Partners fall out on Bass gas plan


Nigel Wilson, Energy writer
June 27, 2007
FUTURE electricity generation in Tasmania is under a cloud after the developers of the Basker-Manta adjacent oil and gas fields pulled out of a gas supply deal.
Alinta told the stock exchange yesterday it was reassessing plans for a 200 megawatt combined-cycle baseload power station in the Tamar Valley after Anzon Australia and Beach Petroleum said they were deferring development of the gas leg of the Basker-Manta reservoir in Bass Strait.
In March the Basker-Manta partners announced a conditional 15-year agreement valued at more than $600 million to supply Alinta.
Alinta subsequently agreed to buy the Bell Bay power station site and three 35MW gas turbines from Hydro Tasmania.
These were to form the basis of a 180MW peak-shaving power station. Investment in the two stations was estimated at $330 million.
Alinta said yesterday the gas supply was a key contractual arrangement for the 200MW baseload station, which would have been operating by early 2009.
The National Energy Market Management Company said yesterday Tasmania could meet its energy needs at least until the end of this decade, but in the next decade it was certain to need new power-generation investment.
The change of heart by the Basker-Manta partners seems to have followed a difference of opinion on due diligence between executives of Anzon and Beach.
The Alinta deal is understood to have been subject to a final investment decision on developing the gas leg, but a final investment decision was not agreed to by the partners.
The underlying issue is understood to be Beach's reluctance to be overexposed on Basker-Manta, which is Anzon's main project.
In a statement to the stock exchange, the two companies said they chose to delay their decision about the gas phase after looking further at what developing oil production would involve.
Oil production would be the "major source of profitability" for the project, they said.
Basker-Manta's proven oil reserves (1P) are estimated at 13million barrels, while its proven, probable and possible (3P) reserves may be 77 million barrels.
The gap between the two numbers is believed to have been the reason the partners decided a $500 million investment to meet the Alinta contract was too risky.
Basker-Manta is producing about 12,000 barrels of oil daily using a floating production storage and offtake vessel, Crystal Ocean, which is too small to handle the big increase in compression required for the development of the fields' gas.
Anzon and Beach are planning a development well, Basker-6, on which drilling is to begin in November.
It is expected to help confirm the fields' reserves at more than the 1P figure now reported.
Anzon and Beach are planning to use a bigger vessel to accommodate an "optimal" field development. They expect to commit to a gas development within 12 months.