Kipper, Turrum development costs increase

By OGJ editors
HOUSTON, Jan. 20
-- BHP Billiton reported an increase in the capital expenditure costs for developing the Esso Australia Resources Pty. Ltd.-operated Kipper and Turrum gas and condensate projects in the Gippsland basin, off Australia's Victoria state.

BHP Billiton's share of Kipper’s capital expenditure has increased to $900 million compared with the $500 million reported in January 2010, and the forecast completion year of the facility for processing 10,000 b/d of condensate and 80 MMcfd of gas is now 2012 instead of 2011.

The company attributed the higher cost and delay to the mercury encountered in the reservoir during development drilling. A separate project will manage the mercury mitigation and the start of gas and condensate production depends on resolving the mercury related issues, the company said.

BHP Billiton's share of Turrum’s capital expenditure has increased to $1.35 billion compared with the $625 million estimated a year ago. The company now expects the project to be completed during 2013 instead of 2011. Turrum is designed to produce 11,000 b/d of condensate and 200 MMscf of gas.

The company attributed the changes to additional design and fabrication of key structural components and to the offshore hook up work.

BHP Billiton estimates that Kipper contains about 620 bcf of recoverable gas and 30 million bbl of oil and gas liquids, and it expects Turrum to recover about 1 tcf of gas and 110 million bbl and gas liquids.

Partners in the Kipper unit are Esso Australia Resources 32.5%, BHP Billiton 32.5%, and Santos Ltd. 35%.

Turrum is part of the Gippsland basin joint venture in which BHP Billiton and Esso Australia Resources each hold equal interests.

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