The key benefits to Armour from the agreements are as follows:
- APLNG is a strong counterparty gas buyer, being a joint venture (JV) between Origin Energy, ConocoPhillips and Sinopec.
- The agreement provides Armour with delivery flexibility during the restart commissioning period.
- The agreement pricing provides Armour with cash flow certainty for 1.8PJ/a over the initial five years.
- Armour has held the right to supply the broader gas market. This includes a number of industrial customers, wholesale customers and traders, as well as other LNG producers, once commitments to APLNG have been met.
- Convenient delivery point of the Wallumbilla Gas Hub.
Nick Mather, the Executive Chairman of Armour, said: “We are pleased to have secured an offtaker of the quality of Australia Pacific LNG as our foundation customer for the Kincora Project. With these agreements in place, we can move forward with confidence on the Kincora Project restart with strong known cashflows underpinning the early years of the project.”
Phase 1 of the supply of gas from the Kincora Project to APLNG is the commencement of gas production (i.e. the restart), commissioning and then the increase of production rate to 9 TJ/d (3.3 PJs/yr), with production initially from the Newstead storage facility and then a number of wells across the fields that were last in operation. First gas production and commencement of gas sales is planned to be achieved by June 2017, and the balance of the restart programme (including the commencement of associated liquids production) is planned to be completed by August to September 2017.
Phase 2 will involve the drilling of new wells, plus workovers and stimulations of existing wells, in order to achieve an increase in gas production to 20 TJ/d over a 12 – 18 month period from first gas production. This production rate is 80% of the Kincora Gas Plant nameplate capacity and, subject to operational performance, further production increase will be explored in order to achieve 100% plant capacity subject to having confidence in plant reliability.
Read the article online at: https://www.lngindustry.com/liquefaction/09012017/armour-energy-signs-gas-sales-agreements-with-aplng/