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    Beach faces construction delays at Waitsia gas plant in WA


The company said it no longer considers it prudent to maintain its previously targeted schedule and capital estimates.

by: Shardul Sharma

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Natural Gas & LNG News, Asia/Oceania, Liquefied Natural Gas (LNG), Corporate, News By Country, Australia

Beach faces construction delays at Waitsia gas plant in WA

Sydney-listed Beach Energy on May 18 announced that the construction progress at the Waitsia gas plant in Western Australia has experienced delays due to the tight labour market in the region. The company had partnered with Italy's Webuild in February of this year to complete the Waitsia Stage 2 project, pending the finalisation of the Clough administration.

The labour shortage in Western Australia has created challenges for Beach, leading to a range of uncertainties regarding the project's timeline and capital estimates. As a result, the company has made the decision to revise its previously targeted schedule and capital projections.

"Beach no longer considers it prudent or appropriate to maintain its previously targeted schedule and capital estimates," the company said.

Beach, along with the Waitsia joint venture operator and Webuild, is engaged in an ongoing review of the project's costs and schedule. Their aim is to identify and implement strategies to mitigate the impacts of the delays and reduce the overall uncertainty surrounding the project. The company has committed to providing an update once this comprehensive review is concluded.

The Waitsia gas field is one of the largest onshore gas fields ever found in Australia. In 2020, Beach Energy and Japan's Mitsui made a final investment decision to proceed with the project. 

Beach had previously secured an important agreement with BP in September last year. This agreement solidified BP's commitment to purchase all 3.75mn mt/year of LNG volumes expected from the Waitsia Stage 2 project. 

The company had earlier this year slashed its Perth basin estimated gas reserves by 11% following the Waitsia Stage 2 drilling campaign. The company said that despite the downgrade its ability to supply the LNG volumes to BP and meet domestic gas commitment remains unchanged. 

In February, Beach revised its total capital expenditure estimate to A$400mn ($267mn) – A$450mn compared with A$350 – A$400mn originally. The Waitsia joint venture and Webuild were targeting the first gas from the Waitsia gas plant by the end of 2023.