oil search - alcan customer for png pipeline artic

Reuters
Alcan close to choosing Australia gas supply
Sunday March 2, 10:24 pm ET


MELBOURNE, March 3 (Reuters) - Alcan South Pacific, a unit of the world's second-largest aluminium producer Alcan Inc (Toronto:AL.TO - News), will decide on a gas supplier for its Gove Alumina operations in northern Australia by the end of March. David Sutherland, Alcan South Pacific's projects director, said the company was negotiating with three potential suppliers -- the Papua New Guinea-to-Australia gas pipeline project, the Blacktip gas development in the Timor Sea and the Petrel/Tern gas project, also in the Timor Sea.
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"We will definitely have a decision by the end of the month. There isn't a clear frontrunner," Sutherland said.

Last month, Alcan South Pacific said it would undertake a feasibility study of a proposal to increase alumina production at its Gove facility by 75 percent to 3.5 million tonnes a year.

Sutherland said project approvals were expected by mid-2004 and the expansion was scheduled to be completed by 2007. The new facility would need up to 40 petajoules of gas annually, he said.

The PNG-to-Australia gas pipeline project is operated by ExxonMobil (NYSE:XOM - News) and has struggled for more than six years to sign up enough customers to underpin its construction.

It has secured deals to supply up to 75 petajoules of PNG gas annually to Australian customers from 2007, but needs commitments for between 100 and 150 petajoules a year before entering the early engineering and design phase.

Other shareholders in the project are Chevron/Texaco (NYSE:CVX - News), Japan PNG Petroleum, Oil Search (Australia:OSH.AX - News) and Mineral Resources Development Company (MRDC) -- a PNG company representing landowner interests.

The undeveloped Blacktip gas field is operated by Woodside Petroleum (Australia:WPL.AX - News) and contains an estimated 1.1 trillion cubic feet (Tcf) of gas.

Woodside and its venture partner Agip Australia (AGIP.LG) have said they are targeting gas markets in Australia's Northern Territory and evaluating development opportunities for Blacktip.

The undeveloped Petrel/Tern gas fields are operated by Santos Ltd (Australia:STO.AX - News) and are estimated to hold around one billion Tcf. Origin Energy (Australia:ORG.AX - News) also has a small interest in the project.

Shares in Woodside were trading down 2.5 percent at A$10.58 trade on Monday, while shares in Oil Search were down 1.5 percent at 67 cents, shares in Origin were down 0.7 percent at A$4.27 and shares in Santos were down 2.7 percent at A$5.69.