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Bloomberg: Exxon, BHP Plan to Study Potential for Deeper Gas in Australia

By Angela Macdonald-Smith

Aug. 12 (Bloomberg) — Exxon Mobil Corp., the world’s biggest publicly traded oil company, plans to study the potential for natural gas discoveries below existing fields off southeast Australia after adding to resources there in the past two years.

A venture between Exxon and BHP Billiton Ltd. found 300 billion cubic feet of gas in the Gippsland Basin in 2006, in addition to 700 billion in 2005, and drilling is continuing, Exxon’s Esso Australia Resources Pty. unit said today in an e- mailed statement. Exxon hadn’t previously released the 2006 figures.

The Exxon/BHP venture estimates it has more than 20 years of oil production remaining in the Gippsland Basin and more than 30 years of gas production. Continued production from the fields may conflict with a proposal to use depleted fields for the storage of carbon waste from power generation and industrial processes.

“As an indication of our confidence in the substantial gas resource remaining in the basin, we are planning to begin a comprehensive formation evaluation study to look into the untested deeper basin gas potential under our existing fields,” Exxon Mobil Australia Chairman Mark Nolan said in the statement.

The company can’t provide further details on the study, said Rob Young, an Exxon spokesman in Melbourne. The reserves being added show that the fields may not be available for carbon disposal as early as some estimates of 2015, he said.

“We think Gippsland has strong potential for carbon capture and storage, but only when the fields are depleted,” Young said.

Existing fields in the Gippsland Basin could store more than 2 billion metric tons of carbon dioxide, Monash Energy, a coal- to-liquids venture between Anglo American Plc and Royal Dutch Shell Plc, says on its Web site.

One trillion cubic feet of gas is enough to power a city of one million people for 20 years.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at [email protected] .

Last Updated: August 12, 2007 00:28 EDT

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