KALGOORLIE (miningweekly.com) – ASX-listed Woodside has welcomed federal Resources Minister Gary Gray’s decision to vary conditions on five of the seven retention leases over the Browse liquefied natural gas (LNG) project, paving the way for early commercialisation.

“The decision to vary the Browse retention leases was taken to ensure the timely development of these gas resources for the benefit of the Australian, Western Australian and Kimberley coast economies,” Gray said.

“It was clear that the Browse joint venture (JV) did not consider development of James Price Point to be commercially viable. I take the view that companies, not governments, are best placed to determine which developments are commercially viable, subject, of course, to environmental and regulatory requirements.”

In April, Woodside announced that it was considering JV partner Shell’s floating LNG technology to develop the Browse project, saying that the A$45-billion proposed onshore development, at James Price Point, was no longer commercially viable.

Gray said his decision restored the Browse retention lease to a lease consistent with other commonwealth leases.

The revised conditions did not specify any particular development concept, consistent with the government's belief that this should be a commercial decision, the Minister said.

“We must take full advantage of the current window of opportunity for Australia to develop its LNG industry. I want to ensure that Australia and Western Australia benefits from the development of our resources and that those dollars don't go to competing markets,” he said.

“The risk is that if Australia does not provide the environment for commercial decision-making now, we may miss out altogether. Already, it has been more than 40 years since the first Browse fields were first identified, and over a decade since development options were first considered.

“Australia, Western Australia and the communities of the Kimberley cannot afford to delay any longer, which is why I have made this decision.”

Woodside said that the variation to the retention lease conditions allowed the Browse JV participants to progress the selection of an alternative development concept, and to start the related design and engineering work.

The Western Australian Chamber of Minerals and Energy also welcomed the decision.

“Australia is currently a high-cost operating environment and must remain internationally competitive in order to attract investment for large resource projects. Any loss of development options lessens Australia’s ability to compete with other energy-rich countries,” said CEO Reg Howard-Smith.

However, not everyone was pleased with Gray’s decision.

Western Australian Premier Colin Barnett, who has been a staunch supporter of an onshore development, said over the weekend that it was a pity that the commonwealth government had taken the action.

“At the end of the day, that gas belongs to Australia, and it’s a great thing that Australian and international companies can develop it. But in any other part of the world, there would be a requirement for local industry participation, and there would be a requirement for gas to come onshore and to be used in the domestic economy.”

Barnett noted that the state government supported an agreement that would see the Browse project deliver gas to an onshore facility, and which added to the domestic economy.

“At the end of the day, and it's not my perfect result, but if we were to have a supply point built at James Price Point, that would be acceptable to the state government, and [it] would allow for future LNG to come onshore, because there are other miners in the Browse basin that intend to develop onshore facilities.”

The Browse 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 had 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 BHP.