Browse LNG plant in cost blow-out
THE construction of a standalone LNG plant in the Kimberley to process gas from Woodside's Browse fields appears increasingly unlikely, with the cost of the massive project blowing out to $50 billion and discord growing between the project partners.
The blow-out, confirmed by an informed source, puts costs at the West Australian project on par with those at Chevron's huge Gorgon liquefied natural gas project, which has almost three times the gas reserves.
Gorgon is the biggest resources project in Australian history. Woodside's partners at Browse are refusing to fall in line with the Perth company's stated preference to build an LNG plant in the Kimberley.
Instead, some are leaning towards Browse's other option of having gas processed at the existing Woodside-operated North West Shelf plant at Karratha when its reserves run low.
There is a growing sense among the partners that Woodside has gone off-message by stating a preference for a Kimberley plant and signing a preliminary agreement with the Kimberley Land Council and the West Australian government to build an LNG precinct at James Price Point, north of Broome.
Woodside owns 50 per cent of the Browse project, which it hopes to start building in 2013.
The other partners are global giants BP, Chevron, Shell and BHP Billiton. As well as the huge cost, which would come as many of the partners faced other commitments in the region, the Kimberley region is seen by some partners as a risky place for LNG development, given strong opposition to development there and the potential for a backlash should something go wrong.
None of Woodside's partners yesterday would confirm their preference for the Karratha processing option, but all said more evaluation of Browse was necessary.
"A decision will be made by the Browse joint venture when all of the options for developing Browse gas are fully explored," said Chevron, whose 50 per cent stake in Gorgon is expected to set it back $25bn.
Gorgon, for which a final investment decision is expected soon, is designed to produce 15 million tonnes of LNG a year from offshore reserves containing 40 trillion cubic feet of gas.
The three Browse discoveries -- Torosa, Brecknock, and Calliance -- contain about 14tcf of gas. A Woodside spokesman said the company was now hoping for a site selection by next year, but BP said it would not speculate on the timing of any site announcement.
Shell, which has a 25 per cent stake in Gorgon, stressed that a joint venture decision was yet to be made.
"Given the complexity, scale, challenges and expected cost of this development, Shell believes it is critically important that the Browse LNG development is progressed in a prudent and responsible manner," it said.
BHP said the joint venture continued to study all aspects of the Browse development.
The cost of developing an LNG plant at the Kimberley would be more than that of sending the gas to Karratha, but the second option could delay production of LNG.
The North West Shelf gas fields are expected to run low enough for the plant to take gas from Browse some time between 2017 and 2021.
Thursday 2 July, 2009
Thursday 2 July, 2009
The Australian
