Apache's Van Gogh Oil Field Resumes Production

PERTH (Dow Jones Newswires), March 8, 2011

Apache said Wednesday its Van Gogh project, one of Western Australia's biggest oil fields, has restarted production after nearly four months of repair work.

"It started on Sunday afternoon, so we've been producing for over 48 hours now and it looks good," said Tom Maher, Apache's Australian managing director.

"Production is still stabilizing, but today's report had us just about back to where we need to be," Maher told reporters after a function in Perth.

Van Gogh, offshore from Exmouth, was closed in October for repairs to the Ningaloo Vision floating production, storage and offloading vessel. Originally targeted for January, the restart was delayed because of repeated cyclone-related disruptions in Australia's north west.

Apache aims to achieve a steady rate of production from Van Gogh of 35,000 to 40,000 barrels of oil a day, Maher said.

Oil traders in Singapore said they were watching for possible spot cargo offers of Van Gogh, but otherwise the return of production had already been factored into regional crude oil trading as the resumption had been expected.

Apache operates the field with a 52.5% interest, with Japan's Inpex holding the remainder.

Turning to other Australian assets, Maher said that Apache aims to approve development of its Coniston oil project this month. He didn't provide any further details on the scope and cost of Coniston, which is a joint venture with Inpex and Australia's Woodside.

However, Maher confirmed that the field's oil would be processed via the Van Gogh FPSO.

Apache's interest in Coniston dates from March 2009 when it teamed up with Inpex to acquire BHP Billiton's interest in two blocks north of Van Gogh, including Coniston, which was discovered in 2000.

Outside of oil, Apache expects the first gas from its new Devil Creek onshore processing plant Oct. 31, Maher said.

Devil Creek, which will process gas from the offshore Reindeer field for the Western Australian domestic market, is a joint venture between Apache and Australia's Santos. Apache and Santos have entered into a seven-year gas sales deal with Rio Tinto starting in 2012.

Separately, Maher said that Apache's Egyptian oil and gas operations are "still going well", despite the civil unrest in the country.

"Production looks like it hasn't been affected from what I can see," said Maher, who was Apache's exploration manager in Egypt before he took on the Australian role in early 2010.

Earlier this month Apache said it had redeployed all non-essential expatriate personnel and all expatriate dependents from Egypt. Apache's production in remote locations in the Western Desert has continued uninterrupted, the company said.

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