Oil and Gas News

Gorgon, Prelude issues drop LNG export volumes

Australia’s liquified natural gas (LNG) exports are forecast to decline significantly in 2020-21 as a result of COVID-19 impacts, as well as technical issues at the Prelude FLNG and Gorgon LNG plants in Western Australia.

Outlined in the Department of Industry, Science, Energy and Resources’ quarterly report, Australia’s LNG export volumes have come under pressure in recent months, with shipments between June and August being 12 per cent lower year-on-year.

Gorgon’s production was disrupted after the shutdown of Train 2 was extended to October when cracks were discovered in the heat exchangers in July.

After a period of uncertainty, a shutdown of the whole plant was avoided with phased shutdowns decided on instead. Trains 1 and 3 are expected to be taken offline for inspections between now and January 2021.

The Prelude FLNG project, which shipped its first cargo in June 2019 and had not reached its full nameplate capacity, has been temporarily shut since February 2020.

Shell has indicated that the process to restart operations has begun, but has not yet announced an official production restart date.

Despite these technical issues, the report highlighted that LNG exports for Australia are expected to recover to around 80 million tonnes in 2021-22, as the impacts of COVID-19 and technical issues ease, and Prelude ramps up towards its nameplate capacity.

In addition, a production halt at the Darwin LNG plant is expected to weigh on export volumes in 2022, as gas from the Bayu-Undan field is exhausted.

Santos has outlined that is advancing plans for an infill drilling program that could extend the life of the field and narrow the time between its depletion and start-up of the Barossa backfill project.

A final investment decision (FID) for the Barossa project has been delayed from 2020 to an unspecified date.

“The outlook for the next wave of investment in Australian LNG projects is shrouded by considerable uncertainty, with weak market conditions resulting in capital expenditure reductions, write-downs, and FID deferrals,” the report outlined.

“The Darwin and North West Shelf projects will require new gas field developments as backfill from as early as 2021.”

In terms of oil production, Australia is forecast to increase marginally in 2020-21, with output recovering at exisiting fields.

In 2019–20, Australian crude and condensate production has increased by 18 per cent to 372,000 barrels a day, as crude production rose as a result of Woodside’s Greater Enfield project.

Looking ahead, the report stated that the deferral of FIDs for several gas projects may affect future condensate and LPG production, with the production of both commodities typically associated with gas production.

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