Not sure if this has been posted yet, but it's all starting to sounding very positive ....
Royalty cut urged for gas project
6th February 2009, 6:00 WST
The State Government is considering slashing by half its royalty demands from WA’s latest gas prospect in an effort to boost much needed domestic supplies and secure the State’s energy needs.
Resources Minister Norman Moore said yesterday he was considering Latent Petroleum’s request for a reduced royalty rate of 5 per cent, compared with the industry average of 10 per cent.
The call for the reduced royalty rate is to help speed development of Latent Petroleum’s Warro gasfield 250km north of Perth, near Jurien Bay.
The company and its partners Alcoa and TranServ want the exemption to justify the $300 million investment required to develop the complex field.
“I’m happy to hear Latent’s arguments and see if there is justification for cutting the royalty,” Mr Moore said.
“It seems to me that the capital requirement to get this thing going up front is greater than if you are doing a normal gas deal in the North-West. Maybe there does need to be some incentive to encourage people to do that.”
Unlike conventional gas fields off WA’s far north coast, the onshore Warro field is known as a tight gasfield because it requires hundreds of wells to tap and is therefore more costly to develop.
The partners are aiming to produce, from 2010, up to 150 terajoules of gas a day — about 10 per cent of WA’s current needs.
If initial drilling proves the Warro field to be commercially viable, and pending environmental approvals, it would be the first of its kind in the State.
The field is just 30km from the Dampier-to-Bunbury pipeline, which would meet the Government’s desire to diversify the State’s gas supplies in light of the Varanus Island explosion last year that caused widespread disruption to business.
Latent Petroleum managing director Stephen Kennihan said the Warro project would help meet an anticipated shortfall in domestic gas supplies in coming decades.
PETER KERR and PETER KLINGER
TSV Price at posting:
2.2¢ Sentiment: LT Buy Disclosure: Held
