Industry News

CENTRAL Petroleum has been racing to reach a final investment decision for its Range project in the Queensland Surat Basin, but with the market suddenly sidelined by the outbreak of COVID-19 and the global and domestic economy struggling to stay afloat, has had to shelve its project for the time being.

Business growth has been the company's priority for the last year and has seen it accumulate a portfolio or operating assets and exploration tenements. 

However, the company told the share market today while there was no direct material impact to its current production from a low oil price and volatile market, it expected logistical challenges to hinder its growth projects. 

Central and its 50% joint venture partner, fertiliser manufacturer Incitec Pivot, had been targeting an FID for the Range coal seam gas project in Queensland for early 2021. Incitec had been progressing Range as a way to shore up much-needed domestic supply. 

Pre-FID activities and planning for a three-well appraisal pilot project were well under way. But now, due to a crashing market the venture has abruptly stopped work. Neither partner has a time frame for when work may recommence. 

Incitec told shareholders it "remained committed" to the domestic gas project, which has a 2C contingent gas resource of about 130 petajoules, and hoped to restart activities "as soon as possible." 

Central insisted it too was committed to the project and would accelerate operations "as soon as business conditions permit." 

The company had a cash balance at the end of February of $27.2 million and has no major exposure to the low oil price as about 90% of its production is gas, not oil. 

It also recently extended its debt facilities to September 2021 and only has a $5 million repayment due in the next 12 months, positioning the company in a relatively stable position. 

Other exploration and development projects, including Central's Northern Territory Amadeus Basin project has been put aside as they are "no longer feasible given the logistical constraints" imposed by travel and infrastructure restrictions imposed by the Territory government to isolate vulnerable remote communities from the virus. 

The company said it would revise its exploration schedule after market conditions stabilised. Again, there is no time frame on when this could occur. 

Source: Energy News Bulletin

Read more here

INPEX is just the latest major oiler to flag deep cuts to its operations and capital expenditure, today announcing at its annual general meeting it was reviewing investment and seeking cost saving measures.

Inpex today confirmed to shareholders it was considering its options and is looking to make cuts following a growing trend of other international oil and gas producers. No specific details were given however. 

Over the last fortnight, as the oil price plunged below $30 a barrel and fears of a global recession ramped up, international oil and gas companies have taken the axe to capital expenditure and operational expenditure budgets. 

Shell plans to lop US$9 billion from its spending plans as it seeks to weather out the collapse in oil prices, cutting operating costs by $3 billion and capex by $5 billion. 

Shell has also suspended its buy-back share program, saying its "decisive action" would protect cash flow and guarantee dividends. 

French oil producer Total said it would slash operating costs by $500 million and suspend its $2 billion buyback program having already repurchased about $550 million of shares.  

BP has said it is "making interventions" and has flexibility to cut its spending by 20%. BP is yet to make any specific spending figure for 2020 public. 

Equinor said just this week it would follow suit reducing capex by US$3 billion to ride out the oil price and COVID-19 pandemic. It had already suspended a $5 billion share buyback program. 

Equinor is postponing all its US shale drilling and expects to be cash flow neutral at an average oil price of $25/bbl.

Overnight Eni, joined its fellow European-based multinationals, revising its planned activities and reducing its capex by around US$3 billion. This equates to 35% of its planned capex. 

Chevron has also made big cuts this week in the face of oil price woes too, outlining measures which include cutting capex by US$4 billion, or 20% and also suspending its annual share repurchase program. 

Chevron's biggest cut will target upstream unconventionals, primarily in the US Permian Basin, where the company will slash more than $2 billion in spending. 

A further $1.2 billion will be hacked from upstream projects and exploration both across its US assets and internationally. 

Around $800 million will be shaved from its downstream and chemicals business. 

ConocoPhillips has committed to US$2.2 billion worth of spending cuts. 

The Houston-based oil business released a statement last week saying it would reduce its forecast operational capex by $700 million, or 10% and cancelling $500 million worth of planned 2020 share repurchases. 

On a combined basis, the capital and share repurchase cuts represent a reduction in 2020 cash uses of $2.2 billion, according to the company. 

"Our industry is clearly experiencing an unprecedented event brought about by simultaneous supply and demand shocks," ConocoPhillips CEO Ryan Lance said. 

Source: Energy News Bulletin

Read more here

Protecting our health is imperative and should be everyone's priority... Maintaining livelihood for business is next. Stay safe everyone and support each other through trying times!

UPDATE: Factsheets now available to assist industry

Fact sheets are now available from the Northern Territory government in regard to how industry might apply for exemptions to support their operations and workforce requirements.

• How to apply for an exemption 
• How to self quarantine 
• Border checkpoint information 
• Conditions for exempt persons 
• NT Border arrival form 
• NT Exemption application 

Northern Territory border restrictions 

The Chief Health Officer has granted further directions under the Public and Environmental Health Act 2011 which allow Police to exercise their ability to control the entry of persons into the Territory to minimise the risk of spreading coronavirus and keep Territorians safe.

The NT has secured its borders by introducing a two-week quarantine period for anyone arriving in the Territory, with an exception for those providing goods and essential services during the coronavirus pandemic.

This will not affect lawful trade or commerce, essential activities will not be impacted, and we will continue the supply chain.

From 4:00 pm Tuesday 24 March, all non-essential travellers arriving at the Territory borders will be required to go through a police control checkpoint to verify their medical status and purpose of their travel into the Territory.

They will also be required to self-isolate for 14 days upon arrival, with penalties for those who do not comply.

All arrivals including Territory residents will be screened and, if deemed a non-essential visitor, would be told to quarantine themselves. Territory Police and the Public Health Unit will ensure compliance and help people access support where needed.

This includes directing people to self-isolate for 14-days once they arrive. 

Complete up to date information: https://coronavirus.nt.gov.au/ 

Source: NT News

THE NT’s borders will close at 4pm today, Tuesday March 24, meaning everyone who arrives in the Territory must be quarantined for 14 days to prevent the spread of coronavirus, unless for special exemptions.

Q1: What if I see someone out who I know is supposed to be self-isolating after just arriving from interstate? What should I do?

Call the NT Public Health hotline on 1800 008 002 and report them.

Q2. What if someone gets caught failing to follow the self-isolation rules? What will happen to them?

The self-isolation rules are enforceable by law, and a fine of up to $62,800 applies.

Q3. Further to Q2, what will happen to someone caught failing to self-isolate who then turns out to be coronavirus positive? Will extra action be taken against them?

As above, you can be fined $62,800. There are no specific actions for people who turn out to have the virus at this stage.

Q4: I’m a FIFO worker working in the Territory but who lives interstate? Do I have to self-isolate for 14 days every time I return to my job in the Territory after I go home from my swing?

The NT Government held industry meetings on Monday to consult on implementation and exemptions. There will be an exemption that FIFOs can apply for. Those who get exemptions will still be required to follow certain protocols, i.e. social distancing. More information and the application process will be published today.

Q5: I’m a Territorian and have a home here. But I mainly work interstate because that’s where my job takes me. How will these changes affect me?

It depends on what your job is. Unless you fall into one of the categories described in question 12, you will have to self-isolate each time you return home to the Territory.

Q6: I live in the Territory but travel interstate regularly for medical treatment. How will these changes affect me?

You can apply for an exemption to the self-isolation rules to the Chief Health Officer if you are travelling interstate for essential medical treatment.

Q7: I live in the NT just inside the border with WA. I go into Kununurra every couple of days for supplies. How will these changes affect me?

South Australia’s Premier Steven Marshall yesterday assured people who lived in border communities they would still be allowed to cross into South Australia, so long as there were no outbreaks of coronavirus in those towns.

The NT is planning to make similar exemptions for border communities here and the people who will be able to apply for exemptions if they go to school or shop over the border (for example).

More information on who can apply for exemptions will be available in the coming days.

Q8: What if someone returns to Darwin from interstate after today and goes back to living with their family or housemates? Are the others able to come and go although they have had contact with someone who has been interstate and is now in isolation? Or do all household members now need to self-quarantine as well?

According to advice from the Australian Government, your housemates or other family members should live somewhere else if possible. If it’s not possible, the person who is in isolation should have their own bedroom and bathroom and wear a mask when home with other people.

The NT Government has also opened a drive-through testing clinic at the Manigurr-Ma Village in Howard Springs, and Territorians who aren’t sick but need to self-isolate can stay there if they need to.

Q9: What about the remote border points, such as the Tanami Highway? How will they be policed?

Police and Australian Defence Force personnel will be deployed at checkpoints on the major roads into the NT from 4pm today.

NT Police Commissioner Jamie Chalker warned people on Saturday that for anyone attempting to sneak into the Territory using more remote roads, that NT Police would also be using technology to monitor travellers’ comings and goings.

Q10: Is there a hotline I can call to get more information on how these changes will affect my circumstances?

Yes, you can call the NT hotline on 1800 008 002 or the national hotline on 1800 020 080.

Q11: How long will the NT’s new border restrictions apply for?

According to the Chief Minister and Police Commissioner, at least six months.

Q12: Who is exempt from having to self-isolate?

1. People involved in national and state security and governance.
2. Active military personnel required to be on duty in the Territory while in the Territory.
3. A member of the Commonwealth parliament who is ordinarily resident in the Territory.
4. Health service providers and personnel.
5. Some transport, freight and logistics workers.
6. Specialist skills critical to maintaining key industries or businesses or infrastructure.
7. Emergency services.
8. Other individuals or groups will be able to apply for an exemption to the Chief Health Officer, for instance visiting a terminally ill relative, or medical grounds, or interstate travel for essential medical treatment.

Q13. It sounds like there are going to be many people who will be exempt from the new restrictions. Will they all be checked for any signs of coronavirus when they enter the Territory though? If not, couldn’t any of them just as easily bring it into our community unknowingly?

Yes. All arrivals including Territory residents will be screened at the border.

Q14. What if I have to travel to another state with the same border restrictions for work or other reasons? Say I travel from NT to SA for two days work. It seems I’ll have to self-isolate for 14 days in SA before I spend two days working. When I’m finished do I have to self-isolate for another 14 days when I return home to the NT?

Unless your job falls into one of the exemption categories, yes you would.

Source: NT News

AS the COVID-19 pandemic slams the economy, analysts fear it may slow down decarbonisation efforts, as coal, relatively unaffected by the oil price crash, could be seen as the fuel source of choice for companies and governments stripped of all financial capacity to invest in renewables.

 In analysis released on Friday, Rystad said coal was already cheap before the economic shockwaves ripped through the energy sector, and the demand for it in China, during its own lockdown, was accompanied by a domestic production cost, balancing the market.

Now, it believes coal mining capacity is moving quickly back towards full capacity and power generation returning to normal levels, meaning thermal coal import demand into China is likely to total close to the 2019 annual numbers, though reports indicate some ports have already reached their 2020 annual quota limits.

It also noted the cheap price of oil, which is used as a fuel in coal mining could reduce coal output costs by a few dollars per tonne.

"With ARA prices already so low, any cost decrease will potentially give struggling producers selling to Europe a little breathing room, rather than allowing prices to move down any further," Rystad's head of global coal research Steve Hulton said.

The analysis noted a possible outcome of the pandemic could be a shift in public opinion and policy regarding the speed of transition towards a low carbon power generating future, noting coal to be a cheap, but problematic, source of energy to rebuild the economy.

"These factors could potentially lead to a slowing of the rate of the energy transition," Hulton said.

Separate analysis from Wood Mackenzie noted the cheap price of gasoline could also de-incentivise people from purchasing electric vehicles.

But it did say the volatility of oil market could lead to energy companies losing their appetite for oil and gas projects and instead invest in renewables, particularly given the ambitious decarbonisation targets some have set for themselves.

WoodMac analyst Valentina Kretzschmar said solar and wind projects have offered much lower rates of return than oil and gas projects, but now with the oil price through the floor this will no longer be true.

"Renewables projects suddenly look as attractive as upstream projects at US$35 a barrel," she said. The oil price has since slipped to $26/bbl. 

International Energy Agency executive director Fatih Birol has urged governments to use their economic rescue packages to support low-carbon energy investment. 

Source: Energy News Bulletin

Read more here

CHAMBER of Minerals and Energy Western Australia chief executive Paul Everingham has said the new WA government rules that have effectively shut down the state’s border, will see fly-in-fly-out worker flights “massively curtained” with the majority of non-essential staff now sent home. 

Critical oil and gas facilities will continue to operate Everingham said over the weekend, but worker health and safety in the resources sector is the top priority.  

All entry to Western Australia will be restricted, by road, rail, air, and sea from 1.30pm AWST on Tuesday.  

"We're taking extraordinary measures to ensure our workforce and the communities in which we operate are not impacted," Mr Everingham said at a press conference alongside WA state premier Mark McGowan yesterday.   

"Now is not the time to think about profitability," he added.  

More than 240,000 people are directly employed across Australia's mining and energy resources industry. Around 100,000 of these work in Western Australia.  

Under the new rules initiated by the government, some FIFO personnel will still be allowed to enter and depart on dedicated charter aircraft that leave from Perth airport and arrive at specific oil and gas facilities.  

However, all workers will be required to undergo testing at facilities and checks will need to occur before interstate staff can enter sites.  

Each oil and gas facility will now be required to have trained medical professionals, including doctors, onsite to manage potential outbreaks of COVID19.  

Operators will also need to create specific quarantine zones and specialised isolation facilities. 

Source: Energy News Bulletin

Read more here

SANTOS confirmed the inevitable this morning: Barossa’s sanction has been delayed..

The Barossa field was due for final investment decision in the next quarter and would be destined as backfill for the Darwin LNG plant as the current Bayu Undan field goes into decline. 

It has also "re-phased" its planned spend at PNG LNG, the ExxonMobil-operated LNG project that was planning a one train expansion and commercialisation of the P'nyang gas field. Given the joint venture's gas agreement talks with the Papua New Guinea government had already stalled it is no surprise.  

"Barossa remains an important project for Santos due to its brownfield nature and its low cost of supply," managing director Kevin Gallagher said this morning.  

It will cut spending by almost 40% making it the second major ASX-listed oiler to revise guidance after Oil Search cut all spend guidance and announced the delay of a farmdown of its Alaska project last week.  

Santos will lower its capital expenditure this year by $550 million and will cut $50 million from cash production costs and is now targeting a lower breakeven cost of US$25 per barrel.  

"The reductions in expenditure in the base business are not expected to impact 2020 production guidance," it said.  

The company said it generated $186 million in free cash flow in the first two months of this year.  

It has hedged a portion of its oil and has fixed price gas contracts to fall back on - which it said will account for 35% of this year's sales volumes - and recently began a new 12-year domestic gas contract in Western Australia for 120 terajoules a day, which is priced in US dollars.  

It has 6.2 million barrels of oil hedged this year at a floor price of US$54/bbl. 

It still expects its acquisition of ConocoPhillips Northern Australia assets to complete next quarter and will then farm down a share of the assets to SK E&S as planned.  

In October it announced it was taking a larger share of the assets it already shared with the US oiler for a total of $1.4 billion, but would sell down 25%  interest in Bayu-Undan and DLNG to SK for $390 million, giving the latter a larger stake.  

It said there are still "a number of interested parties" it is talking to regarding selling a stake in Barossa. 

It expects gearing of around 35% "reduce by year-end based on the current oil price environment and including a dividend based on the free cash flow policy".  

Its debt covenants are not under threat at current prices for a number of years. 

Source: Energy News Bulletin

Read more here

OIL and gas operators are facing uncertainty on all fronts today, as the coronavirus takes a stranglehold of the market and the government introduces harsh new travel restrictions.

This morning, unions released a statement attacking gas giant Woodside Petroleum for standing down 400 workers without pay from its Western Australian operations.

Over 400 contractor employees from Woodside's Goodwyn and North Rankin platforms, along with Woodside floating production storage and offloading units, have been summarily stood down, according to the Australian Workers Union.

The AWU condemned Woodside, dubbing the move "a brutal act of industrial bastardry." 

"Today's decision by Woodside is maybe the most heartless corporate response we've seen to the COVID-19 crisis to date," said Offshore Alliance spokesperson and Australian Workers' Union national secretary Daniel Walton said.

The 400-worker figure has been challenged by a second source however, who said the worker count was much less.

Energy News understands Woodside is meeting with contractors this afternoon.  

Energy News has approached Woodside for comment.

According to the unions, Shell, Inpex and Jadestone have come to arrangements with employees and are providing employees with flexibility and special payments.

"Shell, INPEX, even Jadestone — all have proven that it's possible to balance a response to coronavirus with basic decency to your workforce. For Woodside, an Australian in the market, to fall so short is hugely disappointing," Walton said.

Source: Energy News Bulletin

Read more here

MINING giant BHP has joined with Anglo American, Fortescue and Hatch to form a Green Hydrogen Consortium aimed at finding ways to use green hydrogen to accelerate.

The main aim of the consortium is to collectively help to eliminate the obstacles to the adoption of green hydrogen technologies.  

The goal is to identify opportunities to develop green hydrogen technologies for the resources sector and other heavy industries, and provide a mechanism for suppliers and operators to contribute to and engage with these development activities.  

Some of the proposed activities include undertaking research, technology and supply chain development, and piloting green hydrogen technologies to seek to de-risk and accelerate the technologies.  

Ontario-based engineering firm Hatch has been appointed as the project management and governance facilitator of the new consortium.   

The consortium will work collaboratively with customers and suppliers to find solutions for the emissions associated with the use of their products and in their supply chains.  

Western Australia minster for regional development Alannah MacTiernan said the collaboration would cement the state's place on the world stage as a green hydrogen innovator and producer. 

"Green hydrogen provides a real opportunity to reduce diesel consumption and decarbonise mine site operations, with potential for fuel cells to power fixed and mobile plants, mining vehicles and feedstock," she said. 

In late 2018, FMG formed a A$20 million research hydrogen research partnership with CSIRO, while Anglo has been looking into hydrogen fuel cell mining trucks.

Source: Energy News Bulletin

Read more here

BOTH the listed Gas2Grid and the private Timor Resources, a subsidiary of engineering firm Nepean, have reported drilling delays as equipment is stuck in limbo due to coronavirus COVID19 outbreaks. 

Timor Resources, which plans the spud Timor-Leste's first onshore wells in four decades, has had to push back the date from May 1 to somewhere between May 22 and June1.  

Managing director Suellen Osborne told Energy News via email yesterday that as factories in China were closed for 21 days the ports have a backlog of cargo to move.  

"Covid19 has caused havoc on supply chains. We have purchased our wellheads and casings from Petroil in Tianjin and this was purchased in September 2018. 

"We have struggled to secure trucks and now we have seen two vessels cancelled as they are not travelling to Dili. The majority of our long leads items are ex-China," she told Energy News.  

"We have again booked our cargo, casing and well heads on the next ship, our rig comes onshore Timor in the next four days."  

She said all equipment had been sent on breakbulk cargo to Kupang and will be trans-shipped to a private barge then sent to Suai on the south coast close to where Timor Resources plans its ten-well campaign.  

Well casing is currently sitting at a port in Tianjin waiting for a ship.  

Timor is hunting for oil on the south coast, home to several historic wells and some oil seeps and plans an eventual 1-well campaign , with five wells this year in one permit it operates under a production sharing contract arrangement with the Dili government and five more in its other permit in early 2021.  

Wells Karau, Kumbilli, Laisaipi, Lafaek and Raiketin will be drilled in Permit A this year. 

The company has two onshore permits in the south close to Suai where the nation plans to eventually develop an LNG export terminal to commercialise gas from its Greater Sunrise fields. 

Meanwhile ASX-listed smallcap Gas2Grid warned shareholders late yesterday its activities across the Philippines could face significant delays due to restrictions in movement and equipment availability following outbreaks of the coronavirus COVID-19. 

Source: Energy News Bulletin

Read more here