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'Significant' step for Apache project
'Significant' step for Apache project

http://www.thebull.com.au/articles_detail.php?id=3242

Apache Energy Ltd says it has met the most important milestone for its $850 million Devil Creek natural gas project near Dampier in Western Australia.


22.05.2009 06:07 PM

Apache Energy Ltd says it has met the most important milestone for its $850 million Devil Creek natural gas project near Dampier in Western Australia.

WA environment minister Donna Faragher on Thursday gave the green light to the greenfields gas development, subject to stringent conditions.

The Devil Creek onshore processing plant will use reserves from Apache's Reindeer gas field, development of which was mothballed in December after a proposed foundation customer failed to commit to a firm sales agreement.

The project was revived in January after CITIC Pacific Mining agreed to buy 60 per cent of gas from Reindeer for its $US4.2 billion ($A5.3 billion) Sino Iron magnetite project at Cape Preston in WA.

Apache government and public affairs manager David Parker told AAP on Friday that the remainder of initial production from Devil Creek was "subject to commercial negotiations" but all would go to WA's domestic market.

US headquartered Apache and joint venture partner Santos Ltd expects to commence gas delivery from the Reindeer field by the second half of 2011.

Apache previously hoped to do so in the June quarter of 2010, but the delay with the CITIC deal and uncertain financial markets pushed back the timetable.

Devil Creek is expected to provide up to 220 terajoules (TJ) of gas to the Dampier-to-Bunbury natural gas pipeline each day, diversifying WA's domestic energy market.

The state consumes about 1,000 TJ of gas per day, with about two-thirds coming from the Woodside Petroleum Ltd-operated North West Shelf Venture at Karratha in WA.

The other third, or 350TJ to -370TJ a day, was slashed from WA's domestic gas supply in June last year when Apache's Varanus Island gas processing plant was shut down after a pipeline explosion.

Mr Parker said the Varanus Island plant had been restored to "over 90 per cent of pre-incident rates of production".

He would not be drawn on when it would be returned to full production, other than to say "the next few weeks".

"Apache is very pleased to receive the environmental approval for the Devil Creek development project," Mr Parker said.

"There are still a number of other approvals required, but the environmental approval was the most significant."