Beach Petroleum, Alinta sign gas pact
Sunday Mar 18 17:00 AEDT
Beach Petroleum Ltd has signed a 15-year agreement with Alinta Ltd to supply gas to a Tasmanian power station, and flagged a $500 million upgrade to one of its oil and gas projects.
Beach said the agreement with Alinta, which is to supply 225 peta joules of gas over an initial term of 15 years starting in 2009, will help fund a $500 million expansion of its part-owned Basker Manta and Gummy fields project (BMG) in the Bass Strait.
The project mostly produces oil, and much of its development will be focused on expanding its oil producing capability.
Beach said new drills there in 2006 led to much greater expectations for the project's potential, with oil reserves estimated at 40 million barrels.
In light of the Alinta deal, three new oil wells are now scheduled for construction there in late 2007, and three new gas wells are planned for 2008.
The gas development will include a gas processing facility and a pipeline to shore.
"The ability to export gas from the fields to onshore markets will also enhance oil production by allowing wells to achieve optimum performance," Beach managing director Reg Nelson said.
He said construction of the pipeline would give Beach the ability to explore other project opportunities near BMG, notably the Chimaera prospect immediately north of the Manta field.
Mr Nelson later told AAP he was confident the deal with Alinta would more than offset the $500 million in working capital being devoted to the BMG development.
"With gas prices in the order of $2.90 to $3.00 per gallon ... there is a lot of scope for a profitable return on this project," Mr Nelson said.
The gas will be used by Alinta to supply Tasmania's first private power station, located in the Tamar Valley.
Beach owns 50 per cent of BMG with the remaining 50 per cent owned by Anzon Australia Ltd.
AZA
anzon australia limited
