Exxon hopes to have fix for Bass Strait problem

EXXONMOBIL says it knows how to fix a mercury contamination problem that has delayed production and blown out costs at a large gas project in Bass Strait.

EXXONMOBIL says it knows how to fix a mercury contamination problem that has delayed production and blown out costs at a large gas project in Bass Strait.

The company says it is poised to make a decision shortly on which of several solutions best fits the Kipper field, which it operates as a joint venture with BHP Billiton and Santos.

Kipper is one of three fields being refurbished and developed under the Kipper Tuna Turrum project, which suffered a 63 per cent cost blowout last year after engineering problems and the discovery of mercury contamination in the gas.

The project is now priced at $4.4 billion, and while he was unable to give a schedule for when the mercury contamination would be resolved, Peter Baker, the project installation manager, said his team had identified multiple solutions.

"There has been a huge amount of engineering done to decide what is needed to remove that mercury to a satisfactory level and our engineering people are homing in on that," Mr Baker said.

"They are not far away from the decision on what would need to be done and how to do it."

Mr Baker said the team would select the best option soon to remove the mercury, and then move to the front-end engineering and design stage.

He said the Kipper Tuna Turrum project's overall budget of $4.4 billion would be able to manage the cost blowout.

Nor would next year's deadline for first production be missed, he said, given the Turrum field would be supplying gas even if Kipper continued to struggle.

Harvesting gas from old oilfields highlights Bass Strait's evolution from being Australia's prime oil production province to its important role in the supply of natural gas to customers along the east coast.

The decline of Bass Strait's oil stocks has been well documented, but Mr Baker said the vast potential for the region's gas meant reports of its demise were premature.

"Bass Strait has been around (as an oil and gas province) since 1965 and it is going to be around for another similar time frame," he said.

"It's huge, and as the reservoir technology becomes more sophisticated, they pick up new zones ... there are lots of smaller opportunities that will come into play."

An overhaul of ExxonMobil's Marlin rig is nearly complete, with a 60-metre bridge connecting the existing rig to the new Marlin B rig.

The new rig is needed to house the compressors and other equipment required to harvest the reservoir below for gas.

Production of natural gas will soon be more lucrative for companies such as ExxonMobil, BHP and Santos, with domestic customers to be forced to match the higher prices charged for export gas.

ExxonMobil discovered two prospective fields in Bass Strait in 2010, but has never revealed their size and will only say they are under evaluation. Asked if there could be any greenfield developments in Bass Strait, Mr Baker said, "I hope so."

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