Santos battles gas market pressures at glng _ afr. com gas oil ratio units

There were always going to be a few stumbles along Australia’s path to become the world’s biggest LNG producer – and Santos’s $US18.5 billion GLNG venture is facing its share of them. Commodity prices, technical problems and gas supply issues are conspiring to spur doubts around just when Australia will usurp Qatar to grab the top spot. Certainly after an earnings season that exposed the extent of the damage that the collapse in oil prices is doing to the LNG industry, it now appears it will take longer than the 2017-18 that was assumed a couple of years ago. Not that to be biggest was an aim in itself; it was just the outcome of the (over-) enthusiastic $200 billion-plus of investment in export infrastructure that is having consequences both on the individual backers of the projects and the global LNG market. Construction delays and technical problems with start-ups of hugely complex plants were almost inevitable. Gas after eating dairy But what was not foreseen was how economics are also influencing the rate of production ramp-up, as highlighted by GLNG.

On the west coast, Chevron is still wrestling to get the first train of its monster Gorgon project fully on stream, after reporting it 70 per cent there at the end of July. After a start-up more than 18 months behind the original schedule, several cargoes have now been shipped but the US major has put back the date for when all three trains should be fully up and running to about the December quarter next year. Shell’s Prelude floating LNG ship is meanwhile still in the shipyard in Korea and while the oil giant never formally gave a date for when gas would be flowing from the Browse Basin project, expectations for some cargoes in 2017 now look optimistic.

On the east coast it’s a different story. Gas zombies black ops Technically, the three liquefaction plants on Curtis Island that are the first in the world to rely on gas extracted from coal seams as feedstock are outperforming, defying early scepticism from some in the industry. The problem there – for the GLNG venture at least – is the adequacy of gas supplies. Gas vs diesel mpg Both GLNG and the $27 billion Queensland Curtis LNG project built by BG Group and now owned by Royal Dutch Shell partly rely on third-party gas to keep their plants full.

Electricity generation by country For GLNG, however, as chief executive Kevin Gallagher revealed last month, that proportion of third party gas has increased as some wells disappoint in the southern part of the Roma field. Given rising prices for gas in the tight east coast market and a glut in Asian LNG, that greater need to rely on buying in gas is particularly unfortunate for the GLNG venture, which includes French oil major Total, Malaysia’s Petronas and heavyweight gas buyer Korea Gas Corporation as well as Santos.

The pricing dynamics stand in stark contrast to when the partners committed to building the project in January 2011 and have undermined the economics of producing any more than the 7.2 million tonnes a year contracted to long-term customers. Z gas el salvador numero de telefono The sobering situation was a key reason behind the $US1.5 billion further write-down on the value of the project in Santos’s half-year accounts. While Gallagher says it is too early to put the under-performance of the Raslie section of the Roma field down to an underlying problem with the CSG reservoir that could lead to reserves downgrades, some in the market are worried. Site: http://www.afr.com/business/energy/gas/santos-battles-gas-market-pressures-at-glng-20160830-gr52ei