The Yolla-5 and Yolla-6 wells are being drilled as part of Stage 2 of the BassGas Mid Life Enhancement (MLE) project.

The two-well drilling program follows the successful lift of the export compression and condensate pumping units into place on the Yolla Platform as reported on 16 December 2014.

These activities are designed to extend production from the Yolla field through the BassGas production facility at Lang Lang, Victoria.

Origin Chief Executive Officer Upstream, Mr Paul Zealand said, “The spudding of the first of two production wells at Yolla is an important milestone and the culmination of years of planning.

“Completion of the MLE project will extend the production life of BassGas, to continue to meet the growing demand for gas on Australia’s east coast,” Mr Zealand said.

Prognosed total measured depth of the well is approximately 3,280 metres MDBRT.

The Yolla Platform is located in Bass Strait, approximately 140km off shore from Kilcunda, Victoria.

• First Of Two New Production Wells At Bassgas Successfully Spudded

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The arrival of the first gas into the LNG facility also marks the completion of commissioning of the 530km high pressure gas pipeline, another important milestone for the project.

With the completion of the pipeline and the arrival of the gas, Australia Pacific LNG can initiate the commissioning of the power generation facilities on the island.

The commissioning phase of the LNG facility also includes the verification and testing of each system of the first processing train and the two LNG tanks; part of which has already commenced.

Page Maxson, CEO Australia Pacific LNG, said: "The achievement of two major milestones, first gas to Curtis Island and completion of commissioning of the pipeline, demonstrates continued strong progress by Australia Pacific LNG and paves the way for the commissioning of the power generation facilities on the island.

"These milestones have been achieved thanks to the incredible effort by the many people committed to safely delivering the Australia Pacific LNG project.

"Australia Pacific LNG looks forward to completing the final phase of construction and delivering first LNG in mid-2015."

• Australia Pacific LNG's first gas reaches Curtis Island

by abarrelfull

Origin Chief Executive Officer LNG, Mr David Baldwin said, "We continue to make significant progress in the delivery of the Australia Pacific LNG project.

"The Upstream component of the project is 90 per cent complete, with 1,019 development wells drilled and 666 wells commissioned, while the Downstream component is 86 per cent complete and the final Train 2 module has been set on its permanent foundations.

"The Australia Pacific LNG project remains on track for first LNG in mid-2015," Mr Baldwin said.

Origin reported production for the quarter to 31 December 2014 of 33.4 petajoules equivalent (PJe) and sales revenue of $235.6 million.

Production was 4 per cent lower than the previous quarter, primarily attributable to lower production at Otway due to maintenance activities and lower customer nominations by Origin, a planned maintenance shut down at BassGas, as well as lower seasonal demand at Kupe, partly offset by higher production at Australia Pacific LNG. Sales revenue decreased 6 per cent compared to the previous quarter, reflecting lower production and a lower average commodity price, partly offset by the timing of product liftings.

Origin reported production for the six months to 31 December 2014 of 68.3 PJe and sales revenue of $486.7 million.

As foreshadowed, production decreased when compared to the six months to 31 December 2013. Origin reduced its call on production from its Upstream business in order to take advantage of cheaper ramp gas available from Queensland’s CSG-LNG projects. Revenue decreased compared to the six months to 31 December 2013 primarily reflecting lower production and reduced third party prices and volumes.

During the quarter, Origin also announced that the Speculant-1 exploration well had encountered potentially commercial quantities of gas in primary target Waarre Formation reservoirs in the Otway Basin, offshore Victoria. Origin has a long history of gas production in Victoria, and continues to evaluate the development options for the Speculant-1 resource, to help position its gas portfolio to meet future growth in demand for gas.

• Origin Reports Australia Pacific LNG Project 88% Complete And Production And Sales For The December Quarter

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As announced on 9 December 2014, the Speculant-1 exploration well had encountered potentially commercial quantities of gas in primary target Waarre Formation reservoirs in the Otway Basin, offshore Victoria.

Preparations are being made to suspend the Speculant-1 exploration well while development options for the resource are assessed.

Well type and location:

The Speculant-1 exploration well is situated approximately 3km off the southern Victorian coastline, about 30km south east of Warrnambool. Extended reach drilling technology is being employed to access offshore gas reservoirs. The well was drilled using the rig Ensign 931 in conjunction with the development drilling of the Halladale field. Origin has 100 per cent ownership of the Speculant-1 well permit.

• Speculant-1 Exploration Well Reaches Total Depth

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The lift was completed safely during a planned maintenance shutdown from 24 November 2014 by the specialist heavy lift vessel, the Sapura 3000, with the vessel released Friday 12 December 2014. BassGas is due to recommence production in late December.

Origin Chief Executive Officer Upstream, Mr Paul Zealand said, "We are pleased to have safely completed the module lift, which is an important first step in Stage 2 of the BassGas MLE project aiming to extend the production life of the Yolla field. The team is now focussed on preparations for drilling the Yolla-5 and Yolla-6 wells, including the arrival of the drill rig, the West Telesto, with the drilling operation expected to begin in the New Year."

Once the Yolla-5 and Yolla-6 wells are drilled and tied in, they will extend production from the Yolla field through the BassGas production facility at Lang Lang, Victoria.

The Yolla Platform is located in Bass Strait, approximately 140km off shore from Kilcunda, Victoria.

• Another milestone achieved in BassGas MLE project

by abarrelfull

The Speculant discovery is a tilted fault block structure covering over 7km2 in a nearshore section off the Otway coast, and sits immediately north of the Halladale and Black Watch fields previously discovered by Origin in 2006.

Origin Chief Executive Officer Upstream, Mr Paul Zealand said, "We are pleased to have discovered new gas resources in the Otway Basin, an area in which we have a long history of operating. We look foward to completing further evaluation of the resource, as we seek to continue to expand our gas portfolio in order to meet growing demand for gas."

Logging While Drilling (LWD) data acquired during the drilling of the well indicates the presence of potentially commercial quantities of gas within excellent quality sands of the Waarre Formation. This formation contains sands over a gross interval of approximately 100m vertical thickness.

Wireline formation pressure data has confirmed the presence of a gas column of approximately 145m within the Waarre C formation. Further evaluation of secondary targets are currently underway.

The Speculant-1 exploration well spudded at 04.00 hours EST on 23 September 2014.

Well type and location

The Speculant-1 well is situated approximately 3km off the southern Victorian coastline, about 30km south east of Warrnambool. Extended reach drilling technology is being employed to access offshore gas reservoirs. The well is being drilled using the rig Ensign 931 in conjunction with the development drilling of the Halladale field.

• Origin Confirms New Gas Discovery Offshore Victoria

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Origin will only advise the market again when well operations have been completed with a summary of results, or of any event that is material.

The Speculant-1 well is situated approximately 3km off the Great Ocean Road in Nirranda South, about 30km south east of Warrnambool, Victoria. Extended reach drilling technology is being employed to access offshore gas reservoirs. Prognosed total measured depth of the well is approximately 3,800 metres.

• Speculant-1 well successfully spudded

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“The LNG tanks are not only one of the most visible and complex parts of these plants, they are also among the most critical components to ensure long-term production success for our customers,” said Bechtel LNG General Manager Alasdair Cathcart. “Verifying the safety and integrity of the tanks is just one of the many steps we take in our disciplined approach to delivering our customers world-class quality projects.”

Hydro testing takes between two and four weeks to complete. Water is pumped into each of the tanks and held for 24 hours while various tests are carried out. Once testing is complete, it takes about five days to empty the tanks. Hydro testing verifies that each tank can hold its design capacity of LNG at -260 degrees Fahrenheit (-161o Celsius). Each of the QCLNG and GLNG tanks is capable of holding more than 140,000 cubic meters of LNG with Australia Pacific LNG’s tanks each holding 160,000 cubic meters.

In addition to the work on Curtis Island, Bechtel is the principal downstream contractor for the Chevron-operated Wheatstone Project in Western Australia. Bechtel also constructed the LNG facility, in Darwin, in 2005. A global leader in the LNG industry, Bechtel is responsible for about half the LNG liquefaction capacity under construction.

• Bechtel Puts LNG Tanks to the Test on Curtis Island Projects

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Hydrotesting of LNG tanks on Curtis Island has commenced, construction of the main gas transmission pipeline has been completed, and the gas from the recently commissioned Condabri Central gas processing facility is now being delivered into the gas network.

Page Maxson, Australia Pacific LNG CEO said: “These three milestones mark very definitive steps in the progress we are making in the gas fields, on the pipeline and at the LNG facility on Curtis Island.”

On Curtis Island, the first of the LNG tanks commenced hydrotesting, a process that takes up to 26 days per tank and requires filling the tanks with water to test its ability to hold its weight.

“Testing the integrity, quality and stability of the LNG storage tanks is a crucial part of ensuring they are ready to receive the first LNG, and we are pleased that our tank construction has reached this point,” Mr Maxson said.

Construction of the main high pressure gas transmission pipeline was safely and successfully completed and it is now being progressively placed into service.

“The pipeline is a critical piece of infrastructure linking the gas fields with the LNG facility. That we have now completed 530km of pipeline construction, with a relentless focus on personal and process safety, is a significant milestone,” Mr Maxson said.

Following construction and commissioning in June, gas from Condabri Central Train 1 is now being delivered into the domestic gas network together with gas from Australia Pacific LNG's existing Spring Gully and Talinga facilities. Condabri Central is the first of seven new gas processing facilities being constructed.

These construction milestones play a critical role in the delivery of first LNG exports in mid 2015, with gas from Condabri Central delivered to Curtis Island through the pipeline system where it will be liquefied and shipped to Asia.

• Australia Pacific LNG Shows Strong Progress As Key Milestones Achieved

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The West Telesto drilling rig is expected to be mobilised during the 2014/15 Australian summer to drill the Yolla-5 and Yolla-6 wells as part of the Yolla Mid Life Enhancement project's second stage. The West Telesto is a three-leg jack-up rig that will cantilever over the Yolla platform during the drilling campaign.

The drilling of Yolla-5 and Yolla-6, along with the installation of associated flow lines and other works, will support the maintenance of gas production from the Yolla field.

• Rig secured for Yolla gas field drilling program

by abarrelfull

All conditions associated with the Sale and Purchase Agreement have been satisfied.

Origin's sale consideration is CDN$30 million plus a 9 per cent royalty payable on all future hydrocarbon production from the Tariki, Waihapa and Ngaere licences.

• Origin completes sale of TAWN assets

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The new agreements between the Santos GLNG and Australia Pacific LNG projects will make gas transportation more efficient between the two projects’ Surat Basin gas fields in Queensland, and reduce the need for additional pipeline infrastructure.

Santos GLNG and Australia Pacific LNG are joint venture partners in a number of permits in the Surat and Bowen Basins, and the agreements will allow both parties to more efficiently access and transport their equity gas, in order to meet the requirements of their CSG to LNG projects.

Trevor Brown, Santos Vice President Queensland, said, "this agreement demonstrates the real efforts that Queensland's LNG projects are making to work together to reduce costs and deliver long-lasting efficiencies.

“It’s a win-win for both projects and puts us in a strong position as we work towards the delivery of first LNG in 2015,” he said.

David Baldwin, Chief Executive Officer LNG for Origin, the Upstream operator of the Australia Pacific LNG project said, “Australia Pacific LNG is pleased to have reached these agreements, which pave the way for more efficient development and transport of gas resources, while reducing the footprint of the industry by avoiding the need to build additional infrastructure such as pipelines.”

Under the terms of the agreement, two pipeline connection points will be built between Santos GLNG and Australia Pacific LNG infrastructure and a number of gas swap agreements undertaken to minimise gas movements and operational costs.

The first pipeline connection located on the Santos-operated Fairview gas field, north of Roma will enable significant volumes of gas to flow bi-directionally between Santos GLNG and Australia Pacific LNG.

The second pipeline will connect the Santos GLNG Scotia gas field, east of Roma, to Australia Pacific LNG’s main gas transmission pipeline.

Without this agreement both projects would need a total of 140km of additional pipelines and multiple connection points at compressor stations to each deliver its gas to Curtis Island.

• GLNG and Australia Pacific LNG sign upstream cooperation deal

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Otway Gas Project consists of two offshore gas fields, Geographe and Thylacine, and an onshore gas processing facility near Port Campbell in south-west Victoria.

Development of the Geographe gas field, which commenced following Joint Venture approval in October 2011, comprised development well drilling and installing subsea facilities to connect Geographe to Otway Gas Project's existing subsea pipeline. In addition, the project's onshore facility, Otway Gas Plant, was upgraded to accommodate a 50 per cent increase in its liquefied petroleum gas (LPG) storage capacity.

Origin Chief Executive Officer Upstream, Mr Paul Zealand said, "Since 2007, Otway Gas Project has played an important role in meeting southern Australia's demand for natural gas, LPG and condensate.

"The development of Geographe enables gas production to Otway Gas Plant to be maintained, thereby ensuring the project continues to make a major contribution to Victoria's energy security. Production from Otway Gas Plant is equivalent to 22 per cent of Victoria's domestic gas demand.

"The commencement of production from Geographe also supports Origin's other energy investments in the region including the State's largest gas-fired power station at Mortlake as well as our position as one of Victoria's largest energy retailers," Mr Zealand said.

The Geographe gas field is located in Victorian coastal waters 55 kilometres south of Port Campbell and 15 kilometres north of the Thylacine offshore platform.

VIC/L23 Participating Interests:

• Origin Energy Resources Ltd * - Operator (67.23%)
• Benaris International Pty Ltd (27.77%)
• Toyota Tsusho Gas E&P Otway Limited (5.0%)

• a wholly owned subsidiary of Origin Energy Limited

• Production commences from Otway Gas Project's Geographe field

by abarrelfull

The safely completed 72-hour operation to winch the pipelines 2.3km from the mainland to Curtis Island represents Australia's longest large-diameter underwater "pipe pull".

QGC managed the project under which pipelines for the Queensland Curtis LNG Project and the Australia Pacific LNG Project were laid in the same trench by pipeline construction contractor MCJV, a joint venture between McConnell Dowell Constructors (Aust) Pty Ltd and Consolidated Contracting Company Australia Pty Ltd.

The segments will connect each project's main pipelines from the Surat Basin gas fields, about 300km inland, to liquefied natural gas plants on Curtis Island.

The pipelines were co-located and installed concurrently to minimise environmental impact and disruption to boating.

The harbour crossing has involved construction of temporary facilities including a 2km-long road, two bridges and a railway line to move the pipes across two creeks, marshes and mud flats.

The harbour crossing used a temporary 450-tonne capacity winch on Curtis Island to pull the pipes - which together weigh 8,000 tonnes - through the sub-sea trench. The trench will now be filled with gravel and rock to protect the pipelines.

QGC Pipelines Project Director Norman Ingram said completion of the operation was a significant milestone.

"This engineering feat is significant on a world scale in terms of scope and complexity," Mr Ingram said.

"Its completion keeps us on track to become the world's first project to convert coal seam gas to liquefied natural gas."

The crossing follows raising of the roof on Queensland's first LNG storage tank on 8 February 2013.

• QGC completes Australia’s longest underwater ‘pipe pull’

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Upon settlement of the agreement, which is scheduled to take place today, Origin will receive US$300 million. These funds will be used to retire existing drawn debt.

Origin Executive Director, Finance and Strategy, Ms Karen Moses said, "Under the terms of the agreement, Origin has agreed to sell a portion of oil and condensate from its Australian East Coast and New Zealand production assets from 2015.

"The agreement allows Origin to realise value today from its future oil and condensate production, which is a by-product of the company's core gas production business.

"The transaction is consistent with Origin's strategy to identify new pathways to monetise the company's diverse and flexible portfolio of fuel resources. Further, it actively demonstrates Origin's ongoing focus on maximising cash flow from our existing business," Ms Moses said.

Goldman Sachs is a counterparty in connection with the transaction.

• Origin announces US$300 million agreement to sell future oil and condensate production

by abarrelfull

The project finance facility will specifically provide funding for the downstream parts of the project, including the liquefaction facilities on Curtis Island near Gladstone in Queensland.

The first drawdown of the finance facility by Australia Pacific LNG has already occurred, and funding will be progressively drawn down throughout the construction period, up to the US$8.5 billion facility limit.

The US$8.5 billion project finance facility is the largest ever signed in Australia and represents a key component of the financing of the Australia Pacific LNG project. The syndicated facility was signed in May 2012 by the Export-Import Bank of the United States (US EXIM), The Export-Import Bank of China (China EXIM), and a number of Australian and international commercial banks for 16 and 17 year terms.

Australia Pacific LNG is developing a A$23 billion CSG to LNG project in Queensland which includes the further development of CSG reserves in the Surat and Bowen Basins, a gas transmission pipeline and a two-train LNG facility on Curtis Island, near Gladstone. The shareholders in Australia Pacific LNG are Origin (37.5 per cent), ConocoPhillips (37.5 per cent) and Sinopec (25 per cent).

• Update on Australia Pacific LNG’s US$8.5 billion project finance facility

by abarrelfull

Production at BassGas had been suspended since late 2011 for the Mid Life Enhancement project, the first phase of which involved upgrading Yolla from an unmanned to a manned platform and installing export compression and condensate pumping modules.

Installation and commissioning of the accommodation module has now been successfully completed. As previously advised, the initial attempt to install the export compression and condensate pumping modules was not successful and a summer 2012/13 installation program was being evaluated.

A decision has been taken not to install the export compression and condensate pumping modules over summer 2012/13. The equipment will be stored and maintained ahead of installation at a later date, to be determined by the joint venture.

As a result of these decisions and with the return to free flow production complete, the chartered installation vessel will be demobilised.

Origin Chief Executive Officer Upstream, Mr Paul Zealand said, "The return of Yolla to free flow production signals the completion of infield activities for the current program. The joint venture is currently reviewing the timing and sequencing of development drilling and installation of export compression and condensate pumping modules, the outcome of which will be advised at a later date."

BassGas Joint Venture:

• Origin Energy Resources Limited (Operator)*: 42.50%
• AWE Limited (through subsidiaries): 46.25%
• Toyota Tsusho Gas E&P Trefoil Limited:
• (i/o Toyota Tsusho Gas E&P Trefoil Limited) 11.25%

• Yolla platform returns to production

by abarrelfull

The Mbawa-1 exploration well has been drilled to a depth of 2,553 metres and has encountered approximately 52 metres of net gas pay in porous Cretaceous sandstones. The well will now be drilled to a total depth of 3,275 metres targeting further exploration objectives.
Apache (50%) is Operator of the offshore Block L8 Licence along with partners Origin Energy (20%), Pancontinental (15%) and Tullow (15%).
Commenting today, Angus McCoss, Exploration Director, said:

"A gas discovery on prognosis in the shallowest objective at Mbawa-1 is an encouraging start to our East African Transform Margin exploration campaign. This is the first hydrocarbon discovery offshore Kenya. The on-going drilling remains on course to test for any deeper oil potential within this gas prone region”.

• Mbawa-1 Drilling Update

by abarrelfull

Origin will only advise the market again when well operations have been completed with a summary of results, or of any event that is material.

Well type and location:

Mbawa 1 is located in the Mbawa Prospect in offshore Kenya. The drillship Deepsea Metro 1 is expected to take about 60 days for this drilling operation, which will reach a total depth of 3,250m subsea in a water depth of 864m.

The well will be plugged and abandoned after the evaluation program is completed.

L8/Mbawa Joint Venture:

• Apache Kenya Limited (Operator) - 50%
• Origin Energy Limited - 20%
• Pancontinental Oil and Gas NL - 15%
• Tullow Kenya B.V. - 15%

• Drilling commences in offshore Kenya

by abarrelfull

Sinopec's shareholding in Australia Pacific LNG has now increased from 15 per cent to 25 per cent. As a consequence, ConocoPhillips and Origin Energy's shareholding in Australia Pacific LNG has been diluted from 42.5 per cent to 37.5 per cent each.

Sinopec's additional equity subscription provides Australia Pacific LNG with a net payment of US$1.4 billion for value determined as at 1 January 2011. That amount was adjusted for Sinopec's share of capital expended since that date, resulting in Sinopec injecting a total of approximately US$2.1 billion into Australia Pacific LNG. These funds will be used to meet project expenditure before any additional funding is required from Origin, ConocoPhillips and Sinopec.

In addition, all conditions precedent have been met for the supply of an additional 3.3 million tonnes per annum (mtpa) of LNG to Sinopec, bringing the total LNG sales to Sinopec to 7.6 mtpa, commencing in 2015.

• Australia Pacific LNG completes additional Subscription Agreement with Sinopec

by abarrelfull