Exports Grow with Australian Offshore Gas Projects

Australian natural gas production has increased sharply over the past decade as a result of new projects. Several recent discoveries and growing regional demand for gas have spurred more investment activity in the country's reserves. 

Australia's natural gas reserves vary by industry source and the category of commercial viability. According to OGJ, Australia's proved natural gas reserves were more than 43 trillion cubic feet (Tcf) as of January 2014. Geoscience Australia estimated total proved plus probable commercial reserves at 132 Tcf (99 Tcf of traditional natural gas and 33 Tcf of coal bed methane-CBM) as of 2012. Most of the traditional gas resources (about 92 percent) are located in the North West Shelf (NWS) offshore in the Carnarvon, Browse, and Bonaparte basins.

The North West Shelf of Australia in the Carnarvon Basin holds some of the country's most mature and prolific fields that are the prime sources for the North West Shelf LNG terminal. As part of the North Rankin Redevelopment Project, the NWS Project developers are investing about $4.8 billion to recover remaining low-pressure gas from the North Rankin and Perseus gas fields. Also, a new production platform, North Rankin B, will be installed in 2013 to support production of smaller fields and extend their development until 2040. Also, the NWS project participants approved the first-phase development of the Greater Western Flank Project containing up to 3 Tcf of gas and 100 million barrels of recoverable condensate. The project is expected to start in 2016.

The Greater Gorgon fields, located approximately 100 miles off the northwest coast of Australia in the North Carnarvon Basin near Barrow Island, are collectively the country's largest known gas resource, and the Gorgon Project could encompass total reserves of 40 Tcf. The project, led by Chevron (50 percent), with Shell and ExxonMobil (25 percent each), is under construction and is on track to be completed in 2015. The project includes development of the Gorgon and Jansz-Io gas fields, with connection by subsea pipelines to Barrow Island, where LNG processing facilities will have production capacity of 750 MMcf/y. 

One of the project's key features is injecting the fields' carbon dioxide (CO2) into deep formations beneath Barrow Island to reduce overall greenhouse gas emissions. The project is expected to produce 950 billion cubic feet per year (Bcf/y) of natural gas and 20,000 bbl/d of condensate when completed.

Another major project under development neighboring the Gorgon Project is the Wheatstone Project that began construction in late 2011. When complete in 2016, the first two trains of its LNG export plant are expected to export 430 Bcf/y. Maximum production from the project is anticipated at 584 Bcf/y of natural gas and 30,000 bbl/d of condensate.

The first stage of the Pluto Project near Karratha, offshore Western Australia, came online in March 2012 with estimated LNG capacity of 200 Bcf/y. Woodside Energy owns 90 percent of the venture supported by 15-year sales contracts with Kansai Electric and Tokyo Gas, which hold 5 percent equity each. The Pluto project includes an offshore platform connecting five subsea wells and a 112-mile pipeline to an onshore LNG facility on the Burrup Peninsula. Plans for a second train are on hold while project owners seek additional gas supply.

The Browse Basin Development Program is another key area of gas discoveries in offshore northern Australia. The largest field in the basin, Ichthys, holds 12.8 Tcf of gas and 530 million barrels of condensate reserves. Construction on this field began in 2012. The project is led by Japan's INPEX (66 percent) and Total (30 percent). A 552-mile undersea pipeline will connect the fields to a new export LNG terminal to be built near Darwin. When the project becomes operational in 2017, its production is expected to be 400 Bcf/y of LNG, 100,000 bbl/d of condensate, and 32,000 bbl/d of LPG. 

Other smaller fields under development in Browse are Crux and Prelude. The partners developing Crux received a five-year retention lease in 2013 and continue to discuss gas processing options, such as constructing a designated stand-alone floating LNG terminal or supplying gas to other projects such as Shell's planned Prelude LNG floating terminal.

The Bonaparte Basin in the Timor Sea straddles the waters of Australia and East Timor and holds some undeveloped gas resources. ConocoPhillips is currently drilling fields at the Bayu Undan natural gas and condensate field. The Greater Sunrise field is a new development that has estimated resources of more than 5 Tcf of gas and 230 million barrels of condensates.

Australia has become a leading LNG exporter in the Asia-Pacific region in the past decade. Greater expected natural gas production and new LNG capacity in the next few years is likely to boost natural gas exports even more. Over the past decade, Australian LNG exports have increased nearly three times, and they are expected to rise substantially in the medium term as developers usher in new upstream and liquefaction capacity. 

Australia, the third-largest LNG exporter in the world behind Qatar and Malaysia, exported 1,070 Bcf of LNG in 2013, up from about 990 Bcf in 2012, according to IHS Energy. Australia exports natural gas almost exclusively to Asian markets, with Japan purchasing about 80 percent of Australia's exports in 2013, mostly through long-term contracts. Other key consumers include China, South Korea, and Taiwan. Japan's demand for LNG rose in 2011 when natural gas-fired generation was substituted for the lost nuclear capacity following the Fukushima power plant accident. 

Australia became the largest source of LNG for Japan by 2012. Chinese national oil companies (NOCs) have teamed with international oil companies (IOCs) on investments in several Australian liquefaction projects and signed gas purchase agreements to lock in supply for the growing market in China.

Australia currently has more than $190 billion worth of LNG projects under construction, and the country is on target to overtake Qatar as the world's largest LNG exporter by 2020, according to industry sources.