Woodside and BHP Billiton have dominated Australian production for many years, each with about double the output of their nearest competitors.
But these giants of the local market have no LNG capacity under construction and will be watching from the sidelines as seven new Australian projects come on stream over the next three years.
The new order will begin to take shape when the first cargoes ship from Queensland Curtis LNG in about 14 weeks. Australia Pacific LNG and Gorgon are next in the queue with mid-2015 start dates for their first trains, and second trains only six months later.
Santos’ GLNG is officially due sometime in 2015, although company guidance for FY15 production suggests a mid-year start.
According to estimates by Energy News, today’s largest Australian producer, Woodside, will be overtaken by Chevron and Shell. BHP Billiton will rank fifth, with Inpex climbing to fourth.
The accompanying table spells out the changes. Energy News calculated its estimates by starting with EnergyQuest figures for actual production in the year to 30 June 2014.
CEO Dr Graeme Bethune supplied these base numbers, but the projections are our own back-of-the-envelope figures.
They are based on a couple of crude assumptions, namely that 2014 production stays steady and that all LNG projects now under construction run at nameplate capacity and sell everything they can produce.
The projections are also something of a hybrid. We have added actual output in 2014 to new LNG capacity online at June 30, 2015, and June 30, 2017.
That said, the number crunching does give some meaningful insights to the shake up in the Australian petroleum industry that is about to begin.
In the new order, Chevron is the giant of the local industry with annual production of an estimated 167 million barrels of oil equivalent (mmboe) from mid-2017, or almost as much as Woodside and BHP Billiton combined.
Chevron currently ranks fourth with 38mmboe thanks to its stake in the North West Shelf project. The US major’s spectacular growth reflects its hefty equity positions in Gorgon (50%) and Wheatstone (64%), which are driving half of all Chevron’s growth worldwide over the next five years.
Shell is also set for remarkable growth, up from 37mmboe (also thanks to the North West Shelf) to an estimated 104mmboe, and will rank second behind Chevron only.
Shell’s growth comes in largely equal share from its 25% stake in Gorgon and its 67% interest in Prelude.
While the pioneering floating LNG project has only a fraction of Gorgon’s capacity, Shell has a much higher equity position at Prelude, which will also be a source of condensate and LPG.
Woodside will sit in third position in 2017, assuming no change in its 2014 output of 95mmboe. The risk here would seem to be on the downside because of the unstoppable force of natural field decline and the fact that Browse LNG, Woodside’s most advanced new LNG project, is yet to be sanctioned.
The company’s best hope for a production boost in the next three years, barring an acquisition, might be the Outer Canning Basin. Woodside and Shell are currently drilling the first of eight wells in a bold program of wildcats, and will be hoping they can follow up Apache’s oil discovery at Phoenix South-1.
The biggest mover in the rankings will be Inpex, which is set to jump from only 3mmboe in 2014 to an estimated 91mmboe by 2017. This reflects a large equity position in the liquids-rich Ichthys project, as well as a 17.5% stake in Prelude.
BHP Billiton will rank fifth, again assuming no change in its 2014 output of 85mmboe. BHP Billiton and ExxonMobil will receive a boost from the 2016 startup of the Kipper project, although this will be offset by continued decline elsewhere in Bass Strait.
BHP Billiton will also be affected by ongoing field decline at its oil projects on the North West Cape.
ExxonMobil and BG rank at sixth and seventh position respectively in the Energy News estimates for mid-2017, with BG moving rapidly up the list thanks to its 50% stake in train 1 at QCLNG and 97.5% stake in train 2.
Santos comes in at eighth position, rising from 2014 actual output of 39mmboe to a production capacity of 61mmboe by mid-2017. Santos is somewhat disadvantaged in that the table reflects Australian projects only, and therefore excludes its stake in PNG LNG and new oil projects in South East Asia.
The Adelaide-based company is also working hard to boost has production from the Cooper Basin. And who knows, maybe Cooper Basin shale gas will be flowing by 2017, which would provide a significant boost to Santos and other unconventional leaders in the Cooper Basin such as Beach Energy.
The sleeper in the rankings could be BP. If it discovers billion-barrel oil fields in the Great Australian Bight in 2016, the top producer rankings would be turned on its head again in the next few years.
