Western Australia’s second biggest producer of gas for the domestic market, Apache Energy, will develop the Balnaves oil field offshore from Karratha for $US438 million ($A449.5 million).
First production is scheduled for 2014, with gross peak production of about 30,000 barrels of oil per day.
Gas from the field will be set aside to be processed later as part of the $US29 billion Chevron-led Wheatstone liquefied natural gas project.
Apache has already pledged to develop its Julimar and Brunello gas discoveries to feed into the Wheatstone project, in which it has a 13 per cent interest.
Apache’s region vice president and managing director in Australia, Thomas Maher, said Balnaves would be the US-based company’s third operated oil development in Australia since 2007.
“With the Van Gough field on production and first output from Coniston expected in 2013, Balnaves will add to our position as one of Australia’s leading oil producers,” Mr Maher said in a statement on Friday.
Balnaves is adjacent to the Brunello gas field and was discovered in 2009.
Apache has estimated a gross recoverable resource at Balnaves of 17 million barrels of oil and 30 billion cubic feet of gas.
Two production wells will be connected to a floating production, storage and offloading vessel, where the oil will be dealt with, while the gas will be reinjected into another reservoir so it can be later fed into Wheatstone.
Apache has an agreement in place to lease the vessel.
A final decision to proceed with the Wheatstone project was made on Monday, days after the federal government gave it environmental approval, subject to 70 conditions.
First gas production at Wheatstone is slated for 2016.
Other joint venture partners in Wheatstone are Kuwait Foreign Petroleum Exploration Company (seven per cent) and Royal Dutch Shell (6.4 per cent).