Policy puts lid on Tallaganda
BHP Billiton says Tallaganda, a gas field estimated to contain one trillion cubic feet of gas, has fallen victim to WA’s domestic gas reservation policy by discouraging the development of near-shore fields.
Tim Cutt, president of BHP’s petroleum and potash business, said yesterday Tallaganda could be relatively easily developed by linking it to the existing Macedon domestic gas operation.
But he said the State’s controversial reservation policy and the “forced” volumes of gas from LNG projects like Gorgon and Wheatstone that will enter the local market were likely to keep Tallaganda a stranded asset.
BHP discovered Tallaganda in 2012. Not big enough for a stand-alone LNG operation, it was seen as a life-extending supply for Macedon.
Speaking at the Australian Petroleum Production & Exploration Association conference in Melbourne, Mr Cutt bemoaned a domestic gas debate that was light on “facts and data”.
He said a lack of incentives for domestic-focused gas projects meant Tallaganda was likely to remain stranded, as would gas by-produced at the Pyrenees oil venture.
“I just hope there is a good logical discussion around how does the country get the best of both worlds by allowing enough gas to go offshore through LNG and allowing the price to stay at a reasonable price for the customer and the developer,” he said.
“And then you will incentivise companies like us to bring more near-shore gas onshore.”
A weak domestic gas price — short-term contracts are struck at as little as $3.50 per million British thermal units, half its level a year ago — had also left Macedon’s profits much lower than budgeted at the time of its $1.6 billion development about four years ago, and made it even less likely the big but remote Scarborough field would be developed any time soon.
Mr Cutt said BHP and Scarborough partner and operator ExxonMobil remained aligned on pursuing a technical case for a floating LNG development but he was open to feeding Scarborough gas through BHP’s part-owned North West Shelf plant.
Mr Cutt said BHP’s frustration with the reservation policy was not deterring its hunt for liquids in the Carnarvon Basin.
