ExxonMobil could join LNG terminal rush

James Bowen | 18 June 2018 | Energy News Bulletin

THE race to develop new east coast LNG import capacity may be getting its biggest players yet, with ExxonMobil confirming it is considering a Victorian terminal in plans that could also involve BHP.

The proposal, which had previously been the subject of speculation by EnergyQuest, would aim to replace supply from Exxon’s rapidly declining Bass Strait gas fields co-owned by BHP and making use of the existing Langford gas plant.

It could take the form of a floating terminal to be built at around half the cost of rival projects, and would help alleviate current and predicted shortages of gas for Australia’s most populous markets.

The proposal comes just after Andrew Forrest’s Australian Industrial Energy consortium announced it had chosen Port Kembla as the location of its New South Wales-based proposal and signed 12 memoranda of understanding on long-term supply.

It also follows AGL Energy signing pipeline and sales agreements with APA Group and a jetty agreement with port authorities for its proposed Victorian terminal.

An ExxonMobil spokesperson today confirmed to The Australian that the company was investigating its own infrastructure.

“Combined with the existing Gippsland resource and infrastructure, an LNG import facility could ensure ExxonMobil can continue to meet our customers’ needs,” the spokesman said.

Macquarie analysts have put an estimated A$100 million price on Exxon’s plans, which compares favourably with $200-$300 million for the AIE proposal and $250 million for AGL’s bid.

RISC Advisory partner Martin Wilkes told Energy News last week that the LNG import terminal idea made sense, even given Australia’s wealth of gas resources in a number of areas.

He cited the case of the US importing a cargo from the UK as a good analogy for Australia, with both countries having an abundance of supply but often experiencing difficulties in getting gas to where it was needed.

Wilkes expressed some scepticism as to whether the country even needed two terminals, however, saying that if one FSRU could produce around 50TJ of gas per day, accounting for about 25% of demand, then it may be enough.

This raises obvious questions about the need for a further terminal as suggested by the latest Exxon comments.

In South Australia, Mitsubishi is also conducting a feasibility study on the potential for an LNG import terminal at Pelican Point.

Last week Exxon’s Mobil Refining Australia subsidiary also announced plans to expand crude storage capacity with a new tank at its Altona refinery in Victoria, in order to improve efficiency and help meet growing demand for transportation fuels.

The company said construction would begin in mid-2018 and be completed in 2020.

Mobil manager of refining for Australia and New Zealand Riccardo Cavallo said the new storage would help optimise ExxonMobil Australia’s integrated oil and gas business to “support continued supply of high-quality, locally produced fuel products to Victorian businesses and households”.