UPDATE 2.30pm: Woodside Petroleum’s partners in the Browse LNG project, including Japan’s MIMI and PetroChina, have agreed to a floating processing development for the vast gas fields off the Kimberley coast.
Woodside, the joint venture’s operator and biggest shareholder, said today the five partners had agreed to pursue FLNG as the development concept, and basis of design work would now kick off.
Today’s news comes two weeks since Woodside told investors it would urge its joint venture partners to adopt FLNG as the only way to quickly and cost-effectively develop the gas fields.
The basis of design deliberations will help the joint venture establish the parameters for the upcoming front end engineering and design (FEED) work, which Woodside said should start next year.
Woodside has previously said it was hopeful the joint venture could make a final investment decision on the Browse project’s development by mid-2015.
The joint venture comprises Woodside, PetroChina, the Mitsubishi and Mitsui partnership known as MIMI, BP and Royal Dutch Shell, which is providing its FLNG technology to be applied to the Browse development.
It is expected at the joint venture will use two to three so-called floaters — the processing vessels that will be moored above the gas fields and process and store the hydrocarbons — to tap the project’s overall resource of 15.9 trillion cubic feet of gas and 436 million barrels of condensate.
The FLNG decision was widely expected and comes after Woodside and its partners agreed that the cost of a land-based LNG processing plant at James Price Point, north of Broome, was prohibitively expensive.
Although Woodside is yet to spell out the likely budget for an FLNG development, it is expected to be up to half the James Price Point estimate (some had tipped James Price Point to cost as much as $80 billion) while development would also be staggered by bringing into production one floater at a time.
The Federal Government has given its support to the Woodside joint venture’s FLNG proposal, and agreed to vary retention leases covering the Browse gas fields.
However, Premier Colin Barnett remains opposed to the FLNG idea because he wants WA to benefit from the construction boom associated with a land-based processing option.
WA controls two of the seven Browse Basin retention leases.
Woodside shares closed up 36 cents at $38.54.