BHP Billiton, Apache approve $1.5B Macedon natural gas field development offshore W. Australia

Sources: BHP Billiton, Apache

BHP Billiton and Apache Corp. (NYSE:APA) will proceed with the development of the Macedon gas field in the Exmouth Sub-basin offshore Western Australia

The BHP-operated Macedon Gas Development will commercialize natural gas from offshore production lease WA-42-L, located 60 miles (100 kilometers) west of Onslow. 

Recoverable reserves for the Macedon field are between 400 and 750 billion cubic feet of gas. First production is expected during calendar year 2013. 

The Macedon project involves four offshore production wells supplying a wet gas pipeline to an onshore gas treatment plant to be constructed at Ashburton North, 11 miles (17 kilometers) southwest of Onslow. A sales gas pipeline will be connected to the Dampier to Bunbury Natural Gas Pipeline for sale to the domestic gas market in Western Australia. The gas plant will have a design capacity of 200 million standard cubic feet per day. 

Project costs will be approximately US$1.5 billion, of which BHP Billiton’s share will be 71.43 percent (approximately US$1.050 billion). The balance, $430 million, will be invested by joint venture partner Apache which holds a 28.57 percent interest. 

BHP Billiton

"Macedon will be a valuable asset for our Company and will improve the security for domestic gas supplies in both the short and medium term for Western Australia,” said J. Michael Yeager, chief executive of BHP Billiton Petroleum. “It will be the first development in the important Ashburton North area and will make a strong contribution to the overall growth of our petroleum operations in Western Australia." 

Proposals to develop the project were subject to a comprehensive environmental assessment process that involved extensive consultation with the local community and other key stakeholders. 

The Macedon Gas Development will build on BHP Billiton’s existing producing interests in the northwest region of Australia including its operated Stybarrow and Pyrenees projects and non-operated North West Shelf Venture. 


"By introducing a new source of gas and a new processing hub, the Macedon development will provide much-needed gas to meet rising demand and increase the diversity of supply for Western Australia's growing resource-based economy," said Rodney J. Eichler, Apache's co-chief operating officer and president – International. 

Apache's Varanus Island processing and transportation hub currently supplies approximately one-third of Western Australia's domestic gas needs. The Devil Creek project, now under construction approximately 25 miles (40 km) southwest of Dampier, will process gas from Apache's Reindeer field with first production expected in the second half of 2011. 

Apache also is a foundation partner in the Chevron-operated Wheatstone liquefied natural gas (LNG) hub, which will provide gas from the company's Julimar and Brunello discoveries for export to growing Asian markets. A final investment decision on the first phase of the Wheatstone project is slated for 2011, after completion of front-end engineering and design. 

In addition to these gas projects, Apache commenced production from its operated Van Gogh and BHP Billiton-operated Pyrenees offshore oil developments in February 2010.

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