WA Domestic Gas Sale Options
OVERVIEW
A non-operating partner in a major LNG project sought an independent view of short, and medium term equity domestic gas management options in Western Australia.
CHALLENGE
The non-operating partner's volume of equity gas was small and dependent on the day to day production of the domestic gas plant, whose reliability was not well understood. The client wanted to fully understand costs associated with different gas management options and the degree of anticipated labour intensity,
APPROACH
Equity Lifting Solutions sought to understand and communicate the costs, labour intensity and risks associated with each gas management option. Specifically, this entailed:
Researching aggregation and trading options available in the WA market.
Determining detailed information on each option via direct engagement with vendors.
Producing an independent recommendation on the short and medium term actions.
DELIVERABLES
Equity Lifting Solutions delivered a report outlining the gas management options available to the client including spot sales, short term gas sales contract, marketer to marketer trades and gas storage.
The NPV for each option was modelled using three price sets representing the range of gas prices widely anticipated by the industry.
Sensitivity analysis was performed for each option to understand the impact of price changes to overall NPV.
Options were plotted on a matrix enabling tradeoffs between NPV and price certainty to be easily evaluated.
OUTCOMES
Management understood the range of options to manage its short-term Domgas obligations.
Management understood all costs associated with each sale option.
Management understood level of labour intensity associated with each option.
Management understood revenue and price-certainty risks associated with each option.
