Melbourne - Esso Australia Resources Pty Ltd and BHP Billiton Limited today made their first deliveries of Gippsland gas to Duke Energy International for supply to Tasmania.

Tasmania will now join Victoria and New South Wales in receiving the benefits of Gippsland gas.

"The first flow of Gippsland gas marks a significant new era for Tasmania," said Robert Olsen, Chairman, Esso Australia.

"For the first time, Tasmanian businesses and consumers will have direct access to a long-term competitive gas supply.  Experience tells us that natural gas brings economic growth. Existing industries will become more competitive and new industries will be attracted to Tasmania," said Mr Olsen.

Esso/BHP Billiton won the contract to supply Duke Energy for up to 15 years after demonstrating access to long-term reserves and willingness and ability to supply competitively priced gas over a long period.  

"Esso/BHP Billiton's operations in Bass Strait have been supplying gas to Victoria for more than 30 years. The joint venture has recently completed the largest 3D seismic survey ever undertaken in Bass Strait and expects to expand its gas reserves over the next few years as it drills targets identified by the seismic survey" said Mr Olsen.

Esso/BHPB has increased the capacity of the Longford gas production facility to supply the Duke Tasmanian contract.

Media Contact: Anna Schulze  03 9270 3182 or 0408 532 589

BACKGROUND

Bass Strait Oil and Gas (Gippsland Basin)

Gippsland supplies 20% of Australia's crude oil requirements and nearly all of Victoria's natural gas requirements.  It also supplies approximately 20% of the New South Wales market and will now supply Tasmania for the first time in that State's history.

More than 3.5 billion barrels of oil and 5 TCF (trillion cubic feet) of gas have been produced from Bass Strait since operations began in 1969.

The Gippsland operation is a 50:50 joint venture with BHP Billiton and in today's dollars represents an investment of around $16 billion.  Capital expenditure has been exceeding $400 million annually for the past 5 years making the Bass Strait oil and gas project one of Australia's largest ongoing development projects.

Current gas resources are in excess of 5 TCF.  This represents around 25 years of Victorian average demand. Remaining exploration potential in the Gippsland basin has the possibility of adding substantially to the reserves already discovered in this world class basin.

Longford Gas Processing Facility

Esso/BHP Billiton’s Longford site consists of three gas processing plants and a crude oil stabilisation plant.  Hydrocarbons, in both liquid and gaseous form, are extracted from the Bass Strait oil and gas reservoirs using offshore production platforms and transported by a pipeline network to Longford.  At Longford the hydrocarbons are converted to natural gas (mainly methane and some ethane), raw Liquid Petroleum Gas (LPG) and stabilised crude oil and condensate. Longford can produce over 1000 million ft3/day of gas.

Average Daily Production

Natural Gas Over 570 million ft3/day - over 19 million M3/day

Raw LPG Over 40,000 barrels/day - over 6 million litres/day

Stabilised Crude Oil Around 160,000 barrels/day - over 25 million litres/day