Project Location : Western Australia
Project Manager : Woodside Energy Ltd (operator)
Project Owner : Browse Joint Venture
Constructor : EPC contractors selected in competitive process
Construction Period : 5-6 years, from mid 2013
Project Value : TBC
Project Status : Evaluating tender bids for construction
The Browse LNG is a $34 billion liquefied natural gas plant project proposed for construction at James Price Point, 60 kilometres (37 mi) North of Broome on the Dampier Peninsula, Western Australia. The plant is being built by a joint partnership including Woodside Petroleum, Chevron Corporation, Royal Dutch Shell, BP, and BHP Billiton. It would process natural gas extracted from the Browse Basin. Liquefied natural gas would then be shipped from a port facility also located in the Browse LNG Precinct.
Technical description
The plant will include three LNG trains able to process an expected 15 million tonnes of LNG per year. LNG would be pumped via 8 pipelines to a 2-kilometre (1.2 mi) jetty. In the construction phase the Precinct would also include a camp to house 8000 workers and would entail the clearing of 2,500 hectares (6,200 acres) of coastal bushland.
The Browse Basin contains proven gas reserves of 30.4 billion cubic feet (860 million cubic metres) of gas and 600 million barrels (95×106 m3) of condensate. Estimations of the reserves range up to 60 billion cubic feet (1.7 billion cubic metres), making the basin comparable in size to the North West Shelf region.
The Sydney Morning Herald April 12, 2013 - 9:22AM Glenda Kwek Business ReporterWoodside Petroleum has shelved its plans for the controversial $40 billion-plus Browse LNG project, saying it is not commercially viable, in a move that has been applauded by investors.The oil and gas giant said it would review alternative ideas with its joint venture partners in the Browse project.
“Woodside will immediately engage with the Browse joint venture to recommend evaluation of other development concepts to commercialise the Browse resources”
Woodside said in a statement to the ASX this morning that it had "determined that the development concept does not meet the company's commercial requirements for a positive final investment decision".
It said some of the alternatives it would discuss with its partners included floating technologies, a pipeline to existing LNG facilities in the Pilbara or a small onshore option at the proposed Browse LNG precinct near James Price Point.
"Woodside will propose to the joint venture a work program and budget for the remaining 20 months of the retention leases with a commitment to the timely development of the Browse resources," it added.
The costs for the Browse LNG project have been estimated at more than $40 billion.Investors applaud moveThe market cheered Woodside's decision, driving the stock up $1.21, or 3.4 per cent, to $36.49 in morning trade.IG Markets market strategist Evan Lucas said the market was responding to the fact that Woodside’s capital expenditure would drop away substantially in the short term.
‘‘There would have been a considerable construction period before it even started production with more overhang,’’ he told AAP.
Until now shareholders would have been concerned about possibly share-diluting actions such as capital raisings to keep up with the costs.
Now they will expect share buybacks or capital returns, Mr Lucas said.
'Concept doesn't provide required return'Woodside chief executive Peter Coleman will hold a press conference at 9am Perth time this morning.
He said in a statement that Woodside’s decision was a ‘‘commercial one’’ and not influenced by government policies.
‘‘[The decision] is driven by commercial risk and reward considerations and the proposed concept doesn’t provide the economic return required to proceed with the project,’’ Mr Coleman said, adding that it was too early to commit to a timing on when the joint venture partners would announce a decision on an alternative development.
Analysts had said rising costs and labour shortages made the existing project less likely.
Four possible alternativesUBS executive director Nik Burns said Woodside and its joint venture partners were likely to consider four alternative development concepts in the medium to long term.
For one, the partners could choose to delay the project to a later time when costs would be lower after mining investment peaks, Mr Burns said."In the meantime though, we expect them to evaluate concepts such as floating LNG. That certainly provides the opportunity for the [joint venture] to avoid exposure to Australian costs and also allow the development of the project in smaller modules."
The onshore project was expected to have produced 12 million tonnes of liquefied gas a year, but the offshore technologies could allow the joint venture partners to reach a final investment decision on a single floating facility at a time, each producing about four to six million tonnes of liquefied gas a year, Mr Burns said.
Shell has also developed its own proprietary floating technology.
Mr Burns said the partners could also consider feeding the gas back to existing North West Shelf facilities in the Pilbara, or building a small-scale modularised facilities that could produce one to 1½ million tonnes a year.
"Under Woodside's own current deliverability forecast North West Shelf starts a shortfall on gas supplies by 2023, he said.
"That may be extended by further gas exploration discoveries, but it doesn't make a lot of sense to have a 16-million-tonne per annum LNG facility at North West Shelf running out of gas [some] years before starting out on a brand-new facility a thousand kilometres along the road, when the cost savings of tying it back makes a lot of sense."Mr Burns added that the option of building smaller onshore facilities was less likely to be viable given the size of the resources at the location.
Environmentally sensitive siteThe current project had been opposed by environmental and indigenous groups.
The Wilderness Society welcomed the announcement today, saying in a statement that the joint venture partners had ‘‘avoided possibly the biggest environmental battle in Australia’s history’’.
‘‘Hundreds if not thousands of people were prepared to stop Woodside from working in the sand dune area at Walmadan, which has great cultural significance to the traditional owners,’’ the society’s national director Lyndon Schneiders said.
‘‘There were always less environmental and socially destructive options yet governments of both persuasions ... tried to force this unwanted and unnecessary development on the Broome and Kimberley communities.’’
Woodside had been due to release its decision on the gas hub, which would have been built at James Price Point near Broome in the Kimberley region, by the end of June.
The new federal Resources Minister, Gary Gray, had to clarify suggestions in March he was in favour of offshore processing, saying he would not comment on Browse after he had spoken in support of the development of floating technologies.
In contrast, Mr Barnett has said he would not support the venture unless it was constructed onshore, amid concern that jobs and economic benefits could be lost.
Last year, mining giant BHP Billiton said it was divesting its stake in the gas venture, less than four months after Chevron had sold its share of Browse.
The environmentally sensitive Browse site is estimated to hold about 13.3 trillion cubic feet of gas.