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Bloomberg: Woodside Says Neptune Oil Delay to Cut 2008 Output (Update2)

By Angela Macdonald-Smith

March 25 (Bloomberg) — Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, said a delay in the start-up of BHP Billiton Ltd.’s $1.1 billion Neptune oil and gas project in the U.S. will reduce forecast production.

Output in 2008 will be reduced by an estimated 150,000 barrels of oil equivalent a month starting April 1 until the “issue” with the platform has been resolved, Perth-based Woodside, which owns 20 percent of the project, said today in a statement. The cut is equivalent to about 5,000 barrels a day.

BHP, the project operator, said yesterday it will revise the start-up schedule for the Gulf of Mexico project after finding “structural anomalies” in the hull of the platform that prompted the evacuation of all workers. The start-up, originally due by the end of 2007, is already running late and the budget was last year revised up from $850 million.

“The operator is undertaking structural inspection and analysis before advising of any required action,” Woodside said in the statement, sent to the Australian Stock Exchange. Woodside can’t estimate when the project may start up, said Roger Martin, a spokesman.

Woodside, 34 percent owned by Royal Dutch Shell Plc, fell 91 cents, or 1.8 percent, to A$50.35 in Sydney trading, lagging behind an advance of 0.8 percent in the exchange’s benchmark energy index.

Output Forecast

Woodside last month forecast full-year production will rise as much as 22 percent to between 80 million and 86 million barrels of oil equivalent. That’s about 219,000 to 236,000 barrels a day, meaning Neptune accounts for as much as 2.3 percent of forecast output.

Melbourne-based BHP and Marathon Oil Corp. each owns 30 percent of Neptune, while Repsol YPF SA owns 15 percent.

Crews started returning to the platform yesterday after BHP confirmed it was safe.

“Further inspection and assessment is under way to determine the appropriate course of action to mitigate the anomaly,” BHP said in a statement distributed on Business Wire.

Neptune, 120 miles (193 kilometers) off the Louisiana coast, is one of five oil and gas projects set to boost BHP’s output in the 12 months ending June 30. The Atlantis South and Genghis Khan fields in the U.S. and the Stybarrow field in Australia have already begun production.

The project, BHP’s first operational deepwater venture in the U.S. Gulf, will have daily production capacity of 50,000 barrels of oil and 50 million cubic feet of gas.

Neptune is a single-column platform in 4,250 feet (1,300 meters) of water on Green Canyon Block 613. The 5,900-ton hull was built by Signal International LLC at Port Arthur, Texas, and was the first of its kind for the fabrication yard, according to Upstream oil and gas newsletter.

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

Last Updated: March 25, 2008 01:45 EDT

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