Woodside Petroleum scrubs offshore LNG project
Woodside Petroleum Ltd. (WPL.AU) has shelved proposals for a floating gas-export operation off
Australia’s west coast due to belt-tightening and the slump in oil prices.
The Australian company on Wednesday said the partners in the Browse venture have decided not to
push ahead with development of the floating liquefied natural gas project at this time, given the current
economic and market environment.
The project had already been delayed several times and Woodside Chief Executive Peter Coleman in
February told investors it wasn’t the time to be “reckless” with capital or to make bets on the future
being rosier simply because people wanted it to be.
Still, the decision is likely to reinforce investor and analyst concerns about Woodside’s efforts to lift
production and reserves without output from Browse. In 2014, Woodside abandoned a planned US$2.5
billion investment in the Leviathan natural-gas discovery off Israel’s coast.
Australia has been an epicenter of gas development in recent years, with more than US$200 billion
committed to vast projects to chill and ship natural gas, setting it up to overtake Qatar as the world’s
leading LNG exporter. The planned Browse project promised a further wave of gas exports targeting
Asia, despite the current raft of projects now beginning production having been hit by cost overruns,
delays and falling prices.
On Wednesday, Mr. Coleman said Woodside remained committed to the earliest commercial
development of the Browse resource and to floating LNG technology but the economic environment
didn’t support investment in a major LNG project at this time.
“We will use the additional time to pursue further capital efficiencies for Browse,” he said.
The Browse project sits on an estimated resource of 15.4 trillion cubic feet of dry gas, plus 453 million
barrels of condensate, in a basin about 425 kilometers north of Broome in Western Australia. Woodside
and partners in late 2013 decided to push ahead with unproven floating technology and undersea
development to produce LNG and in the middle of last year agreed on the front-end engineering and
design phase of the project.
Woodside has an almost 31% stake in the Browse venture, while Royal Dutch Shell PLC (RDSB) has a 27%
interest and BP PLC (BP) a little over 17%. The other partners include Japan Australia LNG and
PetroChina Co. (PTR).
International energy companies have placed large bets on Australia’s gas fields and proximity to Asian
markets in recent years. The US$54 billion Gorgon project off Western Australia led by Chevron Corp.
(CVX) recently began pumping LNG and shipped its first cargo on Monday. That comes on the heels of
initial exports from other multibillion dollar projects over the last year involving BG Group PLC, France’s
Total SA (TOT), ConocoPhillips (COP) and others. Chevron recently pushed back the forecast for first gas
from its Wheatstone LNG project in Western Australia to mid-2017 from later this year.
Mr. Coleman said Woodside planned to work with the Browse partners on a new work program and
budget for the development, leveraging the work done to date. The retention leases for the Browse
project were renewed last year and are due to expire in mid-2020.
https://www.hellenicshippingnews.com/woodside-petroleum-scrubs-offshore-lng-project/