Plans for a newbuild semisubmersible production facility off North Western Australia look to be back on the development path after operator Hess confirmed a deal has been done to process the gas via existing infrastructure owned by the North West Shelf project partners.

The US operator has been sitting on its plans for the development of its deepwater Equus fields for several years, largely while it figured out the best deal for getting its gas converted to LNG onshore for the Asia Pacific market. That deal now appears to have been done, with Hess confirming that its Australian subsidiary Hess Exploration Australia Pty Ltd., has signed a non-binding Letter of Intent (LoI) with the NWS owners.

However a final sanction decision is not expected to be taken until 2017, says Hess. The company wants to develop its string of sizeable gas discoveries in two deepwater permits and, subject to execution of binding agreements, toll the production through existing NWS processing and liquefaction facilities at Karratha. Hess would then market the LNG to customers in Asia Pacific.

NWS is a long-established joint venture owned equally between BHP Billiton Petroleum, BP, Chevron, Japan Australia LNG (MIMI), Shell and operator Woodside Energy. Hess says that it and the NWS project partners plan to conduct joint engineering studies and further progress commercial discussions.

DI recalls that WorleyParsons has previously carried out engineering work for the NWS project under a brownfield engineering, procurement and construction management services frame contract, while also in 2012 WorleyParsons-INTECSEA carried out the pre-FEED and FEED on Hess’ Equus development. As a result it will be a major surprise if any company other than this carried out ongoing engineering work resulting from this latest agreement.

The Equus study from early 2012 saw WorleyParsons-INTECSEA carry out the pre-FEED and FEED, covering the semisub gas production platform (hull and topsides), the subsea gathering system and SURF, mooring system, export pipeline and the onshore liquefaction in a third party LNG plant. WorleyParsons, mainly focusing on the topsides, also won the project management and engineering services contract.

NWS operator Woodside said a tie-in and operational integration FEED studies agreement was expected to be executed for the project “early in 2015”. Where the gas is to be tied back subsea into the NWS infrastructure will be a significant part of the ongoing studies.

In the announcement about the intended gas deal with the NWS project, Hess’ President and Chief Operating Officer, Greg Hill, said: “This arrangement would bring together Hess’ strong deepwater drilling and development capabilities with NWS’ proven track record in natural gas processing and liquefaction. The combination provides an attractive option for Hess to commercialise its important Equus natural gas resource in a manner that delivers secure, reliable energy supplies into Asia Pacific LNG markets and creates value for our shareholders.”

Hess holds a 100% stake in both the WA-390-P and WA-474-P permits in the Northern Carnarvon Basin containing the Equus fields, which feature 14 confirmed discoveries, all drilled in one multi-year campaign by the Transocean semisub rig Jack Bates. These permits cover more than 1 million acres and are located approximately 115 miles off the northwest coast in water depths of approximately 1,097 m (3,600 ft).

Hess was awarded WA-390-P in 2007 and has drilled 16 exploration wells, resulting in the 14 gas finds. Fields include Mentorc, Bravo, Nimblefoot, Chester, Rimfire, Glenloth, Briseais and Glencoe. In 2012 it was awarded the adjacent WA-474-P permit.

Equus is one of the deepest water developments off Australia, with the fields lying in water depths ranging from 975-1,189 m (3,200-3,900 ft). Hess has previously estimated the proven recoverable gas reserves could be up to 3 Tcf, but that figure is understood to be considerably conservative. Capital expenditure has also previously been put at up to US $6 billion, although there is likely to be substantial further work done to reduce that figure in today’s cost-conscious and oil price-constrained environment.

However, with no planned sanction to be given until 2017, Hess has plenty of time to further refine and potentially downsize the scheme from its original scope. An FID on Equus was originally due back in 2013, with production planned by 2018. The original proposed development plan outlined a three-phase, 17-well drilling campaign, with six producing wells to be drilled in a first phase, five more over the next 10 years, with a further six by 2030. The semisub was planned to be 105 m (345ft) long and 60 m (195 ft) wide, with a hull weighing approximately 25,000 tonnes and topsides coming in at 15,000 tonnes. The export pipeline was planned to be 20-inches in diameter.

Woodside added in its latest comments that the LoI specified proposed terms, including tariff fees, to toll resources from both permits, and potentially other permits also, through the Karratha gas plant. Hess, it said, would “deliver gas” to the NWS Project’s offshore infrastructure for processing at Karratha on the Burrup Peninsula, and then market and deliver its own volumes.

Woodside’s senior vice president NWS, Niall Myles, said the LoI forms the basis for the negotiation of binding agreements in 2015, and was “an important step indicating the Karratha Gas Plant is ‘open for business’ – it provides an attractive option for third party gas owners to commercialise their resources in proximity to existing LNG infrastructure”.

The giant NWS project has of course been producing for three decades, via fields and infrastructure including North Rankin and Goodwyn. If Equus’ gas was to be piped north-east to North Rankin, for example, that would entail an impressive but certainly not impossible tieback length of well over 200 km – one of the longest in the world so far.

Hess would have had other potential LNG facility partners to talk to about Equus, with other companies with LNG trains in the area including Chevron with its Wheatstone LNG project 100 km to the east currently under construction, and Woodside with its own Pluto LNG project (producing since 2012) about 150 km northeast. Also nearby are Chevron’s giant Gorgon project due onstream next year some 75 km southeast of Equus, and ExxonMobil’s 8-10 Tcf Scarborough field in permit WA-1-R, lined up for potential development itself via an FLNG facility.