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."
Frequently Asked Questions about this Article…
What is the mercury contamination problem at the ExxonMobil Kipper field?
ExxonMobil discovered mercury contamination in the gas at the Kipper field, part of the Kipper Tuna Turrum project. The contamination delayed production and contributed to engineering challenges and a cost blowout while the project team evaluates solutions to remove the mercury to acceptable levels.
How is ExxonMobil planning to fix the mercury issue at Kipper and when will a decision be made?
ExxonMobil says its engineers have identified multiple technical solutions and are close to choosing the best option for the Kipper field. The company is poised to make a near-term decision and then move into the front-end engineering and design (FEED) stage, though it has not given a firm timeline for when the contamination will be fully resolved.
How much has the Kipper Tuna Turrum project’s cost blown out and can the budget handle it?
The project suffered a 63 per cent cost blowout last year and is now priced at $4.4 billion. Project management says the overall $4.4 billion budget can manage that increase.
Will the mercury problem at Kipper delay the project’s first production date?
ExxonMobil’s installation manager said the first production deadline for next year should not be missed because the Turrum field will be supplying gas even if Kipper continues to have problems. However, a specific schedule for resolving the mercury contamination was not provided.
Who are the partners on the Kipper Tuna Turrum project?
ExxonMobil operates the project as a joint venture with BHP Billiton and Santos.
What is happening with ExxonMobil’s Marlin rig and why does it matter for gas production?
An overhaul of ExxonMobil’s Marlin rig is nearly complete, including a 60-metre bridge connecting the existing rig to a new Marlin B rig. The new rig will house compressors and other equipment needed to harvest the reservoir below for gas, which is key to bringing production online.
How does Bass Strait’s role in gas supply affect companies like ExxonMobil, BHP and Santos?
Bass Strait has shifted from being primarily an oil province to an important source of natural gas for Australia’s east coast. With domestic customers expected to match higher export gas prices, gas production in Bass Strait could become more lucrative for companies such as ExxonMobil, BHP and Santos.
Has ExxonMobil found any new prospects in Bass Strait that investors should know about?
ExxonMobil discovered two prospective fields in Bass Strait in 2010 that are currently under evaluation; the company has not disclosed their size. The project manager said he hopes there could be greenfield developments in the region as reservoir technology improves.
Call 1300 880 160
Start a chat
Schedule a call
