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

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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