Browse LNG project, in recent times.

"These huge projects will underpin the growth of our LNG exports out of Western Australia in the next two to three decades as they are built and brought on line," Mr Yeager told a New York investor conference.

This compares with statements in May at the Australian Petroleum Production and Exploration conference in Adelaide, where he stressed the costs associated with building in WA.

At the time, he also said floating LNG (FLNG) development at Scarborough was being explored.

It is understood these investigations have since become more appealing to Exxon and BHP because they avoid the high costs associated with onshore construction in WA.

FLNG is also shaping up as a more likely option for the Browse project after FLNG-trail blazer Shell bought Chevron out of the project. That move is said to have caused a commotion in the office of WA Premier Colin Barnett, who has been pushing for development of the offshore fields at the controversial James Price Point site near Broome.

Shell is building the world's first FLNG project in a $US12bn ($11.6bn) exercise that will process gas from the Prelude field in WA's offshore Browse Basin.

BHP's main focus remains getting the most from its $US20bn US shale ground acquisitions made last year before US gas prices slumped.


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