BHP not turning its back on conventional gas fields in offshore WA

Despite plans to expand its new gas plant, the company has rejected suggestions that it will neglect conventional gas fields.

Ryan Newman (TMFNewmy)

Ryan Newman (CFA) is the Director of Research of The Motley Fool Australia, and Portfolio Manager for the Pro and North Star services. Ryan’s interest in investing and stocks began at a young. His journey with The Motley Fool started first as a member but when the company first came to Australia he joined the team as one of our writers. Recognising his investing talent and passion, it wasn’t long before he was approached to join the investing team as a research analyst on Pro. Ryan is passionate about learning and continual development. He earned his Chartered Financial Analyst (CFA) designation in 2022, and has completed his Bachelor of Accounting and his Graduate Certificate of Corporate Finance. Ryan loves spending time with his young family as well as non-fiction reading, catching the latest movies and following his sports team, the St Kilda Saints (AFL).

Published September 23, 2013 7:15 am AEST

Mining heavyweight BHP Billiton (ASX: BHP) has assured the public that it will not neglect its offshore conventional gas fields in Western Australia in favour of investing further capital into the US shale gas boom, stating that WA is still critical for offshore gas growth.

The miner last week opened its new Macedon plant in Onslow, Western Australia, which is set to produce around 200 terrajoules per day, and expansion plans are in the works that could see the project's production capacity double.

Projects such as Macedon – which is a joint venture between BHP (71.4%) and Apache (28.6%) and unofficially began production last month – are "targeted at the domestic market and are the key to long-term gas security in WA", according to BHP's head of conventional gas assets, Steve Pastor.

The comments come amidst fear within the state that it could face a gas shortage by 2020. Pastor stated that WA is still its most important market for conventional gas growth plans, but issued a warning that in order to continue attracting investment, the state would need to remain competitive.

Whilst Pastor stated that all of the gas produced at Macedon would be fed into the state's general domestic network, it is also understood that much of BHP's portion will be sold to its own mining operations.

Meanwhile, the company will separate its capital-intensive US shale business from its conventional oil and gas interests as part of the company's CEO Andrew Mackenzie's productivity agenda.

Foolish takeaway

Although the US shale boom offers enormous potential, BHP is maintaining its core operations which diversify the risks for the company going forward.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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