NWS LNG partners move forward on third-party gas supply

Australia’s oldest LNG plant at Karratha, part of the Woodside-led North West Shelf project, is to get natural gas from an onshore field in the Perth Basin under a new deal revealed on Monday.

The Karratha plant has been liquefying gas from fields located off the north-west coast of Australia for more than 30 years.

Hovewher, these fields are slowly running out of gas and the project is now shifting its focus towards a different business model aimed at processing gas from third parties.

Woodside said on Monday the NWS project participants have agreed non-binding key principles for processing third-party gas with Mitsui E&P Australia and Beach Energy, in respect of the second stage of their Waitsia gas project.

The Waitsia gas field is ranked one of the top five largest gas fields ever discovered onshore in Australia. The second stage would see 250 TJ/day of new processing capacity to supply the Karratha plant as well as domestic gas from 2023.

Furthermore, the NWS JV partners also reached a deal for gas processing from Woodside’s offshore Pluto fields.

This gas would reach the Karratha plant through the proposed Pluto-KGP Interconnector, which is targeting start-up in 2022.

These agreements advance the NWS project’s plans to toll third-party gas at the Karratha plant as anticipated processing capacity becomes available this decade, Woodside said.

The NWS project participants will work with each proponent during the second half of 2020 to agree fully termed binding gas processing and other agreements to support the respective projects, it said.

Extending the life of NWS LNG project

Woodside CEO Peter Coleman said the agreements were another significant step in enabling the processing of other resource owners’ gas at the Karratha plant, unlocking further value from this facility.

The processing of third-party gas resources will extend the operating life of the NWS Project and ensure the plant continues its “contribution to the Australian and Western Australian economies for years into the future,” he said.

“The tolling of third-party gas at KGP provides new revenue and LNG exports, and an additional domestic gas commitment for Western Australia from Pluto,” Coleman said.

“We look forward to working with all parties and the government of Western Australia over the coming months to finalise the project agreements and regulatory approvals,” he added.

Besides operator Woodside, other partners in the NWS project include Chevron, BP, Shell, BHP, and Japan Australlia LNG.

However, Chevron announced earlier this year it plans to sell its stake in the LNG venture after drawing interest from potential buyers.

The company made a move to start a formal marketing process for its 16.67 percent stake in the $34 billion project after receiving bids from several buyers.

The Karratha gas plant has five LNG trains with a capacity of 16.9 million tonnes per year. The facility also features domestic gas trains, condensate stabilisation units and LPG units.

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