This follows the Australian Competition and Consumer Commission’s (ACCC) interim approval of joint marketing arrangements, which were more restrictive than expected.
The Mereenie project, operated by Central Petroleum, is in the southwest corner of the Northern Territory, and oil and condensate are produced from the field.
$12 million upgrade of processing plant
The joint-venture has agreed to the terms of the approval and signed authorities for expenditure related to drilling.
There will also be an immediate $12 million upgrade of the processing plant.
Given the delay in the commencement of drilling, the decision was taken to drill only one well and utilise funds for a second well for a larger than envisaged plant upgrade.
Richard Cottee, managing director, said: “Ideally the plant upgrade decision should have been made in February to ensure the work was completed by the time the Northern Gas Pipeline (NGP) became operational.”
Plant to have 58 terajoules per day capacity
The upgrade is aimed at increasing capacity from 25 terajoules per day to 63 terajoules per day.
It is planned that 58 terajoules per day will be sold as gas without adversely affecting crude oil production.
As the operator, Central Petroleum’s aim is to ensure the Mereenie processing plant has the capacity to sell 58 terajoules per day of sales gas by the end of 2018.
Clarification provided today should provide investors with increased certainty regarding the project, as well as an indication of costs and related capacity increases.