2014 PESA production and development review

Abstract

2014 was the penultimate year for many of the massive multi-year LNG development projects. These projects will lift Australia’s LNG capacity by more than 250% from present levels. The first train of the Queensland Curtis LNG project came on-line in late 2014. Exports are expected to commence from a further three LNG projects (APLNG, Gladstone LNG and Gorgon) in 2015. The ramp-up in gas demand on the east coast of Australia is spurring secondary development. A pipeline link has been proposed from the NT’s gas transmission system to connect to the east coast gas transmission system to allow gas from the Timor Sea to be fed into the east coast market and to the Queensland LNG projects. 2014 was a quiet year for new oil developments. Offshore, the Balnaves FPSO development was brought on-line. Onshore, the operators of the Cooper western flank continued to discover and develop a series of small fields. These small developments and better performance from some existing fields were able to offset natural reservoir decline elsewhere, leading to an overall increase in crude oil production of approximately 4% from the previous year. The second half of 2014 was characterised by a decline in crude oil price from more than $100/BBL to under $60/BBL by year-end. For many LNG contracts, LNG price is linked to oil price; existing LNG developments are well progressed and are unlikely to be curtailed by the low commodity price, but future developments are already being slowed or stopped.