Woodside shelves LNG project
BY ROSS KELLY
SYDNEY -- Woodside Petroleum said it has shelved an onshore gas export project in Australia estimated to cost over $40 billion to build, the strongest sign yet that the country' s energy construction boom may be peaking.
Natural gas from the Browse development, which also counts Shell, BP and Asian companies as shareholders, will no longer be piped to a processing facility at James Price Point on the Western Australia state coast, Woodside said in a statement.
The decision means a development of one of Australia' s biggest natural gas resources will be pushed back by at least two years, increasing the risk it will have to compete for customers with anticipated gas export projects in North America and East Africa. Woodside and partners can submit new development plans to regulators, but securing approvals is often slow and time consuming.
Woodside and partners have spent almost $2 billion investigating an onshore plant at James Price Point. But Woodside said it "doesn' t meet the company' s commercial requirements for a positive final investment decision." The facility would have chilled the resource into LNG, for export to Asian utilities by tanker.
International energy companies have committed billions of dollars to build seven LNG projects in Australia, positioning the country to overtake Qatar as the world' s biggest exporter of the fuel by 2017. Companies like Shell, Chevron and ExxonMobil are drawn by Australia' s vast gas reserves, stable political environment and proximity to fuel strapped Asian economies.
Alternative options for Browse' s estimated 15.5 Tcf resource cited by Woodside include using a floating LNG vessel, which would process the gas out at sea where it lies. Another would be to pipe the gas to an existing LNG facility on the coast, such as the Woodside operated North West Shelf plant at a later date.
Woodside needed to make a final investment decision on James Price Point by June to fulfil a requirement laid down by the government of Western Australia. State Premier Colin Barnett had been a vocal advocate of building a gas processing hub at James Price Point. Spokespeople for Mr. Barnett weren' t immediately available for comment.
Ultimately the decision on the development concept is a commercial one for the joint venture, provided it can meet the requisite regulatory requirements, said Gary Gray, Australia' s resources minister, in a statement. Browse isn' t the only Australian LNG project under a cloud. Shell has also raised doubts about the viability of its Arrow LNG joint venture with PetroChina in Queensland state, citing cost pressures.
Dow Jones Newswires