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THE WALL STREET JOURNAL: ConocoPhillips to Boost Gas Capacity in Australia

June 20, 2006; Page B9

DARWIN, Australia — ConocoPhillips may spend as much as US$10 billion to nearly triple capacity at its Darwin liquefied natural gas plant, a senior official said.

The recently-finished Wickham Point plant, which gets gas from the Bayu-Undan field in the Timor Sea, can produce 3.5 million tons of liquefied natural gas a year but has environmental approval to increase that to 10 million tons if it can find the gas.

ConocoPhillips is looking to either the Greater Sunrise fields, in which it has a 30% share, or the newly discovered Caldita field, near Bayu-Undan, said Laura Sugg, president of the U.S. oil company’s Australian unit.

“The earliest prospect could be Sunrise,” which has already been shown to be economically viable, Ms. Sugg said. Caldita is still in the appraisal stage.

Ms. Sugg said ConocoPhillips hopes to have a second processing unit, or train, producing five million to 6.5 million tons a year of liquefied natural gas by 2012 or 2013.

Sunrise’s lead operator, Woodside Petroleum Ltd., has said it won’t go forward on Sunrise until a profit-sharing agreement is ratified by the Australian and East Timorese governments and a fiscal stability agreement with East Timor is signed by the partners.

Another possible sticking point will be the location of a liquefied natural gas facility. Woodside has said it prefers Darwin to East Timor, which says it will do all it can to have a local plant.

Greater Sunrise includes the Sunrise and Troubadour fields, which hold about eight trillion cubic feet of gas and about 300 million barrels of oil that together may be valued at as much as US$40 billion.

Ms. Sugg wouldn’t give any indication of how testing at Caldita has gone, but she said it is still a possible source to fuel an expansion of the Darwin plant. “We would need somewhere north of three trillion cubic feet or four trillion cubic feet of gas” reserves to launch the project, she said.

Minority partner Santos has said initial tests at the Caldita field gave an “encouraging result,” and it would like to expand the Darwin LNG plant using Caldita gas if an appraisal well confirms the reserves.

Woodside operates and owns 33.4% of Sunrise, which is 150 kilometers south of East Timor. Its partners are ConocoPhillips, with 30%, Royal Dutch Shell PLC, with 26.6%, and Japan’s Osaka Gas Co., with 10%.

Write to Matt Chambers at [email protected]

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