Cooper’s Sole field starts gas supply into pipeline

  • Infrastructure

Australia’s Cooper Energy has informed that its operated Sole gas field, located offshore Australia, is now producing gas to the Eastern Gas Pipeline.

Source: Cooper Energy

The Cooper-operated Sole gas field is located in the eastern part of the Gippsland Basin, approximately 40km offshore Victoria, Australia. The project involves the development of the Sole offshore gas field and upgrade of the Orbost gas plant to supply approximately 24 PJ per annum.

In an update on Tuesday, Cooper said that the second phase commissioning of the Orbost Gas Processing Plant is underway.

The plant, which is operated by APA Group (APA), has demonstrated its capability to produce sales gas to specification from the Sole gas field and has started gas supply into the Eastern Gas Pipeline (EGP).

Cooper noted that the initial volumes delivered to the EGP were small, variable, and influenced by commissioning requirements. Sales to market on Sunday, March 29 were 21 TJ, with production rates of up to 50 TJ/d, Cooper said.

According to the company, it is likely that production rates will continue to be variable as commissioning proceeds to the plant production test, which requires a sustained rate of 68 TJ/day.

The beginning of firm gas supply from the Sole gas field to term gas sales agreements will begin after the completion of the plant production test.

Coronavirus

With regard to the coronavirus outbreak, Cooper said that it had established a Pandemic Response Team to oversee the company’s response to COVID-19.

The company is operating on a ‘work from home’ basis with on-site staffing requirements limited to minimal IT attendance when required at office locations and skeleton staff levels at the Cooper Energy-operated Minerva Gas Plant.

All of the company’s gas production is accomplished through subsea installations, which are operated remotely via IT systems. Accordingly, the company’s transition to work from home has no implications for production levels.

The Iona Gas Plant, operated by Lochard Energy, which processes Casino, Henry and Netherby gas is critical to the continued and stable gas supply to Victoria and south-east Australia and is able to supply up to 36% of peak Victorian demand. The Iona Operator, in consultation with the Victorian State Government, has put in place plans to ensure the continued safe and reliable supply of gas into that region.

APA operates an extensive network of pipelines and gas infrastructure, including the Orbost Gas Processing Plant, which are critical to the stable gas supply into south-east Australia. APA has a significant operational capability in Victoria and the majority of its operations personnel who are currently performing the commissioning reside in that state. This personnel will continue to operate the plant at the completion of commissioning.

‘Tighter gas supply outlook’

The majority of Cooper Energy’s revenue is derived from the production of gas for supply to the southeast Australian energy market under take-or-pay contracts, which have no oil price linkage. Revenue from oil accounted for approximately one-quarter of sales for the six months to December 31, 2019. This share is expected to contract substantially with the onset of full production from the Sole gas field.

Capital expenditure is mainly directed towards growth projects to increase the supply of locally produced gas to the south-east Australian market. The company’s long-standing gas strategy focusses on the commercialization of gas.

The company’s analysis, and that of external parties such as AEMO, foresees new supply opportunities emerging in the coming years as output from existing sources of supply is depleted. It is probable that a contraction of capital expenditure by the broader oil and gas industry in response to lower oil prices may create an earlier and tighter gas supply outlook for this region than previously anticipated, Cooper said.

Cooper’s production

Cooper’s guidance for total production in FY20 is unchanged with the output of approximately 1.2 million barrels of oil equivalent from the company’s existing operations in the Otway and Cooper basins.

This guidance now incorporates higher gas production and lower oil production.

Gas production of approximately 5.9 PJ and crude oil production of approximately 0.2 million barrels is now anticipated. This guidance is to be upgraded to incorporate production from Sole once firm supply from the field is established.

The company produces crude oil from the Western Flank of the Cooper Basin through joint ventures operated by Beach Energy (PEL92) and Senex Energy (PEL93). Crude oil produced in the region attracts a premium to Brent. Cooper Energy’s direct operating cost of production, exclusive of royalties, is approximately A$29/bbl.

Potential project delays

Cooper has a number of growth projects at various stages of maturity. It is anticipated work on the main projects (Minerva Gas Plant integration, OP3D2 , the 2021/22 drilling campaign, and BMG abandonment) will continue.

However, it is also anticipated disruption associated with COVID-19, rig availability, and other factors may result in some slippage to the dates previously outlined for some projects.

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