Interpac Business and Migration Solutions Melbourne Australia

（September24, 2010）

BHP Billiton has approved the $US1.5 billion ($1.58bn) development of the Macedon gas field offshore Western Australia.

The approval means BHP joins a number of companies wanting to exploit a domestic fuel supply shortage to the state's booming mining sector.

The diversified miner, which is also Australia's biggest oil and gas company, owns 71.43 per cent of the resource, with Apache Corp owning the rest.

The partners will produce commercial gas from offshore recoverable reserves between 450 billion and 750 billion standard cubic feet of gas located 100 kilometres west of Onslow, with first production expected during 2013.

BHP Petroleum chief executive Michael Yeager said the development -- consisting of four offshore production wells, subsea gas pipeline, onshore treatment plant and sales gas pipeline -- will improve WA’s gas supply security in both the short and medium term.

Gas supplied to Australia's domestic market gets lower prices than liquefied natural gas exported internationally.

But Western Australian attracts higher margins than other parts of Australia because there are few operational gas projects to supply fuel to miners buoyed by sustained demand for their products from Asia.

The supply squeeze was made starkly clear in 2008 when an explosion at Apache's Varanus Island gas processing plant caused domestic gas prices to skyrocket.

Santos, which also counts Apache as a joint venture partner in the state, has several offshore developments in the pipeline.

Last month, it said it will develop the Halyard and Spar natural gas fields with Apache, saying they are likely to meet around 10 per cent of Western Australia's gas needs from 2012.

Santos and Apache are currently constructing the Reindeer project, slated to provide gas to an iron ore operation in the second half of 2011.

Some large LNG projects on the coast such as the Chevron-operated Gorgon project, due to come on line from 2014, will also market gas to the domestic market.

(Source:theAustralian)