PERTH (miningweekly.com) – Australian oil and gas major Woodside on Friday delayed the $45-billion Browse liquefied natural gas (LNG) development, near James Price Point, saying it was no longer commercial.
Woodside said in a statement that an evaluation of the project, ahead of a final investment decision, determined that the Browse project did not meet the company’s commercial requirements.
CEO and MD Peter Coleman noted that the escalating costs of the Browse project had resulted in the current development concept not being commercial.
“Woodside does not discuss publicly the capital costs or commercial terms used to evaluate the project, nor do we publicly discuss the hurdle rates of investment return which would likely differ for each joint venture (JV) participant,” he said.
However, he noted that the company had applied its usual commercial hurdles and had decided not to proceed with the onshore concept for Browse.
The project includes three gasfields estimated to contain a combined contingent resource of about 13.3-trillion cubic feet of dry gas and 360-million barrels of concentrate. First gas production has initially been slated for 2017.
The Browse LNG project is jointly owned by Woodside, Shell, BP, Chevron and PetroChina, which acquired its stake in the project through a $1.63-billion deal with PetroChina.
Coleman noted that the Browse resource was still considered to be a world-class resource, and added that the company was working to underpin this value by bringing forward the earliest possible development of Browse.
One of the options being looked at, instead of an onshore development, was floating LNG technology, which has been advanced by project partner Shell at its Prelude project.
“One of the alternative solutions is floating LNG technology, and that is something we will recommend to the JV to consider, as we move forward,” Coleman said.
“There are other possibilities which we have looked at previously. We won’t pre-empt what we might put forward in our proposed work programme and budget to the joint authority, but those other options could include a pipeline to existing facilities in the Pilbara and a smaller onshore option around James Price Point.”
Coleman noted, however, that it was too early to say if any of those options were commercial.
The proposed onshore development of the Browse project would have seen the development of a 12-million-ton-a-year facility, which had been expected to start production by 2017. The project had received state environmental approval, and had a native title agreement in place.
Coleman said the current retention lease terms for Browse would continue until the end of 2014.