SANTOS and Apache Energy have revived their Devil Creek gas project after securing a supply contract with CITIC Pacific Mining, less than a month after talks collapsed.
Negotiations between the three companies initially fell through on 8 December 2008. As a result, the $850m project in Western Australia, which will use gas from the Reindeer field, was postponed.
The joint venture agreed with CITIC to supply 60% of the gas from Reindeer to the customer’s $5.8b Sino Iron magnetite project at Cape Preston, near Karratha.
According to the miner, it has been in talks with the joint venture for over a year and will now effectively underwrite a new major gas development in the state.
The surplus 40% of gas will be used to boost WA’s domestic gas supplies, which were crippled by the mid-2008 Varanus Island pipeline explosion.
It is hoped the project, with the capacity to produce 215TJ of gas per day, will become the state’s third hub, after the Woodside-operated North West Shelf project and Apache’s Varanus Island plant.
Under the terms of the contract, the facility will supply 75PJ of gas to the CITIC project over seven years commencing in the second half of 2011. The gas will be transported from the Reindeer field platform to the Devil Creek processing facility through a new 105km offshore pipeline.
Construction firm Clough hopes this deal will see its engineering, procurement and construction contracts for the plant and offshore facility renewed.
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