Regional LNG: BHP may develop Scarborough field for U.S. LNG supply: Report

BHP Billiton, Australia's biggest oil and gas producer, said it's considering developing a gas field off Western Australia to supply liquefied natural gas to the U.S., which may involve spending as much as $2 billion, Bloomberg reported.

The Scarborough field, in which Exxon Mobil Corp. also has a stake, could be developed to supply LNG to BHP Billiton's proposed Cabrillo Port import terminal off the Californian coast, said Neil Croker, vice president of gas commercialization at BHP Billiton.

Demand for gas in the U.S. is forecast to increase by 50 percent in the next 20 years, outpacing domestic production and driving companies to seek LNG imports. BHP Billiton said in August the proposed terminal off southern California could supply as much as 15 percent of the state's gas demand by 2008. The company is studying options for gas supply to the proposed plant.

``One option is Scarborough, which we're looking at quite seriously,'' Croker said at the Australia-Asia LNG Review Conference in Perth. ``It's almost a perfect match for the Californian gas specifications.''

Australia's LNG ventures are competing against projects in Indonesia, Malaysia, Russia and elsewhere to supply customers on the U.S. West coast. The U.S. could become Australia's largest export market for LNG, buying more than A$50 billion ($38.6 billion) over 30 years from 2010, Australian Resources Minister Ian Macfarlane said last month.

The Scarborough field, located on the Exmouth Plateau in water about 900 meters deep, may contain about 8 trillion cubic feet of gas, according to BHP Billiton's estimates, Croker said. The gas contains about 95 percent methane and has very low carbon dioxide, which is highly suited to Californian specifications, he said.

The field lies mostly in a permit operated by Exxon Mobil and owned equally by Exxon Mobil and BHP Billiton. Some of the field crosses into an adjacent permit owned wholly by BHP. It lies west of Exxon Mobil's Jansz field and of ChevronTexaco's Gorgon field.

BHP Billiton would prefer to supply gas from a field in which it has a stake, Croker said. An alternative way of developing Scarborough aside from a standalone LNG project would be to supply gas from the field to the North West Shelf plant, he said.

By 2010, the U.S. will need to be importing 2.2 trillion cubic feet of gas, up from 0.2 trillion at present, U.S. Energy Secretary Spencer Abraham said last month.(*)