Shell, Nexus and Osaka to speed up Crux development
Shell, Nexus Energy Ltd (Nexus) from Australia, and Osaka Gas Corp. Ltd (Osaka) have decided to merge their previous respective interests in Crux gas field into a newly created joint venture.
Crux belongs to the offshore block AC/L9 of non-associated gas and is located by 170 meters deep and 3,800 total meters deep in the Browse Basin off the coast of Western Australia.
From the appraisal wells and seismic studies, Crux is estimated to contain:
– 1.8 trillion cf of natural gas
– 66 million barrels of condensate
In addition Crux reservoir shows:
– Low content of CO² and impurities
– Probable reserves around neighboring Auriga and Caelum prospects
Since 2006, Shell, Nexus and Osaka had dedicated gas or liquids interests and operating roles in Crux.
Shell had 100% interests of the Crux gas and was to become the operator of this gas development whenever it should occur before 2021.
Nexus and Osaka share the working interest of the Crux condensate with:
– Nexus 85% is the operator
– Osaka 15%
This set up is simple and clear from the financial perspective but rises questions for the development with two operators having different roles in the same field.
Since Shell, Nexus and Osaka wanted to speed up the development of Crux, they agreed to adjust their legal structure and working interest to fit with the reality of an offshore exploration and production project.
Shell to take solely operatorship in Crux with a FLNG
In January Shell, Nexus and Osaka signed a Head of Agreement (HOA) to develop jointly Crux as an integrated gas and condensate project instead of two stand alone gas and condensate projects.
This Head of Agreement is now moving into a joint venture between the three partners to develop and produce Crux as an integrated gas and condensate asset with the following respective working interests:
– Shell 80%, becoming the solely operator of the integrated gas and condensate project
– Nexus 17%
– Osaka 3%
According to the terms of the joint venture, Nexus has the possibility to sell 2% of its interests on the next 12 months to its partners, thus reducing its interests to 15%.
This new set up gives more transparency to the respective interests of the partners and clarifies the operator role for the development and production phases.
It will also simplifies the review of the reserves after the appraisals of the Auriga prospect planned in 2014.
In addition Shell has the intention to develop Crux natural gas as a feedstock for LNG.
Monetized as LNG the natural gas lying in Crux reservoir get easier for commercialization in Asia.
Actually Shell is planning to tie-in the Crux natural gas feedstock into its Prelude Floating LNG (FLNG) actually under construction by Technip and Samsung.
But Shell, Nexus and Osaka are also considering the option to use a standalone FLNG for the Crux natural gas field depending on the confirmation of Crux recoverable reserves and neighboring prospects to provide additional resources.
