home page photo from AAP Mike Gray/Environs Kimberley via ABC website.
Friday, April 12th, 2013
Woodside just announced to ASX that the proposed $45 billion Browse LNG development at James Price Point does not make commercial sense.
Read Woodside’s announcement here: 12.04.2013 Woodside to Review Alternative Browse Development Concepts
Media coverage:
From Perth Now, April 12, 2013
From the Australian, April 12, 2013
or read the whole article below:
Woodside says giant onshore Browse plant ‘not commercially viable’
BY: MATT CHAMBERS
WOODSIDE Petroleum has scrapped its controversial $US45 billion ($43 billion) plan to build the Browse liquefied natural gas project (LNG) plant at James Price Point, north of Broome, because of the high cost of building in the heated West Australian construction market.
But the issue of whether Woodside will construct a plant on the iconic Kimberley coast, a plan that has angered environmentalists and some community groups, been heavily backed by WA Premier Colin Barnett and divided Aboriginal groups, has not been entirely put to bed.
Woodside said a smaller plant at James Price Point may be explored, along with the option of processing the offshore gas through a floating LNG plant, which most pundits see as the most likely option, and saving the gas to process at a later date through the North West Shelf plant at Karratha.
“It is not commercial to proceed with the James Price Point project,” Woodside chief Peter Coleman said.
“In Australia, unfortunately the cost escalation has been such that the total costs for Browse have resulted in the current development concept not being commercial.”
He did not expand on how a smaller plant at James Price Point would be commercial or the effect that scrapping the plant or building a smaller one would have on an agreement that would have seen local indigenous groups receive more than $1 billion.
Mr Coleman also declined to give a potential timeframe for development of an alternative option but, based on the length of time to develop other projects, there is now little chance of first LNG from Browse this decade.
Any delay means the joint venture risks having to compete for customers with looming LNG supplies from North America and East Africa. Mr Coleman said that the decision had not been influenced by environmental or red tape issues, nor by public policy issues. He said that he did not expect there to be any significant writedowns as a result of the change in tack.
Woodside, Australia’s biggest standalone oil and gas company, had been widely expected to say that it had decided to switch gears on the giant LNG project at James Price Point and would instead review the floating platform option preferred by key partner Shell.
The project operator plans were already in doubt due to the proposal’s high cost compared to other projects with resources of a similar size.
The resource is located in deep, remote waters, has a high carbon dioxide content and would be technically difficult to extract. Due to be built in a place marked with one of the world’s longest chain of dinosaur footprints, the development has faced staunch opposition from environmental groups and has angered some traditional land owners.
West Australian Premier Colin Barnett had pushed for the plant to be built onshore because of the huge benefits to the economy through job creation. Shelving the large onshore plant could effect up to 8000 future jobs. The workforce needed during the construction phase was estimated to be 6000 onshore jobs and 2000 offshore.
Mr Barnett said yesterday, as speculation mounted of an imminent announcement by Woodside, that it would be a “bitter disappointment” if the Browse joint venture partners decided not to proceed with the construction of the onshore plant.
“If they choose not to do so, then that would take the project basically back to square one and probably would mean delays of two to three, maybe five years,” he said.
Pengana Capital senior fund manager Tim Schroeders said yesterday that Browse had always been marginal in terms of getting enough reserves to substantiate the development at James Price Point, 52km north of Broome on the Dampier Peninsula.
Woodside operates the East and West Browse joint ventures, has a 34 per cent equity interest in East Browse and 17 per cent in West Browse.
Woodside and its partners have until the middle of the year to make a final investment decision on the James Price Point option for Browse. Woodside gave its joint-venture partners, which include Shell, BP, Mitsubishi, Mitsui and PetroChina, final cost and schedule estimates earlier this year.
Shell’s interest in the project, which is a 27 per cent stake, has driven market speculation that its floating LNG technology was a more likely option to develop the project in a high-cost climate.
Ann Pickard, chair of Shell Australia, said that the company would continue to work closely with the JV partners and government stakeholders to keep the Browse project moving forward.
“We believe Shell’s floating LNG technology is the fastest, most economic and best technical solution available for Browse,” Ms Pickard said, adding that the floating option would bring long-term, sustainable jobs to WA, including employment and business opportunities for indigenous Australians.
Additional reporting, Dow Jones Newswires
