Join our daily newsletter At The Bell to receive exclusive market insights
Beach Energy (ASX:BPT ) has announced cost blowouts of $150 to $200 million net to Beach at Waitsia Stage 2, where “quality issues” have been red flagged during the pre-commissioning phase at the Perth Basin gas plant.
In a revised note of schedule and cost estimates, the oil and gas explorer and producer said having rebuilt compressors and replacing valves and flanges, additional quality issues had emerged on site.
Mitsui E&P Australia is the operator of Waitsia Stage2 which comprises the Beharra Springs Gas Processing Facility, a 25TJ per day plant which aims to transport gas to Western Australian customers via the Parmelia pipeline.
The Waitsia Joint Venture said it was currently evaluating costs and working through an updated schedule. The project had initially been flagged for completion in mid-2024 to be followed by a three-month period of ramping up to full production. Beach said unavoidable processing costs would be incurred during FY25 and it would continue to assess its options to partially mitigate unutilised capacity enroute to a rescheduled first gas target now set for early 2025.
Managing Director and CEO Brett Woods said: “It is extremely disappointing to be continually encountering quality and execution issues given the late stage of the project. Having to redirect existing onsite labour to remedial works is slowing the progress of pre-commissioning activities, resulting in further delays and cost increases.
“Beach is committed to driving the construction of the Waitsia Gas Plant to its conclusion and will work closely with the operator and contractor to deliver this strategically important project.”
Beach has a special licence to direct some of the gas it produces to the lucrative LNG export market. The company said it would continue to facilitate commercial arrangements to enable LNG cargo liftings prior to completion of the plant. Beach expects to lift one more LNG cargo in FY24 – following on from the lift previously executed in 2023.
To facilitate these cargoes, the JV is exploring time swap opportunities with Western Australia gas market participants who have excess gas prior to the completion of the gas plant.
Beach was down 1.3 per cent at $1.90 in early trading.
