ExxonMobil eyes east Australia gas imports, exploration

ExxonMobil's plans to build an LNG import terminal in Victoria will not see a reduction in its exploration activity in the Gippsland basin as new domestic supplies and LNG trading are part of its future strategy.

ExxonMobil said last year that it was considering an LNG import terminal that could start operations in 2022.

"We see LNG imports and more exploration as complimentary to one another," ExxonMobil Australia commercial director Johanna Boothey told delegates at the Australian Domestic Gas Outlook 2019 conference in Sydney.

ExxonMobil plans further exploration in the Gippsland basin in the VIC/P70 block, about 90km off the Victorian coast, which is further south and east than all the permits it 50:50 owns in the Gippsland basin joint venture (GBJV) with UK-Australian resources firm BHP.

The US firm was unsuccessful with the Baldfish and Hairtail wells last year when drilling showed no commercial gas reserves.

"All is not lost with those two wells, we have found useful information that has provide new leads that will provide the foundation for further exploration work in the Vic/P70 block," Boothey said.

GBJV produced its first oil and gas in March 1969. The cost of development has risen sharply in the past 10 years and the gas found comes with a higher level of impurities than what has been historically produced in the Gippsland basin, said Boothey.

ExxonMobil led the A$5.5bn ($3.9bn) development of the Kipper Tuna Turrum gas and liquids fields in the Gippsland basin, which started production in 2017. About A$1bn of the total investment was in building pre-treatment facilities at the onshore Longford gas conditioning plant in Victoria to remove the expected increase in volumes of impurities coming from the new sources of gas in the Gippsland basin.

"It is getting more expensive to produce gas from the Gippsland basin and part of that is due to the higher content of impurities in the gas," Boothey said.

Gas production from the GBJV appears to be a in long-term decline. GBJV produced 50.4bn ft³ (1.4bn m³) on a 100pc basis in October-December, which is equivalent to 53.45PJ or 580TJ/d. This level of output is below the average daily gas demand of 625 TJ/d for the Victoria market throughout the entire 2017-18 fiscal year, according to data from the Australian Energy Regulator.