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Armour Energy to supply gas to APLNG

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LNG Industry,

Armour Energy Ltd has announced that it has executed a connection agreement with APA Group.

This agreement provides Armour with access to the Roma Brisbane Pipeline at Wallumbilla, Australia, allowing it to supply gas to Australia Pacific LNG (APLNG) under a previously announced gas sales agreement. Armour claims that the agreement also further underpins the restart of the Kincora Project.

The connection agreement is also a key part in Armour being able to access the broader east coast gas market, including a number of industrial customers, wholesale customers and traders, and other LNG producers. APA is a key gas transport provider for the east coast gas market, and Armour’s agreement with it is for a 10-year term, providing a connection for up to a 30 TJ/d gas flowrate into the Roma Brisbane Pipeline.

Nick Mather, the Executive Chairman of Armour, said: “Late last year we announced that we had secured a gas sales agreement with Australia Pacific LNG. Execution of the Connection Agreement with APA now means that we can commence supply of gas to Australia Pacific LNG as soon as the Kincora Project Restart is completed. Armour continues to move closer to becoming a significant gas producer supplying gas into the east coast gas market and alleviating the supply side constraints that market currently faces.”


Kincora project restart


Supply of gas from the Kincora Project to the east coast market is planned in two phases. The first phase will involve the start of gas production (the restart), and the recommissioning of gas processing and compression facilities. Then, the gas production rate will be increased to an initial 9 TJ/d. Initially, gas production will be from the newstead storage facility with various existing wells across the fields progressively brought back into operation. First gas production and commencement of gas sales delivering into the APLNG offtake agreement is targeted to be achieved by June 2017, whilst the balance of the restart programme (including the commencement of associated liquids production) is scheduled to be completed by August or September 2017.

The second phase will involve the drilling of new wells, as well as workovers and stimulations of existing wells to achieve an increase in gas production to 20 TJ/d. This phase will be carried out over a 12 – 18 month period from first gas production, and will take the total gas production rate to an estimated 70% of the Kincora Gas Plant nameplate capacity. Subject to operational performance, a further increase in production will be pursued to achieve 100% plant capacity. Associated liquids production from the project historically averaged 9942 bbl of condensate per PJ of gas produced, and 2066 t of LPG per PJ of gas produced. Based on these historical production rates, at a gas production rate of 20 TJ/d liquids production is expected to reach 198 bbl of condensate and 41 tpd of LPG.


Newstead gas storage


Currently, the Newstead storage facility holds approximately 2.3 PJ of treated gas (sales quality). This is expected to require minimal reprocessing (compression and dehydration) before it is sent to market by Wallumbilla. Newstead has a total capacity of approximately 7.5 PJ, and provides a number of operational and commercial benefits. These include the following:

  • Back-up capacity when upstream production facilities undergo planned or unplanned shutdowns.
  • Ability to store gas when prices are low, for later production during periods when prices are higher in order to maximise revenue.
  • Capacity to maximise sales opportunities during seasonal price cycle and trading activities, specifically sales to electricity generators during the peaking electricity market in the December – March period.
  • Opportunistic supply when LNG spot cargoes experience price spikes.

Armour claims that it is expected that both gas injection and withdrawal rates at the Newstead facility will be improved through de-bottlenecking and process plant augmentation. The company will carry out studies to achieve this, following the facility restart and commencement of gas sales, as the project developments.

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