Australia Pacific LNG

Australia Pacific LNG has continued to make substantial progress in both development of the domestic gas supply business and its CSG to LNG export project.

Domestic gas supply increased to 97 PJe for the year to 30 June 2011. This represented an increase of 36 per cent on the prior year, as supply increased to Origin’s combined cycle Darling Downs Power Station and supply commenced to the expansion of the Yarwun Alumina Refinery in Gladstone.

Well deliverability continues to exceed expectations with well enhancement activities delivering a record flow rate of 10 terajoules (TJ) per day from one well in Spring Gully, and average rates of 1.7 TJ per day per well being achieved at the Talinga development.

Australia Pacific LNG holds Australia’s largest 2P CSG reserves. The joint venture further added to these reserves during the reporting period, with 2P reserves increasing from 10,143 PJ at 30 June 2010 to 11,775 PJ at 30 June 2011. Proved, probable and possible (3P) reserves increased from 14,598 PJ to 14,742 PJ. Australia Pacific LNG’s resource base also includes an additional 10,050 PJ of 3C contingent resource.

Checking a gas well at Spring Gully

During the year, Australia Pacific LNG achieved a number of major milestones which culminated in a FID on the first phase of its CSG 
to LNG project in July 2011.

This followed the receipt of State and Federal approvals of the project’s Environmental Impact Statement, and the signing of agreements with Sinopec for both a 15 per cent equity stake in Australia Pacific LNG and the sale of 4.3 million tonnes of LNG per annum from 2015. The joint venture also completed front end engineering and design studies and all major construction and procurement contracts required to underpin the development.

Following the FID announcement and completion of Sinopec’s 15 per cent equity subscription, both Origin and ConocoPhillips’ interests in Australia Pacific LNG were diluted to 42.5 per cent.