Woodside Petroleum has split the front-end engineering work for its Pluto expansion project by awarding dual contracts for trains 2 and 3 to KBR and its existing joint venture contractors FosterWheeler and WorleyParsons.
Woodside Petroleum has split the front-end engineering work for its Pluto expansion project by awarding dual contracts for trains 2 and 3 to KBR and its existing joint venture contractors FosterWheeler and WorleyParsons.
The awarding of dual front-end engineering and design (FEED) contracts for the 2nd and 3rd LNG production trains marks a stepping up of Woodside's expansion plans at Pluto.
UK-based FosterWheeler and Sydney-based WorleyParsons have previously handled the engineering work on Pluto train 1 and the North West Shelf venture's train 5 expansion project, also managed by Woodside.
Houston-based KBR, formerly Kellogg Brown & Root, is also a major player in the LNG industry in Australia and internationally.
A KBR-led joint venture, which includes Perth firm Clough, has been awarded the engineering contract for Chevron's Gorgon LNG project on Barrow Island.
Previously, the KBR-led joint venture worked on the North West Shelf venture's initial four production trains.
In addition KBR worked with WorleyParsons on both the Pluto offshore platform and the North Rankin B platform at the North West Shelf project.
The other big LNG engineering contract awarded this year went to Houston-based Bechtel, for Chevron's Wheatstone project.
Woodside did not disclose the value of the two contracts, but said total FEED costs were still expected to be between $100 million and $150 million. It awarded both contracts congruently in order to ensure FEED work is completed in the shortest possible time. Completion is expected in the second half of next year.
When the $12 billion Pluto 1 project comes onstream in 2010, it will be the world's fastest ever LNG development, coming just five years after the Pluto gasfield was discovered in April 2005.
Determined to keep Pluto ahead of the pack, Woodside formally launched the FEED stage for trains two and three in mid August in a bid to make Pluto a rival of the giant Gorgon gas project by the time it comes onstream in 2014.
Pluto 2 is expected to start production in 2013, followed by Pluto 3 in 2014, trebling the project's initial capacity to more than 12 million tonnes of LNG a year for a total investment of over $30 billion. Longer term, it is planning up to two more LNG trains at the site, potentially boosting output to over 20mtpa.
However, Woodside must first confirm it has sufficient gas to even fill Pluto 2, given that the Pluto and Xena gas fields contain only about 5 trillion cubic feet of gas.
Those plans were ostensibly dealt a savage blow last month, when arch rival Chevron struck third party gas supply deals for its proposed Wheatstone LNG project with Apache Energy and Kufpec.
Apache and Kufpec had previously been in talks with Woodside about supplying gas from their Julimar and Brunello fields to Pluto, but opted for Wheatstone when they were offered a 25 per cent interest in the LNG processing venture.
Chevron started FEED work on Wheatstone in late July, but does not anticipate first production until 2016.
Nonetheless, Woodside remains confident that gas supply for its Pluto expansion will not be a problem, based on high expectations for its 21 well exploration program that will be completed in the area over the next 18 months. It has identified almost 40 prospects in five "hubs" in the so-called Greater Pluto area, which in terms of potential, range in size between 500 billion cubic feet and 10 trillion cubic feet.
Woodside has estimated it would need to find only 3.8 trillion cubic feet of gas to keep a second Pluto train full for 15 years, and 7.6tcf to also support a third train. A discovery of 15tcf or more would be enough to keep five LNG trains fully supplied for 15 years.
Importantly, success rates in the Carnarvon Basin have significantly increased in recent years, and are significantly better than the 10 per cent average historically attributed to offshore exploration.
As an indicator, Woodside has estimated the probability of success for its proposed wells in the immediate Pluto area to be between 15 per cent and 52 per cent.
Woodside has also previously revealed it was in talks with at least three other companies other than Apache and Kufpec with regard to its Pluto expansion.
US explorer Hess is understood to head that list, having already made at least three discoveries in a nearby permit in which it is undertaking a $500 million exploration program. The permit is estimated to have the potential to host up to 15tcf of gas.
With regard to the other two companies, Woodside has said only a "commercial proposal' was being considered with one, while a joint study was being considered with the other.