Esso supplying gas for the next 5 years in the Gippsland Kipper...

Esso supplying gas for the next 5 years in the Gippsland Kipper field...that sounds awfully close!

Esso is supplying 200PJ of gas to meet the short term winter energy shortfall demand, but is also looking for other opportunities to maintain reliable supply as noted by the quote from the article below.

“There is still plenty of gas remaining in Bass Strait and we are working hard to unlock its full value. More investment will be required for Victoria to maintain its reliable supply of natural gas, especially during winter.”

Note that Esso's project will cost $400m for 200PJ of gas, being about $2m/PJ. EMP on the other hand to do all the approvals, test wells, and infrastructure to supply through APA will cost roughly $600m for 730PJ of gas over a 25 year life, being about $0.86m/PJ. At roughly half the cost of the current project and if all goes well coming on line in 2025 two years before Esso's extra supply is due to finish, that makes EMP a very attractive proposition to partner with.

Also having done a very rough NPV at the Government 6.5% rate over 25 years using a $600m initial investing (~$34m for FEED and Test Well, $500m for APA gas infrastructure), with $292m revenue per year at $10/GJ gas rate (although has been seen as high as $13 or so of late), would give an NPV of almost $3 billion, with the possibility to expand the project if flows reach anywhere close to P50 estimates.

EMP...talk about the right company at the right time!