green on red day!, page-11

EL

A couple of weeks ago the Fin Review reported whispers that the Shell and PetroChina vehicle, Arrow, was conducting a beauty parade for consultants to take on the front end engineering design (FEED) project for their Gladstone based project. The snippet suggested that an announcement could have come out as soon as the end of May. Obviously they've missed that date but maybe a decision is not too far away.

As the BOW preso shows some think that Arrow is short as much as 3000 pJ of the amount of gas they need. BOW has a couple of blocks in the Bowen Basin handy to some of Arrow's holdings and its proposed pipeline. These blocks are away from the artisean basin, on less than prime farming country and produces csg with little water byproduct. So if Arrow is about to move into the FEED stage I reckon they are likely to also be talking to BOW.

The 2015 / 2019 timeframe also pretty much rules out LNG Ltd as being a buyer of MEL gas also as LNG Ltd have hopes of being in production in 2014 but it means that LNG Ltd just has to be talking to BOW as well (imo).

By the way, BOW reckons they can get to FID by the end of 2012 and be supplying LNG buyers by the end of 2014, early 2015. MEL's consultants indicated FID for them is not till 2015 and gas sales for LNG not till 2019. As such the value of selling to LNG buyers for MEL has to be heavily discounted in comparison to BOW imo.