PERTH Oct. 31, 2007 (Dow Jones Newswire)
BHP Billiton (BHP.AU) said Wednesday that it expects a three-month ramp up from its new US$760 million Stybarrow oil field, due to start production in a matter of weeks.
"We expect to take three months from initial production to ramp up," a BHP spokeswoman told Dow Jones Newswires.
Last week BHP confirmed that Stybarrow, an equal joint venture with Australia's Woodside Petroleum Ltd. (WPL.AU), is due to start production this quarter, or three months earlier than previous forecasts. BHP operates Stybarrow.
BHP hasn't said how much oil Stybarrow will produce before Dec. 31, though a person familiar with the situation said the field could be in production as early as November.
With a forecast rate of up to 80,000 barrels a day, Stybarrow's first oil will mark the start of major growth spurt for BHP in Western Australia's North West Cape province. Oil was discovered in the region nearly a decade ago but is only now attracting billions of dollars of investment because of booming crude prices.
BHP is more bullish on Stybarrow than partner Woodside, which predicts a six-month ramp up to a plateau production of around 50,000 to 60,000 barrels of oil a day - around 25% less than BHP's forecast.
Woodside's caution may be due to its experience at the new A$1.5 billion Enfield development, where technical problems late last year crimped output at the forecast 70,000 barrels-a-day venture. Recent production at Enfield has averaged around 55,000 barrels a day.
BHP said that Stybarrow's peak production will last for roughly one year after startup, with a "steady decline after that," the spokeswoman said, adding that the field's forecast life is 10 years.
Approved for development in late 2005, Stybarrow is one of five new oil projects planned for the Cape.
Pyrenees, BHP's second development in the area, was approved in July at a cost of US$1.7 billion.
That venture, which includes U.S.-based Apache Corp., will be capable of producing around 96,000 barrels a day from the first half of 2010.
After Pyrenees, BHP's potential share of production in the Cape will be roughly 100,000 barrels a day.
This compares with the company's other key growth region, the Gulf of Mexico in the U.S., where BHP's production is due to move from around 12,000 barrels of oil equivalent a day to 100,000 barrels a day next year.
BHP says the new U.S. and Australian oil projects will launch a "step change" in production after its output in the fiscal year ending June 30, 2007, held steady at 116 million barrels of oil equivalent.
The Cape is also important for Perth-based Woodside, which kicked off the region's investment spurt last year with the start of it's A$1.5 billion Enfield venture.
That project, a joint venture with Japan's Mitsui, will be followed by the nearby Vincent development, due to start production in the third quarter of 2008 at a cost of US$720 million.
"Woodside is developing a significant oil production hub off North West Cape," said Steve Hall, Woodside's general manager of the greater Enfield area.
"This hub is particularly good business for Woodside, given current high oil prices, and will continue to provide cash flow to help fund Woodside's broader aspirations of becoming a global leader in LNG production and supply," Hall told Dow Jones Newswires.
Woodside plans to triple liquefied LNG production by the early years of next decade. In June the company approved it's A$12 billion Pluto LNG development.
The new Cape oil fields will help shore up Australia's petroleum output, under pressure in recent years because of rising costs, few major discoveries, and declines in traditional fields such as Bass Strait.
Last month the Australian Bureau of Agricultural and Resource Economics said the nation's crude oil production in the fiscal year ending June 30, 2008, is forecast to increase by 6% to 30.4 gigalitres, up from 28.8 gigalitres previously.
Increased production from new fields such as Vincent and Stybarrow will contribute to the increase, Abare said.
Copyright (c) 2007 Dow Jones & Company, Inc.
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