Exxon pressured to exploit gas field | Business | The Australian

THE largest undeveloped gas reserve in southeastern Australia is poised for exploitation, with ExxonMobil being offered a production licence for the Kipper field.
The company was forced to move on the field after the Victorian Government refused to renew a retention licence it held over the field.

This meant the company had to take the first step to production or risk losing control of the field to another company.

ExxonMobil and its joint venture partners - BHP Billiton, Woodside and Santos - have been given until July 6 to decide whether or not to develop the field, which could be worth as much as $3 billion.

Kipper, which has about a tenth of Australia's remaining identified gas reserves, lies under about 100m of water 45km off the Victorian coast.

The development came as the US parent company announced a first-quarter profit of $US8.4 billion ($11.1 billion), up 7 per cent from a year ago but below the record in the previous quarter that ignited a political firestorm.

The world's biggest oil and gas company had posted a profit of $US10.7 billion dollars in the fourth quarter of 2005, bringing full-year earnings to a record $US36.1 billion dollars.

The US-based parent, ExxonMobil, the world's biggest oil company, credited booming oil and gas realisations and improved market margins for its massive first-quarter profit.

ExxonMobil Australia chairman Mark Nolan, speaking yesterday at the company's Snapper Platform in Bass Strait, close to the Kipper field, said the gas market had improved and an investment decision would be made later this year.

"If the joint-venture partners agree, it could start up as early as the first half of 2009," Mr Nolan said.

"We see gas as the fastest-growing energy source in Australia. The market has improved and broadened widely. We have a lot of gas to offer in Gippsland."

State Energy Minister Theo Theophanous said the 620 billion cubic feet field had the potential to supply a million homes for 15 years.

"The production licence for this gas field will ensure that families continue to have a steady flow of gas at one of the lowest prices in the world," Mr Theophanous said.

He said the Government was keen to develop the state's gas industry, including gas-fired power stations. These produced 70 per cent less greenhouse gas emissions than similar coal-fired power stations.

Development of the Kipper field is expected to cost between $200 million and $300 million. Its gas would be extracted using undersea wells and piped ashore to the ExxonMobil processing plant at Longford. It could be then sent to Victoria, South Australia, Tasmania and NSW.

Under the terms of the joint venture, ExxonMobil and BHP Billiton have a 32.5 per cent stake, with Woodside taking 21 per cent and Santos 14 per cent.

ExxonMobil's revenue rose in the latest three months to $US88.98 billion dollars from $US82.05 billion in the same period a year earlier.

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