Exxon, BHP Billiton to Invest $1 Billion in Australian Gas Plant

Exxon (XOM) Mobil Corp. and BHP Billiton Ltd. approved investment of more than $1 billion on a new plant to process natural gas from the Kipper and Turrum project off the southeast coast of Australia.

The plant in Victoria state will remove carbon dioxide from gas produced at the Turrum venture, Melbourne-based BHP said today in a statement. BHP, Australia’s largest oil producer, said it will spend $520 million on the Longford gas treatment facility. Exxon’s Esso Australia Resources Pty said in a separate statement that it will invest A$500 million ($527 million) for its share.

“Australian energy consumption will continue to grow during the next 20 years,” Exxon Australia Chairman John Dashwood said in the statement. “The gas conditioning plant will process gas to help meet this expected increase.”

Exxon, the world’s largest energy company by market value, and its partner BHP said last year that the cost to develop the Kipper and Turrum fields rose by more than 60 percent to $4.4 billion and that the project would be delayed, partly because of mercury found during drilling. Exxon said in October it expects a decision at the end of 2013 to develop facilities to remove mercury from gas extracted from the Kipper field.

Exxon advised that first gas from Kipper is most likely in the first half of 2016, partner Santos Ltd. (STO) said in July.

The Longford plant will process about 400 million standard cubic feet of gas daily and will cut carbon dioxide content to less than 3 percent, according to the statement. Saleable gas output at Turrum will start in 2016, BHP said.

BHP, which earned 18 percent of revenue from its petroleum division in fiscal 2012, agreed yesterday to sell its stake in Woodside Petroleum Ltd. (WPL)’s Browse liquefied natural gas venture in Western Australia to PetroChina Co. for $1.63 billion.

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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