lng project in queensland, page-4

oh hell not this again. The comparison is not apples to apples.

THE EWC LNG project costing only includes the land, pads, coldboxes, compressors, loading arms and jetties.

It does not include the generators. It does not include the upstream E&P, it does not include land access, its doe not include gas processing, it doesn't include the pipeline to the LNG plant, it doesn't include the Australian project inflation since 2009 when EWC paid for all its equipment.

see page 9 of this link - http://www.originenergy.com.au/files/Site_Tour_Presentations_6to9_APLNG_Project.pdf

I will have a dig to see if Bechtel disclose the contract value of the plant.

EWC's $350m only applies to last box - the rest EWC picked up from El Paso, or have been developed as separate projects.

Origin appear to have been pretty careful about not disclosing upstream costs. But if we look at the BG project they have capitalised their SE Asia (including Australia) E&P expenditure at about $3bcf (probable undeveloped). Or $150m per million annual tonnes of LNG. 9m annual tonnes is $1.35b. These contracts go for 20 years -> so now we are looking at $27b. Of course the exploration and development will be staged and paid via cashflows so perhaps not included in project capex - but you can see my point that the upstream work can easily be the lions share of the quoted capex.

Now because the BG is undeveloped cost I then need to add the cost of 1000+ production wells, 1700 easements, 3000km of pipe, 7 gas processing plants, 15 compressors (for the pipeline - not the LNG), water treatment plants + $300m in social spending to make this an apples to apples comparison.

If I take EWCs $350m, add a bit of inflation say 20% (same at origin's overrun), and add back the 30MW generators at $1m per MW, I get a price of $430 per annual tonne - I am getting to $4b for the liquefaction and loading facility.

The question investors need to ask themselves is does the exploration (possibly up to $27b on an undiscounted and unfunded basis) and the schedule of work listed above bring the $4b EWC quotes into line.