Exxon, BHP Billiton Invest $1.1B for Turrum O&G Development

BHP Billiton and ExxonMobil Australia subsidiary, Esso Australia Resources Pty Ltd., have approved an expenditure of US$1.1 billion for the full field development of the Turrum oil and gas field, a significant hydrocarbon resource in the Gippsland Basin, offshore Victoria. The Turrum development will produce new supplies of natural gas and liquids through new and existing Bass Strait facilities.

Turrum is part of the Gippsland Basin Joint Venture in which BHP Billiton and ExxonMobil subsidiary, Esso(Operator), each have a 50% interest.

The development follows the recent announcement of $1 billion in funding to develop natural gas from the Kipper field, also in the Bass Strait.

ExxonMobil Australia Chairman Mark Nolan said the decision by the Turrum Project participants to approve development of the approximately $1.1 billion project is a key step toward meeting eastern Australia's long-term energy needs.

"The Turrum field holds approximately one trillion cubic feet of gas and 110 million barrels of oil and gas liquids -- that's enough energy to power a city of a million people for 20 years," said Nolan.

"The further development of our natural gas resources has significant environmental benefits. Natural gas produces up to 70% fewer emissions than coal in power generation, and uses up to 80% less water. “The Turrum Project will also have a significant impact on the Gippsland economy, with up to 100 additional jobs created in the construction phase. This is in addition to the 1,000 people currently employed through the ExxonMobil Group of Companies in Gippsland.

"Bass Strait has a strong long term future. We estimate that there is still around seven trillion cubic feet of gas still to be produced, and we’re confident that means we have over 30 years of gas remaining," Nolan said.

Nolan also acknowledged the continued support of the Commonwealth, Victorian and local governments

BHP Billiton Petroleum Chief Executive, J. Michael Yeager, said the Turrum project would build on BHP Billiton’s long-life producing assets in Bass Strait and follows the recent approval of the Kipper Gas Field Development in December 2007.

"BHP Billiton’s investment to develop the Turrum field is yet another step in delivering significant value to our shareholders, while also adding new supplies of oil and natural gas to meet the future energy needs of South Eastern Australia. Our Bass Strait resource base continues to have significant opportunities to develop, even after producing for nearly four decades."

The development consists of a new platform, Marlin B, linked by a bridge to the existing Marlin A platform. Marlin A will require upgrading to accommodate the bridge and new equipment. Construction is anticipated to begin in 2009. Initially gas will be injected back into the reservoir after capturing oil and gas liquids. The platform will process additional oil production and gas cycling which will be piped back to existing processing facilities at Longford. The field is expected to start up in 2011.

Gas sales are expected to commence in 2015 at approximately 200 million cubic feet per day, on a 100% basis. All products will be processed by the Gippsland Basin Joint Venture facilities.

The Turrum field is located 42 kilometers from shore in about 60 meters of water. Full field development is expected to recover approximately 1 trillion cubic feet of natural gas and 110 million barrels of oil and gas liquids, on a 100% basis.