The Australian oil and gas sector received some further positive news this morning when AWE Ltd announced that it was proceeding to the Front End Engineering and Design (FEED) stage for the exciting Waitsia Stage 2 gas development north of Perth.
AWE and Joint Venture partner Origin Energy have opened up a design competition for the Waitsia Stage 2 facilities which will include a gas plant capable of processing 100 TJ/d, CO2 extraction, collection hubs and flow lines. AWE said this approach will allow the Joint Venture to establish a high degree of capital cost certainty and will also develop and compare EPC and BOO contracting models.
The four contractors selected to proceed to the design competition are Quanta/Suez (EPC); ATCO Australia (BOO); SNC-LAVALIN (EPC/BOO) and Clough (EPC).
The design competition will commence immediately and will be followed by a commercial phase. AWE is targeting completion of all phases of FEED by the end of CY 2017, prior to achieving a FID (subject to finalising gas sale agreements).
AWE CEO and managing director of AWE, David Biggs, said that when developed, Waitsia will provide around 10% of Western Australia’s gas demand.
“Waitsia Stage 2 has been making excellent progress and the Joint Venture’s decision to begin the design competition is another sign that this project is rapidly gaining momentum,” Mr Biggs said.
“A design competition is the best way for the Waitsia Joint Venture to compare the various aspects of EPC and BOO delivery methods while at the same time ensuring a high degree of certainty around the capital cost component,” he said.
“In addition, AWE is currently drilling the Waitsia-3 appraisal well – the first of a two well program which will facilitate a review of Waitsia reserves – and we are negotiating gas sale arrangements with a
number of potential customers.
“Recent market data shows that the Western Australian gas market is tightening, with new sources of gas required to meet domestic demand. Waitsia offers potential customers increased competition, diversity of supply, and improved security of supply by offering a lower risk onshore supply chain,” Mr Biggs said.
Discovered in September 2014, the Waitsia field is regarded as the largest onshore conventional gas discovery in Australia for the last 30 years and has the capability to supply the domestic market with 100 TJ/d for 10 years from conventional reservoirs.