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April 12th, 2013 
Peter Nolan
Updated
Woodside has confirmed it is shelving its controversial $45 billion Browse LNG development near Broome.
The company says that, after a technical and financial evaluation, the proposed LNG development near James Price Point in north-west Western Australia does not meet its commercial requirements.
Woodside says it recently looked at tenders for the project, which showed the development would not deliver the required commercial returns to support a positive final investment decision.
It says it will look at alternative options to develop the Browse gas field with its joint venture partners.
In its statement to the share market, Woodside says those options could include a floating processing plant, a pipeline to existing LNG facilities in the Pilbara or a smaller onshore option near James Price Point.
One of Woodside’s Browse joint venture partners, Shell, says it wants the project to use its offshore floating processing technology.
“We believe Shell’s floating LNG technology is the fastest, most economic and the best technical solution available for Browse,” the company’s Australian head Ann Pickard said in a statement.
“Floating LNG can bring significant long term, sustainable jobs to Western Australia, Australia, and the Kimberley, as well as providing employment and business opportunities for Kimberley Indigenous people.”
Environment, cost, gas prices
Commodities analyst and the chief economist of Barratt’s Bulletin, Jonathan Barratt, says Shell’s floating option is probably likely to get up.
“I think you’ll probably look for some form of floating system, not quite as expensive and also a little bit more manageable,” he told ABC News Online.
Mr Barratt says opposition from environmental groups has played a part in sinking the James Price Point plan, as have spiralling construction costs in Western Australia.
However, he says the main factor that has sunk the original James Price Point plan is a dramatic slump from peak to trough in natural gas prices as US shale gas production has surged.
“When you’ve had a complete technology shift where we have so much supply, so many people trying to tap into the resource, then all of a sudden you have too much supply of the product,” Mr Barratt explained.
“And when you see prices dropping from $US14 to $US2 [per British thermal unit] all of a sudden a lot of projects do not become viable.”
Woodside says it will make a proposal to its joint venture partners regarding work and a budget for the remaining 20 months of the retention leases, and still intends to develop the Browse Basin gas resource.
The Perth-based company is the operator of the Browse joint ventures and owns a 34 per cent stake in the East Browse project and a 17 per cent stake in West Browse.
Topics:
business-economics-and-finance,
oil-and-gas,
australia,
wa,
broome-6725
First posted
Source Article from http://www.abc.net.au/news/2013-04-12/woodside-looking-at-alternative-browse-options/4625064
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