This story was originally published in The West Australian on 12 February 2018 with the headline "Confidence high for Equus gas." © Peter Milne.
Energy greenhorn Western Gas believes it will have the Equus gas field on the North West Shelf producing by 2023 — something oil major Hess failed to achieve despite pumping $1.5 billion into the project over 10 years.
Western Gas executive directors Will Barker and Andrew Leibovitch surprised the industry in November when the company purchased the 10 Equus fields from Hess to target the WA domestic gas market.
There has since been plenty of scepticism from industry insiders about how the minnow can succeed where the giant failed.
The directors, who each own 30 per cent of the company, believe their focus, flexibility and independence will make the difference.
Hess won the rights to explore Equus in 2007 with a record work commitment of more than $500 million.
Mr Barker said at the time that Hess envisaged the discovery of five to 10 trillion cubic feet of gas and spent about US$1.5 billion to pursue an LNG project to be a material part of a portfolio that lacked LNG.
Negotiations with Woodside to send to the North West Shelf LNG plant the two trillion cubic feet of gas reserves Hess did find ended in late 2016.
The Browse and Scarborough projects are now frontrunners to fill the Karratha Gas Plant early next decade.
Mr Barker said the NWS deal pursued by Hess required 350 million cubic feet of gas a day to flow to the NWS for 20 years with extremely high availability and redundancy as the “toll or pay” contract required payments even if gas was not delivered. Hess would have needed further exploration success to supply that quantity of gas so was not able to approve the project.
Mr Barker said they were downsizing the Hess concept to about 150 to 250 million cubic feet of gas a day focused first on the four fields that contain about 40 per cent of the reserves.
Perth-based offshore oil and gas engineer Peritus, which also worked for Hess on Equus, will deliver the smaller concept next month that sees pipeline-quality gas piped to shore.
Mr Leibovitch said the work would demonstrate how Western Gas was different to Hess and allow prospective gas customers or investors to perform due diligence.
He said the oil price rise from about $US45 a barrel when Equus was purchased to about $US70 now had made gas for LNG more attractive.