Large Scale Gas Projects Northern Territory, Queensland & PNG. Moyes & Co.

Transcription

1 Large Scale Gas Projects Northern Territory, Queensland & PNG!

2 Large Scale Gas Projects - Australasia "

3 Regional Activity SE East Asia, Australia

4 Existing & Possible Northern Territory Gas Pipelines #

5 Original Amadeus-Darwin Contracts! Producers: Mereenie and Palm Valley Fields! Purchaser: Gasgo Pty. Ltd., subsidiary of PWC at pipeline inlet! Mereenie contracts expire June 2009, Palm Valley January 2012; replaced by ENI Blacktip but will continue until Blacktip onstream $

6 Original Amadeus-Darwin Contracts! Palm Valley currently A$2.20/MCF, indexed to Australian CPI! Mereenie averaged A$3.77/MCF (twelve months to 6/30/08), more complex formula indexed to CPI and out-of-state electricity prices, has seasonal variation %

7 Darwin Gas Supply General Summary! Darwin gas supply historically has been transported from the Amadeus Basin via 1,512 km 8 pipeline, with a current capacity of 50 MMCFD. Line capacity could be increased with additional compression and looping the line.! Palm Valley Gas Field sales contracts have four more years! Mereenie Gas Field contract to ends June 2009, likely to continue through year end 2009 as the offshore ENI gas discovery, Blacktip is developed and tied into Darwin line by ENI. Pipeline completed. Mereenie gas reserves are almost exhausted, and the operator was able to offer only another two years to Darwin.! Magellan reports may be difficult to sell productions tails in the short term, but anticipates incremental long term demand from mining and industrial users in NT and nearby states.! Blacktip gas field, Darwin gas contract, A$4.5/MCF, take or pay contract, reserve estimates of 1.2 TCF based on discovery well with 3D seismic. Development plan is for 2-6 production wells. &

8 ENI Development of the Blacktip Offshore Gas Discovery! 2008: Development of the Blacktip gas field, Timor Sea 110 km off shore at a water depth of some 50 meters. The Blacktip field is owned 100% and operated by Eni and has 1.2 Tcf of 2P reserves! The project provides for the drilling of 2 initial development wells, the installation of a production platform, the laying of a 108- kilometer 16 offshore pipeline and the construction of an onshore treatment plant with a capacity of 1.3 billion cubic meters per year. APA Group, awarded a A$ 400 mm contract in June to transport Blacktip gas from the onshore plant through a A$ 130 mm pipeline built to connect into an existing pipeline that runs to Darwin.! The gas drilled from Blacktip field will be mainly used to generate electricity in Darwin and other Northern Territory locations, through a 25-year Gas Sales Agreement with Power Water Corporation.! Production is planned to start in 2009 at an initial annual al rate of 650 MMCMPA (63MMcfpd), increasing to 1.1 BCMPA. (108 MMcfpd)! December 2005: Woodside Petroleum Ltd has sold its 54 per cent Blacktip gas field interests to Italian-based oil giant ENI in a $40 million deal.! In the same area Eni holds 12% of the gas and liquids field of Bayu Undan, whose liquids production started in 2004, and 12% of the Darwin gas liquefaction plant, whose nominal capacity is 3.5 MMTPA LNG. '

9 Bayu-Udin Darwin LNG (

10 Darwin LNG! Third year of operation, one train! 3.24 MMT/yr (550mmcfd) capacity! 16 yr sales contract (reserves limited) to Tokyo Power Electric and Tokyo Gas! Bayu-Undan supplies 500MMMcfpd via 500km 26 pipeline! Darwin LNG has license to expand to 10MMTPA! Current effort to secure additional gas supplies to expand plant! Greater Sunrise reserves not sufficient to justify additional train! Floating LNG is potential competitor for NW Shelf Gas! Darwin LNG Ownership! Conoco Phillips 56.72%! ENI Australia 12.04%! Inpex 10.53%! Santos 10.64%! Tokyo Electric 6.72%! Tokyo Gas 3.36%!)

11 Darwin LNG!!

12 Global LNG Trade!"

13 Once onboard a ship LNG can be transported globally. LNG Can be shipped from Darwin to the US for +/-$1.70/mcf $1.10 $1.10 $0.95 $0.60 $1.30 $0.70 $1.40 $1.70 $2.75 $/MCF!*

14 The Global LNG supply will need to increase to 440 mtpa by 2020 LNG,!mtpa Supply LDemand !#

15 LNG Cost of Service Delivered to West Coast or Gulf of Mexico $6.00 Atlantic Trade Pacific Trade $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Trinidad Venezuela Snovhit Algeria Libya Nigeria EG Angola Available source for North America Egypt Qatar Abu Dhabi Oman Yemen Brunei Malaysia!$ Bontang Australia Tangguh Gorgon Darwin Sakhalin Peru Gas Liquefaction Shipping Regas

16 Australian Gas Transactions!%

17 Regional Transactions, focus on Legacy Projects Date!!!!!!!!!!!!! Announced Buyer Seller Deal!Notes Transaction!!!! Value! Transaction! 3P!Reserves! US$/Mcfe!!!! A$/Mcfe!!! (US$MM) Value!(A$MM) A$/US$ US$/A$ (Bcfe) (3P) (3P) 29"May"08Aus Petronas Santos CSG $2,008 $2, ! $2.35 $ "Sep"08Aus Shell Arrow!Energy CSG $613 $ ! $1.38 $1.74 8"Sep"08Aus ConocoPhillips Origin CSG $6,484 $8, ,332! $1.50 $ "Oct"08Aus BG Queensland!Gas CSG $3,172 $5, ,311! $0.96 $ "Oct"08Aus AGL!Energy BG CSG $522 $ ! $0.89 $ "Dec"08Aus Arrow!Energy Pure!Energy CSG $458 $ "Jan"09Aus AGL!Energy AJ!Lucas/Molopo CSG $259 $ ! $0.72 $1.03 9"Feb"09Aus BG Pure!Energy CSG $533 $ Average $1,756 $2, ,648! $1.07 $ "May"08PNG Rift!Oil Austral!Pacific Con $10 $ "Dec"08PNG Merlin!Energy AGL!Energy Con $780 $1, "Jan"09PNG Nippon Oil!Search Con $0 $ !&

18 Regional Transactions, focus on Legacy Projects Date!!!!!!!!!!!!! Announced Buyer Seller Notes Transaction!!!!! Value!(US$MM) Transaction! Value!(A$MM) A$/US$ US$/A$ 3P!Reserves! (MMBOE) US$/Boe!!!!(3P) A$/Boe!!(3P) Spot!US$ Sales!US$/boe! as!%!spot 29!May!08Aus Petronas Santos CSG 2,008" 2,088" $ % 12!Sep!08Aus Shell Arrow"Energy CSG 613" 776" $ % 8!Sep!08Aus ConocoPhillips Origin i CSG 6,484" 8,005" $ % 28!Oct!08Aus BG Queensland"Gas CSG 3,172" 5,200" $68 8.4% 28!Oct!08Aus AGL"Energy BG CSG 522" 856" $68 7.9% 22!Dec!08Aus Arrow"Energy Pure"Energy CSG 458" 673" $45 12!Jan!09Aus AGL"Energy AJ"Lucas/Molopo CSG 259" 370" $45 9.7% 9!Feb!09Aus BG Pure"Energy CSG 533" 796" $36 Average 1,756 2, % 23!May!08PNG Rift"Oil Austral"Pacific Con $127 18!Dec!08PNG Merlin"Energy AGL"Energy Con $45 14!Jan!09PNG Nippon Oil"Search Con $45!'

19 Transaction Metrics vs Historical and Nymex Strip Prices!(

20 Transaction Metrics as a % of the then Oil Price ")

21 Petronas Acquisition & Investment in Santos Gladstone LNG! Project Overview: The Curtis Gladstone LNG (Santos-60% (operator), PETRONAS - 40%) project is for a 3-4 mtpa LNG.! Current Status 29 May 2008: PETRONAS, to take a 40% interest in the development, operation and marketing of the company s proposed Gladstone LNG (GLNGTM) project. PETRONAS will make an initial cash investment of US$2.008 billion, plus a further payment of US$500 million upon reaching a Final Investment Decision for a second LNG train. The agreement fully aligns the interests of both companies across all strategic elements of the value chain from resources to plant development and operation, and LNG marketing.! Santos and PETRONAS will form a 60/40 joint venture company to:! Develop and operate the 450 km gas pipeline to Gladstone;! Develop and operate the LNG liquefaction plant on Curtis Island at Gladstone with initial capacity of 3mtpa.! Undertake all marketing activity, accessing PETRONAS well-established customer base in the three largest Asian LNG markets of Japan, Korea and Taiwan. "!

22 Gladstone LNG Curtis Island Project Overview: The Curtis Gladstone LNG (Santos-60% (operator), PETRONAS - 40%) project is for a 3-4 mtpa LNG. A single processing train of approximately 3-4 million tonnes per annum of LNG. Capital costs in the range of A$7.7 billion, including upstream field development, liquefaction plant and associated infrastructure. Half of the investment is expected to be in the Gladstone plant, with the other half in Queensland s Bowen and Surat Basins. Final Investment Decision by the end of 2009 to enable first cargoes to be exported in early Gas supply of petajoules pa from Santos coal seam gas (CSG) fields in Bowen and Surat Basins. Construction commencement in 2010 ""

23 Shell enters into strategic alliance with Arrow - Coal Seam Gas 9 September 2008: Shell Exploration Company B.V. completed the acquisition of a 30% interest in all of Arrow Energy Ltd. s Australian upstream tenements and a 10% stake in Arrow International, which holds all of the company's assets, for A$777 MM (US$613 MM), (USD/AUD: 0.79) The acquisition and alliance with Arrow increases Shell existing strategic positions in potential coal seam gas (CSG) areas including China. Arrow had significant CSG production facilities in Queensland, Australia, where it was the largest CSG acreage holder. It had 4 producing projects in Queensland selling gas for industrial users such as power stations. The Australian acquisition consisted of an A$435 MM upfront payment, an A$140 MM payment upon final investment decision of an LNG project; and a further A$70 MM payment when the LNG project was producing an annualized equivalent of 1 MMTPA (approx 150 MMCFD). The 10% stake in Arrow International was acquired for A$132 MM. "*

24 ConocoPhillips and Origin Energy enter into CSG Joint Venture 8 September 2008: ConocoPhillips was to initially contribute A$6.9 billion to the JV and will carry Origin for its first A$1.15 billion totaling A$8.05 bn (US$6.48 bn), (USD/AUD: 0.81) in JV expenses. Conoco had the option to make up to four additional payments of US$500 MM to the JV based on project milestones, for a total possible cash acquisition investment of US$8.48 billion. As a result of these investments, ConocoPhillips would receive 50% equity in Origin Energy CSG Ltd. The 50/50 JV would be comprised of CBM development, operated by Origin, i and an LNG project, operated by ConocoPhillips. NSAI had 2P reserves net to Conoco at 1,632 BCFE ($4.5/mcf) with 3P reserves of 4,335 BCFE ($1.66/mcf). Origin i estimated t a gross resource base of 42 TCF of CSG, including 17 TCF of prospective resources, located in the Bowen and Surat Basins in Queensland. Four or more LNG trains, ConocoPhillips proprietary Cascade LNG technology, each processing a 3.5 MMTPA are planned. An estimated 20,500 wells were envisioned to supply both the domestic gas market and the LNG development. Initial plans for a four-train development would enable production of 23 TCF gross (11.4 TCF net) of the coal bed methane resource, with significant upside potential. Peak production forecast at 1.05 BCFD in 2023, excluding effects of possible reversions. "#

25 BG acquires Queensland Gas (CSG) for US$3.2 billion 28 October 2008: The BG Group plc and Queensland Gas Company Limited (QGC) agreed on transaction under which BG Group would make an all-cash offer valued the entire issued share capital of QGC at A$5.6 billion. BG Group's consideration to increase its ownership of QGC to 100% would total A$5.2 billion (US$3.17 billion), (USD/AUD: 0.61). As at the end of trading on December 4, 2008, BG AUS had increased its stake in QGC to 96.62%. QGC strategy focused on developing its world-class coal seam gas reserves in the Surat Basin for domestic generation and international markets. Founded in 2000 as a junior explorer, QGC employs more than 240 staff and is developing projects including the 140 MW gas-fired Condamine Power Station and the Queensland Curtis LNG Project. "$

26 AGL enters into US$522 million option agreement with BG on Queensland CSG 28 October 2008: BG International (AUS) Investments Pty Ltd entered into an option agreement with AGL Energy Limited under which AGL had the right (but not the obligation) to acquire either or both of - a) 100% of the Lacerta gas field and a 15% WI in the Polaris gas exploration license, amounting to certified 3P reserves of 585 Bcfe and 2P reserves of 250 Bcfe; and/or b) the 140 MW Condamine combined cycle power station project currently under construction, together with an associated 10 PJ per annum gas supply contract until January 1, The exercise price for the Lacerta and Polaris interests was A$0.78 per GJ on existing 3P reserves valuing those interests at A$856 million ($522MM), ( USD/AUD:0.61). The exercise price for the Condamine power station would be the higher of the costs paid up to completion or the fair market value to be determined by an independent expert. The options were conditional on BG AUS acquiring at least 50.1% of the issued share capital in Queensland Gas Company (QGC). AGL's existing 740 PJ gas supply contract t with QGC would remain in place on identical terms and conditions. AGL and BG AUS also agreed to discuss in good faith a future option for AGL to supply gas from the Lacerta development to the QGC-BG Group Queensland Curtis LNG Project. Should AGL exercise the option to acquire an interest in the Polaris gas exploration project, 100% of AGL's share of any gas produced from Polaris may also be dedicated to the Queensland Curtis LNG Project. "%

27 Arrow raises offer for CSG player Pure Energy Resources after BG bid 22 December 2008: Arrow Energy made a bid for Pure Energy Resources Ltd of A$673 MM (US$458 MM), (USD/AUD: 0.68), in cash and stock. The offer of A$5.40 per share valued the company at 81% over its last traded share price. Arrow was to supply gas from its projects as feedstock for the proposed 3 million tonnes per annum Gladstone LNG project in Queensland. Arrow s tie-up with Pure was supported by Pure s holdings in the Surat and Bowen basins, both close to proposed pipelines feeding the Gladstone project. The company said the deal would also consolidate existing farm-ins and joint ventures with Pure in whom it already had a 20% stake. The cash component of the offer was to be funded via a combination of Arrow's existing cash reserves and proceeds from the firm's recent 30% sale of its Australian upstream interests to Royal Dutch Shell. The proposed acquisition was to boost its un-contracted 2P gas reserves to more than 2 TCF. 11 Feb 2009: Arrow Energy increased its offer to A$796 MM (US$519.3 MM) to match that of BG Group. Arrow's new offer represented A$3 cash and 1.57 Arrow shares for each Pure share tendered, or 21% more than its initial offer and 12% more than BG's offer of 9 February. Pure's independent directors had unanimously recommended the acceptance of Arrow's offer subject to there being no superior proposal. "&

28 BG in competition with Arrow for Pure Energy Resources Ltd - CSG 9 February 2009: BG Group launched a A$796 million (US$533 million), (USD/AUD:0.67) bid for Pure Energy, seeking to beat out an existing offer from Arrow Energy. BG had already become a key CSG player after acquiring Queensland Gas Company, the largest domestic CSG producer. BG had failed bid to acquire Origin Energy earlier in BG offered Pure shareholders A$6.40 per share in an all-cash deal, a 19% premium to Arrow s A$5.39 per share cash and stock offer and a 115% premium to Pure sclosing price prior to the announcement of Arrow s offer on December 22. The offer was contingent on a 51% acceptance of its bid and approval by Australia's Foreign Investment Review Board, and BG said it had already taken control of 10% of Pure s stock through various shareholders. The Arrow bid had a stock component and was also contingent on a 90% acceptance of the offer. Arrow, which already holds 19.98% of Pure, said it would discuss the BG offer with Pure's board. Pure had previously recommended the Arrow offer but was now likely to favor the bid from BG. 12 February 2009: BG noted the terms of the revised offer by Arrow for Pure Energy Resources Ltd announced on 11 Feb BG was considering its position and would advise the market of its decision before the opening of ASX trading on 18 Feb BG recommended that shareholders and directors of Pure take no action in relation to the Arrow offer before then. "'

29 AGL acquires Lucas/Molopo, Gloucester Basin CSG for US$259 million 12 January 2009: AGL Energy Ltd. acquired a 100% WI in PEL 285 from AJ Lucas Group and Molopo Australia Ltd. for A$370 MM (US$259 MM), (USD/AUD: 0.7) in cash. AJ Lucas held a 70% stake and Molopo held 30%. PEL 285 reserves had been certified by NSAI to be 1P 14.9 BCF; 2P BCF ($11.5/Bbl); and 3P BCF as at Feb In addition, another BCF in possible contingent resources were identified. The certification identified a potential BCF of recoverable gas (3P plus contingent resources) from a mapped volume of 1.6 TCF of gas in place. PEL 285 covers 1,308 km² 100 km north of Newcastle NSW. "(

30 Papua New Guinea Gas Transactions *)

31 Rift assumes 100% ownership of Papua New Guinea assets 23 May 2008: Rift Oil reached a settlement with partner Austral Pacific Energy for Rift to assume 100% ownership of Blocks PPL261 and PPL235 in PNG, which include the Douglas and Langia gas discoveries as well as the Coral Sea drilling rig for a total payment of US$5 million. The assets acquired are 35% of PPL235 and the rig and 50% of PPL261. The settlement also provides for all debts to Rift which currently exceed US$5 million and future drilling and seismic cost obligations between Austral and Rift to be cancelled. November 2008 Rift retained RBC Capital Markets and Sydney based RFC to establish appropriate commercial partnerships for the funding of future drilling and development of PPL235 and PPL261. The tripling of potential P50 resources plus potential of PPL261, allowed re-assessment of commercial alternatives including LNG through a floating liquefaction plant as envisaged in the Heads of Agreement with FLEXLNG where potential annual off-takes of 100 BCF or greater are planned. *!

32 Merlin acquires AGL PNG interests for $780 million 18 Dec 2008: AGL Energy completed the sale of its stake in the PNG LNG project to Merlin Energy, a unit of Japan s Nippon Oil Exploration, for a total of A$ billion (US$780 million), (USD/AUD:0.69). Merlin exercised pre-emptive rights to AGL s stakes in the PDL 2 and PDL 4 permits, while both Merlin and Petroleum Resources (Kutubu) exercised rights to the PL2 Kutubu pipeline licence adding 6% and 5.9% respectively of AGL s 11.9% stake in the permit. The assets are part of the ExxonMobil-led PNG LNG project, to utilize gas reserves for a greenfield LNG plant to be built near Port Moresby. Oil Search, a major player in the project elected not to exercise its own options in the assets. *"

33 Interoil focusing on PPL 238 Agrees to Government Participation 30 October 2008: InterOil agreed to government-owned Petromin PNG Holdings acquiring a direct interest in the Elk/Antelope Field in Block PPL238 of the Eastern Papuan Basin. Petromin was to contribute an initial deposit and fund 20.5% of the development. In June of 2008, InterOil agreed to divest its 43.13% WI in PRL 4 and it s 28.57% WI in PRL 5 to Horizon Oil for US$6.5 MM to focus its resources and efforts on appraisal and development activities in the Elk/Antelope Field. InterOil retained a right of first refusal to purchase hydrocarbon condensates produced in PRL 4 and 5 with the intent of using them as feedstock for its refinery. Austral Pacific operated both blocks. Drilling and logs at Antelope-1 in PPL 238 had shown the existence of a gas and gas liquids column over the entire logged vertical interval of 611m from m making it Papua New Guinea s largest known vertical section of continuous gas and gas liquids reservoir, the net reservoir was more than 10 times the thickness intersected in the earlier Elk-4. The discovery gave the Liquid Niugini Gas project credibility. **

34 Oil Search farms out PNG stakes to Nippon Oil 14 January 2009: Oil Search farmed out interests of 10% to 20% in four Papua New Guinea exploration licenses (PPLs 219, 234, 239, and 244) to Nippon Oil subsidiary NOEX (Nippon Oil Exploration). The two companies agreed to cooperate on a non-exclusive basis in progressing gas commercialization in PNG. Through a 36.6% owned Merlin Petroleum, NOEX had been a long term investor in PNG with interests in the Kutubu and Gobe oilfields and the PNG LNG project. In December 2008, NOEX increased its PNG LNG Project equity and oilfield interests through the acquisition of AGL's PNG assets. Oil Search had also reached agreement to acquire Gedd (PNG) Ltd's 10% interest in Block PRL10, which contained the Uramu offshore gas field and 10% in PPL240, the license that surrounds the Kimu gas field. *#

35 PNG LNG- ExxonMobil Hides Project! Location: The Hides gas/condensate field is located in the Papua New Guinea (PNG) Highlands, with the development to include a pipeline from the Highlands to a proposed LNG plant near Port Moresby.! Participants: Santos, ExxonMobil (operator), Oil Search, Nippon Oil, AGL, MRDC! Discovered: The Hides field was discovered in 1987.! First Production: The first LNG cargo is expected to be shipped in early 2014.! Overview of Project: The project involves piping gas from the Highlands region of Papua New Guinea to a 6.3 million tonnes per annum LNG plant situated on the coast of the Gulf of Papua. The Hides field (Santos 25% working interest) will underpin the gas volumes required, with additional gas sourced from the Juha and Angore gas/condensate fields and associated gas from the Kutubu, Gobe and Moran oil fields.! Current Status: The PNG LNG joint venture signed the Joint Operating Agreement on 13 March 2008 and the Gas Agreement with the Papua New Guinea Government on 22 May Front End Engineering Design (FEED) study work is underway with a final investment decision (FID) expected in the fourth quarter of FEED activities include detailed work on optimising facilities design, landowner, environment and regulatory affairs, and the selection of an engineering, procurement and construction contractor. In parallel, the venture is marketing the product to potential buyers in Asia and elsewhere and is implementing its financing plan. *$

36 Large Scale Gas Projects - Australasia *%