SPP southern pacific petroleum nl

southern pacific pet

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    HOMEX - Brisbane

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    Southern Pacific Petroleum NL (SPP) advises that performance of the
    Stuart Stage 1 plant continues to improve as a result of work carried
    out in recent plant shutdowns to increase capacity and reliability.
    New technical and operational milestones have been achieved in the
    current production run that began on8 April 2003 and is continuing.

    1. BEST PRODUCTION RUN CONTINUES

    The Stage 1 plant has achieved its best production run to date. As of
    16 June, the current run has been underway since 8 April, a period of
    69 days, during which shale was processed for 58 days at an average
    rate of 175 tonnes per hour. This exceeds the best previous result of
    56 days on shale at an average rate of 158 tonnes per hour achieved
    in the run that ended in February 2003.

    During the current run, atotal of 11 days of ATP hot hold conditions
    were required to make repairs to the shale ash conveyor system and to
    clear minor blockages in one of the hydrotreater towers and two
    associated heat exchangers.

    More than 155,000 barrels of oil have been produced in the current
    run at an average rate of approximately 2,650 barrels of oil per
    stream day, both new records. These exceeded previous best results by
    11% and 6%, respectively.

    A new daily production record of 3,372 barrels of oil per day was
    also established on 13 June.

    The improved production performance in the current run has resulted
    from a combination of higher average shale processing rate, plant
    availability, ore grade and oil yield.

    The current run is scheduled to continue to the end of June.

    2. OIL YIELD INCREASES TO 87% OF DESIGN

    Oil yield performance in Stage 1 has continued to improve in the
    current run, achieving an average of 87% of the design level (ie
    80.2% of Modified Fischer Assay ore grade compared to design of 92%).
    This is an improvement of 7% from the previous run.

    Ore grade in the current run has averaged 187 litres per tonne at
    zero percent moisture (LTOM) which is 9% higher than the design grade
    of 172 LTOM.

    3. YEAR-TO-DATE OIL PRODUCTION 266,000 BARRELS OR 82% OF 2002 TOTAL

    As of 16 June, the Stage 1 plant had produced more than 266,000
    barrels of oil in 2003. This represents 82% of the total oil produced
    in 2002 and 44% of the current production target of 600,000 barrels
    for 2003.

    Production to date in the second quarter of 2003 totals 155,000
    barrels, which has already surpassed the previous best quarter of
    133,000 barrels.

    4. A$4.2 MILLION IN OIL PRODUCT SALES ACHIEVED IN MAY 2003

    Oil product sales continue to benefit from current high oil prices
    and have yielded net revenues of A$4.2 million in May 2003, including
    the excise tax rebate on naphtha sales. This increases year-to-date
    sales revenues to A$14.7 million.

    May shipments included 43,491 barrels of ultra-low sulphur naphtha
    (ULSN) to Mobil Oil Australia on 16 May and 29,220 barrels of light
    fuel oil (LFO) to the Singapore fuel oil market on 2 May.

    A cargo of 48,960 barrels of LFO was shipped to Singapore on 10 June.
    Revenues from this sale will be booked in June. Another cargo of ULSN
    is scheduled for shipment in late June to Mobil Oil Australia.

    5. STAGE 1 CAPITAL IMPROVEMENT PROGRAM BEING INITIATED

    Nowthat new funding of A$34 million has been received from SCP Koala
    Partners, execution planning and detailed engineering is ramping up
    on the capital improvement program for the Stage 1 plant. The program
    will target to increase annual oil production volumes up to 1.2-1.4
    million barrels in 2005 through measures to increase both stream day
    capacity and plant availability.

    At these higher production levels, and with the benefit of the excise
    tax rebate program through 2005, the Stage 1 plant is projected to
    yield positive operating cash flow. This provides the opportunity to
    extend the already extensive technical, operational and environmental
    experience base on Stage 1 and to firm up key design parameters for
    the proposed Stage 2 commercial plant.

    J D McFarland
    MANAGING DIRECTOR
 
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