Some have been more successful than others. Conoco are looking okay, but someone at Total has probably done his career on this one. Their investment is, as the French say, up merde creek.
Basically the four CSG-LNG plants in Qld need somewhere around 15-18 Tcf of Reserves for their two trains (depending on size, and including ramp/tail gas).
When the supermajors (and several other majors) bought in, it looked like that would happen easily for all four projects. People were talking about three trains, even four or five in some cases.
Since then several things have happened.
1. The anti-CSG movement has gained traction which has increased regulations and community opposition, both of which mean extra delays and costs.
2. The gas boom has driven costs higher so that all the projects are having cost blowouts (both east and west coast).
3. The US shale gas revolution and several very large gas discoveries offshore Africa and in the Mediterranean have raised the possibility that a lot of the LNG price forecasts that the projects took FID on are overly optimistic.
And worst of all
4. The CSG basins have been underperforming. It's not so much that the good areas are underperforming, they are doing fine - but more that people just assumed they'd find some new good areas, a lot of okay areas, and some bad areas. What actually happened was that all the sweet spots were already discovered and basically no more have been found. And a lot of the 'okay' areas turned out to be nowhere near as good as hoped.
The effect of this is that five years on, none of the projects have met their gas reserves requirements and some aren't even close. For some like GLNG (Santos/Total/Petronas/Kogas) it's hard to see how they will ever get there. They simply can't do it. They either need to combine with another project (probably out of the question now given how far advanced they all are), or they need another source of gas.
And that's where the Cooper comes in. Even if the gas price doesn't reach the figures necessary to justify shale, the LNG plants facing penalty rates for failure to deliver will pay top dollar for whatever gas they can get.
Even for the projects that are likely to have enough gas(APLNG and QCLNG), they still are well short of where they'd like to be in terms of Reserves, and the unforeseen effects of the anti-CSG movement, green tape, and cost blowouts mean the ROI of the projects is nowhere near as attractive as it was when they bought in.
Arrow too recently had a large Reserves upgrade which I think surprised a lot of people, but there are going to be some bitten-down fingernails in the boardrooms of the Qld LNG projects for a long time to come yet.
The projects have also tried to sell down stakes in the projects too, but APLNG and BG have had no luck. Rumours are that Kogas is trying to get out of GLNG altogether, but nobody seems to want their stake (unsurprisingly). BG finally managed to sell a stake but only by throwing in gas from their global portfolio.
That's not to say the projects are doomed. I think at least three of them will go ahead with two trains each. It's just profitability will be down and any expansion beyond two trains looks extremely unlikely, unless it comes from Cooper shale.
The Cooper does have plenty of gas. But so do the Qld CSG fields. Trillions upon trillions of cubic feet. They just can't get enough of it out of the ground economically.
So Conoco, Total, BG and Shell all took a punt.
Conoco and BG look like their punt will pay off, albeit nowhere near as much as they'd hoped. Shell were looking bad for a while, but now could go either way. But Total appear to have rolled snake eyes.
Hope this helps.
BPT Price at posting:
$1.43 Sentiment: None Disclosure: Not Held
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