Equus discoveries were made by Hess, which divested them to Western Gas in 2017
The long-stranded Equus gas complex offshore Western Australia is returning to the development fray based on a simpler and less expensive development concept.
The owner of Equus is Australian private company Western Gas, which acquired the asset from the US independent Hess in 2017.
The complex comprises several discoveries that were all made by Hess, and contains about 2 trillion cubic feet of best estimate contingent resources of low carbon dioxide gas plus 42 million barrels of condensate.
Western Gas made some early development moves after the acquisition, but there has been no news flow for several years.
However, progress was reported on 9 September when Western Gas said it has signed a US$30 million pre-funding agreement with aluminium company Alcoa to enable Equus to progress to the final investment decision.
Western Gas said it will begin a pre-front end engineering and design phase followed by FEED.
In exchange for the funding, Alcoa has an exclusive right to 50 terajoules per day (47 million cubic feet per day) of Equus gas for 10 years, but this represents only 15% of expected gas volumes from Equus.
The remainder of the gas will be sold into the domestic gas market and as backfill for existing liquefied natural gas facilities in Western Australia, a spokesperson for Western Gas told Upstream.
In late 2022, Western Gas signed non-binding gas processing agreements for LNG and domestic gas with the Woodside-led Pluto LNG project and the Woodside-led North West Shelf LNG project.
“The Alcoa pre-FEED funding will provide for a refresh of the development plan based on a tie-back to existing offshore and onshore infrastructure, together with updated project costs and economics,” the Western Gas spokesperson said, adding that pre-FEED contracts will be awarded this month.
Upstream’s market sources confirmed the development concept will be different and slimmed down compared to the previous engineering and design work by McDermott and Baker Hughes.
Sources cautioned that Equus will be a difficult development. While the reserves are fairly significant, the reservoirs are complicated which puts pressure on project economics.
“There was a good reason that Hess walked away,” one source said.
Another source cautioned about Western Gas’ lack of development experience, so bringing in a project partner with technical experience would be necessary.
Rick Wilkinson, chief executive of Australian commentator EnergyQuest, told Upstream: “EnergyQuest expects the WA market will need new gas to be developed to meet demand in the coming decade, and so it makes sense that Western Gas is seeking to progress the project with Alcoa.”
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