Fresh gas hit adds to kitty in Poseidon areaBy Russell Searancke...

Fresh gas hit adds to kitty in Poseidon area

By Russell Searancke Wellington

20 September 2013 00:00 GMT

Karoon Gas has confirmed making a sizeable wet gas discovery in the ConocoPhillips-operated ­Poseidon area off north-west Western Australia, where a new liquefied natural gas project looks inevitable.

However, the exact shape of that LNG development is not yet clear, while ConocoPhillips is only halfway through its Poseidon ­exploration-appraisal drilling campaign in the Browse basin.

Joint venture partner Karoon confirmed earlier this month that development options include a standalone offshore scheme with a 1000-kilometre subsea pipeline to ConocoPhillips’ Darwin LNG plant.

There is also an option of “backfill” to the ConocoPhillips-­operated Bayu Undan field, which has an existing pipeline to Darwin LNG.

Finally, a floating LNG vessel is an option.

Karoon said the tie-in to Darwin was a brownfield solution that would offer “enormous cost savings relative to greenfield projects”.

ConocoPhillips is very keen to build a second train at Darwin LNG, which has state and federal government approvals to expand the facility’s capacity from the current 3.5 million tonnes per annum to 10 million tpa.

However, a ConocoPhillips ­executive said last week that the company “recognises the advantages” of floating LNG, and is looking closely at the concept.

Mike Nazroo, vice president for commercial, said ConocoPhillips is looking closely at the prospect of placing its proprietary Optimised Cascade LNG process on board a vessel, and that FLNG could “complement traditional onshore liquefaction”.

It is understood that third-­party design work has already been carried out on the project.

ConocoPhillips has said previously that the final concept is dependent on the drilling campaign. The latest well, Proteus-1, has just been flow tested, with Karoon reporting rates of up to 7.3 million cubic feet per day of gas and the best condensate-gas rate to date in the Poseidon area of between 19 and 22 barrels per MMcfd.

Karoon said flow rates were constrained in order to maintain hole stability and estimated that, with appropriate infrastructure in place, the Proteus production wells would flow at rates in excess of 100 MMcfd.

Proteus-1 follows on the heels of ConocoPhillips’ previous discoveries — Boreas-1, Kronos-1, Zephryos-1, Poseidon-1 and Poseidon-2.

Next up is the Grace-1 well, which like its predecessors will be drilled by semi-submersible rig Transocean Legend.

Sources said an interesting dynamic is building in the Browse basin where there are several major undeveloped discoveries owned by major companies all with LNG aspirations.

David Knox, chief executive of Australia’s Santos, said recently he believes “Browse is going to require collaboration to develop”.

“We’re well placed with many of the players in the region. Total, Inpex, ConocoPhillips and Chevron are all our partners in Western Australia and in the Northern Territory, which helps open doors to further partnerships, as the industry seeks to unlock the Browse basin,” added Knox.

Santos’ own Crown-1 discovery is only 20 kilometres away from Poseidon and shares similar reservoir characteristics to Proteus-1.