Woodside Petroleum scrubs offshore LNG project

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/