Second phase commissioning of the Orbost Gas Processing Plant, announced 12 February, is underway. The plant operated by
As foreshadowed in the previous update, initial volumes delivered to the EGP were small, variable and influenced by commissioning requirements. Sales to market on Sunday 29 March were 21 TJ, with production rates of up to 50 TJ/d. It is likely production rates will continue to be variable as commissioning proceeds to the plant production test which requires a sustained rate of 68 TJ/day. Commencement of firm gas supply from the Sole gas field to term gas sales agreements will commence after the completion of the plant production test.
COVID-19
The company is operating effectively on a 'work from home' basis with on-site staffing requirements limited to minimal IT attendance when required at office locations and skeleton staff levels at the
Effective communication and internal and external engagement are continuing, using a range of media including video conferencing, online telecommunications and telephone. Employees and contract staff are being supported with direct regular contact through the chain of command, provision of important information about COVID-19, health and well-being advice and access to the company's
All of the company's gas production is accomplished through subsea installations, which are operated remotely via IT systems. Accordingly, the company's transition to work from home has no implications for production levels.
The Iona Gas Plant, operated by
APA operates an extensive network of pipelines and gas infrastructure, including the Orbost Gas Processing Plant, which are critical to the stable gas supply into south-east
Current status and strategic position
The majority of
Capital expenditure is mainly directed towards growth projects to increase supply of locally produced gas to the south-east Australian market. The company's long-standing gas strategy focusses on commercialisation of gas ranking among the most competitive sources of supply for the region. The company's analysis, and that of external parties such as AEMO, foresees new supply opportunities emerging in the coming years as output from existing sources of supply is depleted. It is probable a contraction of capital expenditure by the broader oil and gas industry in response to lower oil prices may create an earlier and tighter gas supply outlook for this region than previously anticipated.
Balance sheet
As at
Total production
Guidance for total production in FY20 is unchanged from that reaffirmed at the announcement of the first half results on 24 February: output of approximately 1.2 million barrels of oil equivalent from the company's existing operations in the Otway and Cooper basins. This guidance now incorporates higher gas production and lower oil production. Gas production of approximately 5.9 PJ and crude oil production of approximately 0.2 million barrels is now anticipated. This guidance is to be upgraded to incorporate production from Sole once firm supply from the field is established.
Oil production
The company produces crude oil from the Western Flank of the
The company has completed its
Capital expenditure
Incurred capital expenditure for the 12 months to 30 June is expected to approximate the middle of the previous guidance range of
Projects
As outlined at the FY20 half year profit announcement, the company has a number of growth projects at various stages of maturity. These projects are directed to the supply of gas to south-east
As the company has previously expressed, including to the 2019 Annual General Meeting, the timing and sequence of these projects will be managed to optimise returns to shareholders. As an ongoing, day-today discipline, this incorporates the impact of market conditions on the anticipated costs, revenue and financing.
It is anticipated work on the main projects (
Contact:
Tel: +61 8 8100 4900
Disclaimer
This ASX announcement contains forward looking statements that are subject to risk factors related to oil, gas and associated businesses. The expectations reflected in these statements are believed to be reasonable. However, they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to diverge materially, including in respect of: price fluctuations and currency fluctuations, drilling and production results, actual demand, reserve estimates, loss of market, competition in the industry, risks (environmental, physical, political etc.), developments (regulatory and fiscal etc.), economic and financial market conditions in
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