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-- Exxon, BHP invest more than US$1 billion in a gas processing plant
-- Facilities will handle gas from the Kipper, Tuna, Turrum fields in the Bass Strait
-- About 250 jobs expected to be created
(Recasts the first paragraph, adds comment from Exxon and detail throughout.)
By Robb M. Stewart and David Winning
SYDNEY--ExxonMobil Corp. ( XOM ) and BHP Billiton ( BHP ) will spend more than US$1 billion on natural gas processing facilities in southeastern Australia to handle new supplies of the cleaner-burning fuel from offshore fields in the Bass Strait.
The investment builds on the billions of dollars major international energy companies are pumping into gas projects in Australia that are targeting an expected jump in demand in the coming decades domestically and from energy-hungry consumers in Asia. It also comes despite BHP's focus on cost-cutting and freeze on major new capital expenditure.
BHP in a statement Thursday said it had approved a US$520 million investment in new facilities at the jointly owned Longford plant in the Gippsland Basin of Victoria state, while Exxon separately said it would spend a similar amount. The gas will flow from the Kipper, Tuna and Turrum fields in the Bass Strait, which the two companies and a third partner, Santos Ltd. (STO.AU), are developing as part of a more than US$4 billion project.
The gas conditioning plant is being designed to process about 400 million cubic feet of natural gas per day, and reduce carbon dioxide content of treated gas to less than 3%. Reservoirs at the Turrum field contain between 5% and 22% carbon dioxide in the produced gas, and the Kipper reservoirs from 10%-18% carbon dioxide.
Michael Yeager, chief executive of BHP's petroleum division, said the new facilities are a necessary extension of the companies' Bass Strait infrastructure, allowing gas reserves in the region to be developed and meet long-term energy supplies in southeast Australia. The Longford gas plant has been operating for more than 40 years and is one of country's biggest oil and gas developments.
John Dashwood, chairman of ExxonMobil's Australian arm, said the project with BHP will create about 250 construction and other jobs.
"Australian energy consumption will continue to grow during the next 20 years. The gas conditioning plant will process gas to help meet this expected increase in demand," Mr. Dashwood said.
Building work is expected to begin in the third quarter of next year, and the new facility is set to be operational in 2016, the companies said.
BHP's investment comes a day after it agreed to sell a minority stake in the Browse liquefied natural gas project offshore Western Australia to PetroChina Co. (PTR) for US$1.63 billion cash. It brings the total from BHP's sale of small operations and minor positions in resources operations to more than US$4 billion in recent months.
-Write to Robb M. Stewart and robb.stewart@wsj.com and David Winning at david.winning@wsj.com
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source: http://www.nasdaq.com
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