Sydney (Platts)--4Mar2011/831 am EST/1331 GMT

Australia features prominently in US independent Apache's growth pipeline over the next few years, with the region hosting six new projects scheduled to start up or reach a final investment decision over the period, according to the company's 2010 annual report, lodged with the US Securities and Exchange Commission this week.

Apache's current capital budget for 2011 includes exploration and development spending of about $7.5 billion, of which Australia will account for around $1.2 billion.

Apache's Australian assets, located off the country's northwest coast, produced a record 79,200 b/d of oil equivalent in 2010 and accounted for 12% of the company's total output. The result was driven by the Apache-operated Van Gogh oil field and BHP Billiton-operated Pyrenees oil field, both of which started up in early 2010, which together added 42,200 b/d to the company's net oil production for the year.

The company's other major producing asset in Australia is the Varanus Island processing hub, where it is operator. The facility produces around 8,000 b/d of oil and 375 terajoules/day (about 360,000 Mcf/d) of gas, and accounts for more than a third of the estimated 1 Bcf/d of gas consumed in the state of Western Australia.

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In 2011, Apache expects to complete the development of its 55%-held Reindeer offshore gas discovery and begin producing from the Devil Creek onshore gas plant. Devil Creek will be Western Australia's third domestic natural gas processing hub and is designed to produce 200,000 Mcf/d.

First production is also expected this year from the Halyard-1 discovery well, which is a subsea completion tied back to the existing gas facilities on Varanus Island, Apache said. In 2012, the Spar-2 gas discovery is forecast to start producing through an extension of the Halyard subsea infrastructure that will also allow for the tie-in of future wells. Apache owns 55% of Halyard and Spar.

In 2013, first production is scheduled from four gas wells completed in 2010 at the BHP Billliton-operated Macedon gas field, where Apache has a 28% non-operating interest. Macedon gas will be delivered via a 60 mile (100 km) pipeline to a 200,000 Mcf/d gas plant to be built at Ashburton North in Western Australia.

A development of Apache's Coniston oil field, just to the north of Van Gogh, was sanctioned in 2010 and the project is also expected to start pumping crude in 2013. Current plans call for the field to be produced from subsea completions tied back to the Van Gogh floating production, storage and offloading vessel Ningaloo Vision, the company said.

Looking further ahead, first production from the Balnaves oil field is scheduled for 2014, should the project proceed past a final investment decision, slated for the second half of 2011. Balnaves is an oil accumulation in the Brunello gas field and is expected to produce from three development wells through an FPSO.

In 2016, Apache is expecting to begin production from its operated Julimar and Brunello field gas discoveries through the Chevron-led Wheatstone LNG hub, in which the company is a foundation partner with an interest of 13%. Apache's projected net sales from the fields are 160,000 Mcf/d of gas and 3,250 b/d of liquids, with a projected 15-year production plateau when the project is fully operational.

The first phase of the Wheatstone project consists of two LNG processing trains with a total capacity of about 8.6 million mt/year to be built at Ashburton North. Chevron is currently conducting front-end engineering and design work for the project, aiming for FID in 2011 and first LNG in 2016.

Apache's production of oil, natural gas and natural gas liquids averaged a record 658,000 boe/d in 2010, up 13% compared with 2009. Production in the fourth quarter of last year averaged 729,000 boe/d, up 24% from 590,000 boe/d in the corresponding prior period.

"Based on the current capital spending budget and the acquisitions completed during 2010, Apache expects to increase overall production in 2011 between 13% and 17% from full-year 2010 production levels," the company said. "These projections exclude the impact from any potential acquisitions or divestitures."

Apache said it was currently planning to divest properties worth about $1 billion, in order to optimize its existing portfolio. The divestiture package is likely to include legacy conventional properties in Canada.

In 2010 Apache completed more than $11 billion of acquisitions after sitting on the sidelines from 2007 to 2009 when it believed the market was overheated. "We generally do not budget for acquisitions because they are specific, discrete events whose occurrence and timing is unpredictable," the company said.

--Christine Forster, christine_forster@platts.com