Apache Corp. APA +0.02% is pushing ahead with a large expansion of its Australian oil and gas operations over the next three years that involves spending billions of dollars in Western Australia in 2013 and 2014.
The plans, which coincide with the U.S. company’s decision to sell $4 billion of its assets to shore up its balance sheet, come at a time when Australia’s natural-gas sector is struggling with cost overruns and facing competition for Asian liquefied natural gas customers’ business from North America, which is awash in shale gas, and—potentially—from East Africa, where large reserves of offshore gas have recently been discovered.
The company will spend a record $1.9 billion this year in Western Australia state, where its Australian operations are situated, and a similar or slightly increased amount next year as it rolls out new projects, Apache’s new Australian chief said.
Next year’s expenditure will likely be between $1.8 billion and $2.1 billion, though the final amount hasn’t been decided upon yet, Faron Thibodeaux, Apache’s Australian managing director, told The Wall Street Journal.
In July, Apache signed an agreement to sell shallow-water operations in the Gulf of Mexico for $3.75 billion.
Apache is a minority partner in Chevron Corp.’s CVX -0.46% $29 billion Wheatstone gas-export project in Western Australia and has long-established interests in domestic gas infrastructure in the state.
Last month, Apache unveiled its Bianchi gas discovery off Western Australia and said it was assessing potential commercial opportunities for the find, along with the nearby Zola field, where it struck gas in 2011.
Mr. Thibodeaux said Wheatstone is one development opportunity being looked at for Bianchi and Zola, alongside the company’s domestic gas facilities.
“We have the luxury of having options,” he said, adding it is too early to estimate the size of the Bianchi reserves.
“Where it ends up will purely be what makes the most commercial sense, as well as being able to deliver into either one of those two markets,” said Mr. Thibodeaux, who took over from Tom Maher as head of Australia operations in January.
Both Bianchi and Zola are in Retention Lease WA-49-R, where Apache is operator and majority owner, and has Santos Ltd., OMV Australia, JX Nippon and Tap Oil Ltd. as partners.
The permit lies relatively close to a trunk line being built to connect onshore gas fields to the first stage of Wheatstone’s land-based processing facility, which is due to ship its first LNG in late 2016.
Apache is also a partner in the Macedon project, operated by BHP Billiton Ltd., which is due to produce first gas late in the third quarter, and it is the operator of two new oil projects, Balnaves and Coniston, due for completion in 2014.
First oil from the $438 million Balnaves venture should be delivered by the start of the second quarter next year, Mr. Thibodeaux said.
The $526 million Coniston development, meanwhile, is expected to start up in mid-2014 after the company refurbishes the Ningaloo Vision floating production storage and offloading vessel to handle production from the field, he added.
The two projects—forecast to produce more than 50,000 barrels of oil a day in total—remain on budget and on schedule, despite cost pressures in Western Australia, Mr. Thibodeaux said. “They are doing very well but it doesn’t come easy,” he said.