BHP Sees `Outstanding' Growth in Australian Oil, Gas

By Angela Macdonald-Smith

Oct. 27 (Bloomberg) -- BHP Billiton Ltd., Australia's biggest oil and gas producer, said it has ``outstanding'' opportunities for growth in Australia, with five ``major'' petroleum projects under assessment for future investment.

Potential ventures include developing the Macedon gas field for supply to the Western Australian market and the Thebe, Scarborough and Browse fields, also off the northwest coast, for liquefied natural gas exports, Melbourne-based BHP Billiton said today in a presentation sent to the Australian Stock Exchange.

BHP, which is also the world's biggest mining company, is forecasting 10 percent annual compound growth in oil and gas output through to the 2011 financial year as new fields in the Gulf of Mexico and Australia ramp up output. The company owns one-sixth of the North West Shelf venture, which expanded LNG production capacity by 37 percent this year.

LNG demand growth in Asia is likely to remain ``strong, though near-term volatility'' is likely, BHP said in one of the slides, to be presented by Phil Byrne, Australia country manager for BHP Billiton's petroleum unit, during an analysts tour. New LNG projects in Australia are likely to face a ``challenging financial and regulatory environment,'' it said.

BHP said it's discussing with partner Exxon Mobil Corp. the ``optimum development plans'' for the 8 trillion-cubic-feet Scarborough field, targeting LNG buyers in north Asia. The company is ``looking at options'' for the development of the Thebe field, which lies 50 kilometers (31 miles) north of Scarborough, it said.

The company is still studying both floating LNG and an onshore project for Scarborough and it's premature to say which option is preferred, said Peter Ogden, a Melbourne-based spokesman for BHP.

Oil Ship

The Woodside Petroleum Ltd.-operated North West Shelf venture may this quarter approve an investment to replace the Cossack Pioneer oil production ship to extend the life of the Cossack, Wanaea, Lambert and Hermes crude-oil fields, BHP said. The Perth-based venture said in May it had agreed to replace the vessel because that would cost about the same as the A$855 million- ($525 million)-plus estimate to refit the ageing ship with a shorter production shutdown.

BP Plc, Chevron Corp., Woodside's 34 percent shareholder Royal Dutch Shell Plc and a venture between Mitsubishi Corp. and Mitsui & Co. own stakes in the A$25 billion North West Shelf venture. BHP's partner in the Macedon field is Apache Corp.

LNG is natural gas cooled to liquid form, reducing it to one-six-hundredth of its original volume, for transportation by tanker to destinations not connected by pipeline.

BHP is planning ``key'' exploration and appraisal wells ``over the coming years'' in Malaysia, Colombia, Canada and the Falkland Islands, as well as in Australia and the Gulf of Mexico, according to the presentation. Ogden couldn't provide details.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net