AWE’s BassGas project update

Monday, Apr 23, 2012

AWE Limited (via subsidiaries) has received a project update from Origin Energy Limited, the Operator of the BassGas project. Origin’s ASX release on the update is as follows.

“BassGas enhancement project reaches major milestone, project costs revised
Origin Energy Resources Limited, a 100% owned subsidiary of Origin Energy Limited (Origin), as operator of the BassGas Joint Venture, advises that the Yolla Mid-Life Enhancement (MLE) project has reached a major milestone with the successful lifting and connection of the new accommodation and controls module to the Yolla A platform in Bass Strait.

Origin Chief Executive Officer Upstream, Mr Paul Zealand said, “Offshore construction for Stage 1 of the Yolla MLE project is well advanced. The safe installation of the accommodation module is an important part of the platform upgrade, which will continue with the addition of gas compression and new condensate pumping capabilities.

“The MLE will improve operational efficiencies at BassGas and access remaining gas reserves to allow the continuing supply of gas to help meet Victoria’s energy needs,” Mr Zealand said.

The successful installation of the accommodation module and associated controls equipment paves the way for further critical work on the construction program. This will include the lifting into place of the ompression and condensate pump modules in coming weeks, followed by ommissioning works to complete Stage 1 of the MLE project.

The joint venture is targeting to restart production from Yolla in July, with project commissioning and completion during the September Quarter.

Unique offshore construction challenges associated with working on the remote Yolla platform, together with some minor scope changes, have led to an extension of the time required to complete the project. This has resulted in an increase in total costs for Stage 1 from approximately $360 million to approximately $460 million.

Evaluation of the program for Stage 2 of the BassGas MLE project continues. This will include the drilling of the Yolla 5 and Yolla 6 development wells and is currently expected to be undertaken during the summer of 2013 / 2014.”

Commenting on the update, AWE Limited Managing Director Bruce Clement said:

“The installation of the accommodation and controls module on the Yolla platform is a significant and important milestone for the project. However, the slippage of the Operator’s project schedule and the increase in Phase 1 costs are disappointing and the delay in restarting production will reduce AWE’s production guidance for 2011-12 to 4.7 million BOE.

“The decision to reschedule the Phase 2 drilling to the summer of 2013-14 is not expected to adversely impact Yolla production during the period prior to production from the new Yolla wells.

“The rescheduling provides the joint venture with the opportunity to complete the evaluation of the oil & gas bearing Upper Eastern View Coal Measures (intersected in the Yolla-3 development well) and potentially add a third well to the drilling program.

AWE estimates that potential exists for an additional recovery of up to four million barrels of oil equivalent that may be achieved from a horizontal well in this reservoir, which in the success case, could provide a significant boost to future project revenues.

“AWE looks forward to the completion of the BassGas MLE Project, the resultant improved facilities and enhanced longer term production performance.”

Source: AWE

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