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Ann: Southern Cooper Basin Operations Update, page-45

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Systematic28

702 Posts.

14/01/15

19:49

Post #: 14584788
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Originally posted by rexsh ↑

PSI,

"Each of the wells drilled needs to be connected to the gas processing facility which quickly adds up to an awfully large number of line km of pipe - particularly if they use wellhead separators and then need both water and gas gathering systems."
- Can you answer the question that was posed by MIR911 about what quantity of flow is required to enable separators to work ?

Systematic - I am led to believe your "guess" on the continued demand for off-take agreements is about right. As far as I know the situation for east coast industrial gas users has not changed one bit and in fact has probably gotten worse now (forward supply likely to be even less as the drilling rigs shut down). So the 2017 gas supply picture looks very very tight indeed and if anything getting worse. I believe there are others sniffing around looking for similar deals - although only hearing that third hand.

I am also led to believe that Orica are very much on top of what is happening here. There has been suggestion that they may need to see commercial gas flows to release funds for the next stage of proceedings but I am hearing that this may not be the case. It is likely they may need to see a prolonged period of sustained gas flow (like the 90 days being suggested) but I dont think that is a hard and fast rule either (ie) they could decide to pull the trigger on the greater investment at any point. The tightening east coast gas situation is only going to create more duress for them to pull the trigger more quickly in my view.
As others have suggested I am sure they would want to see gas flows build to a point where the COS improves substantially, but I do not think there are concrete milestones that have to be reached for them to release funds. The idea that it has to be "commercial" first for them to cough doesn't necessarily sound right to me.

IMO

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Rexsh, you are spot on, my latest guess centres more on Incitec Pivot, fresh interest in a likely good thing born out of near term future necessity

EWC Price at posting: 34.0¢ Sentiment: Hold Disclosure: Not Held

STX Price at posting: 11.0¢ Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

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Ann: Southern Cooper Basin Operations Update, page-45

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