The $1.4 billion Bayu-Undan liquids development project in the Timor Gap has been given the green light by operator Phillips Petroleum Pty. Ltd. and the majority of its partners. First production of liquids is scheduled to begin in late 2003 or early 2004.
The field lies in 240 ft of water on Permits ZOCA 91-12 and 13 in the Timor Gap Zone of Cooperation Area (ZOCA) between Australia and Indonesia. Phillips discovered the field in 1995, and BHP Petroleum Pty. Ltd. confirmed an extension that same year. Nine successful appraisal wells have been drilled. The field has been unitized, but in April 1999, BHP sold its Bayu-Undan interest to Phillips.
The liquids development project will involve producing and processing natural gas, separating and exporting condensate and LPG, and reinjecting lean gas back into the reservoir.
Under the terms of the operating agreement, there is sufficient agreement among the Bayu-Undan partners to begin the gas-recycle phase. The plan allows the group to consider a second phase involving future export of the lean gas, subject to coventurer approval and to government approval of the gas export plan. This second phase, expected to cost several billion dollars, would involve piping the lean gas to Darwin, Australia, for both domestic consumption and conversion to export LNG.
"Phillips and its coventurers are continuing to make progress toward the establishment of gas markets for Bayu-Undan gas resources," said Phillips, 50.3% interest holder in the field. Its partners are: Santos Ltd. (11.8%), Inpex (11.7%), Kerr-McGee Corp. (11.2%), Petroz NL (8.3%), and British-Borneo PLC (6.7%).
Phillips says it is continuing to make progress towards the establishment of gas markets for Bayu-Undan reserves.
The Timor Gap Treaty, signed by Indonesia and Australia in 1989, established a framework for exploration and development in the ZOCA, but East Timor's recent vote for independence calls into question the validity of the treaty.
"Phillips has had substantive and encouraging discussions with all relevant parties involved in East Timor's transition to independence," the operator said. "The company and its coventurers will continue to monitor the legal, fiscal, and administrative ar- rangements under the Timor Gap Treaty and will proceed with development in a manner warranted by these arrangements."
East Timor's independence leader, Xanana Gusmao, recently told the Australian government that he had no plans to change the treaty.
