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Royal Dutch Shell Plc .com: ConocoPhillips may spend $ 10 bn on LNG plant in Australia


ConocoPhillips, the third-largest US oil company, said that it may spend as much as $10 bn to more than double capacity at its liquefied natural gas plant in Northern Australia to meet an estimated 40-% surge in world demand.

The company may build a second production unit at the Darwin plant by 2013, using natural gas from either the Sunrise or Caldita fields, off Australia’s northern coast, Laura Sugg, president of ConocoPhillips’ local unit, told at the South East Asia Australia Offshore Conference. It may then look at a third unit, she said.

ConocoPhillips and partners, which include Santos and ENI, started their $ 1.2-bn Darwin LNG plant earlier this year to supply fuel to two Japanese utilities. The Wickham Point site at Darwin has approval for as much as 10 mm tpy.

“We have ambitions for going beyond 10, but we would have to go through due process to be able to do our environmental homework and secure the needed permits,” Sugg said. The cost of expanding the project, including offshore gas field development and a pipeline to Darwin, could cost between $ 6 bn and $ 10 bn, she said.

The Sunrise gas field is owned by Woodside Petroleum, ConocoPhillips, Royal Dutch Shell, and Osaka Gas. The Caldita field is owned 60 % by ConocoPhillips and 40 % by Adelaide- based Santos.

ConocoPhillips and Santos may outpace rivals in increasing LNG gas output because of their lead in getting environmental approvals to expand. A rival project by Chevron, the second-largest US oil company, in Western Australia may be delayed as a regulator raised concern earlier this month about possible harm to rare turtles.

“Getting expansion approved on an existing site is a lot easier than doing something greenfield,” said Frank Harris, co-head of global LNG at Wood Mackenzie Consultants. “ConocoPhillips and Santos just have to find the gas.”

A head start may enable ConocoPhillips to benefit from Asian LNG demand, which is forecast by Wood Mackenzie to jump 40 % to 137.8 mm tons in 2010 and gain a further 43 % to 197.4 mm tons by 2015.

Source: International Herald Tribune

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