Sunday, December 2, 2012

Prelude opens a new chapter for liquefied natural gas industry | The Australian

Prelude opens a new chapter for liquefied natural gas industry | The Australian:

"I think it's a capital N and a capital O," he says of James Price Point.

The lone voice on St Georges Terrace.
"Support for the project being based on the Kimberley seems to have dwindled to a lone voice on St Georges Terrace.


  1. from the fisherwoman:

    Slugcatcher (very significant)

    IN A struggle between money and politics, money wins every time. This is a fact Slugcatcher reckons Western Australia Premier Colin Barnett is about to discover as he tries to bully the Browse LNG partners into pushing ahead with a landfall processing centre.

    The premier’s problems are a combination of time and technology, so while he will eventually lose his demand for an onshore development, it will not be formally announced until after the WA state election set for March.

    Saving face for Barnett will be the olive branch offered by Woodside, Shell and BHP Billiton, the Browse partners which have become deeply concerned about the cost blowouts at all onshore LNG plants and the attraction of a lower-cost floating solution.

    The process of letting Barnett down gently started last week when he was seen to berate the Browse proponents, demanding that they stick with their agreement to spend at least $40 billon, and perhaps a lot more, on the proposed James Price Point LNG centre.

    For the cameras and other media, Barnett was seen to be a champion of local investment and job creation in the Kimberley. That pose will be held until after the March election with the premier able to go to the polls with fewer scars than he might have reasonably expected.

    The oil companies understand what is happening. They prefer to have a pro-business, conservative premier in charge in resource-rich WA.

    They also know Barnett has been wounded by the recent failure of the Mid West rail and port scheme and the failure of the Southdown iron ore project.

    The last thing Barnett needs before the next election is more project postponements or shifts away from local job creation to a total offshore outsourcing proposal, which is what floating LNG represents.

    It is the timing factor of the politics that will cause the WA government and the Browse partners to declare a secret truce in the name-calling spat that has broken out.

    However, it will be a truce that simply delays what has become inevitable in a financial sense.

    The issue, when politics and personalities are set aside, is money.

    Browse, even if it has a $40 billion price tag today will almost certainly cost a lot more.

    This is a fact demonstrated in the cost overrun at Woodside’s Pluto project and reinforced spectacularly in the latest cost explosion at the Gorgon project which seems to be on track to become a $60 billion development.

    Senior management at every resources company in the world has had enough of the rampant cost inflation that has made parts of Australia the most expensive places in the world to do business, as well as being one of the most difficult with its shortages of skills and remote work locations.

    Enter a technology saviour in the form of FLNG.

    Embryonic today, the floater option represents a sort of “get out of jail free” card for LNG-project developers.

    With a single decision they can bypass doing business on high-cost, skills-short mainland Australia, avoid dealing with militant unions and do it all at a substantially lower upfront capital cost.

  2. from the fisherwoman... cont...Slugcatcher (very significant)

    Whether FLNG production will ever achieve the economies of scale available from an onshore plant is unlikely.

    However, the financial equation swings both ways when a lower capital cost and greater flexibility are compared with the high cost, bulk production capacity of an onshore plant.

    Somewhere in the oil majors, accountants are conducting that bean-counting exercise.

    Shell in particular will be closely analysing progress on its Prelude system under construction in Korea and comparing progress there with events in high-cost, high-taxing Australia where resource developers have been made to feel unwelcome.

    The challenge ahead is to manage Barnett’s ego while also helping keep a pro-development premier in power.

    The best way to do that is to delay a final decision that would create a showdown with a friendly politician as he is going to the polls.

    However, shortly after the March election, it is certain the Browse partners will pull the plug on James Price Point, citing costs, taxes and better technology as the reasons for the shift.

    There will be no comment on why it took so long to acknowledge what everyone already knows – onshore Browse is dead.



    1. "The challenge ahead is to manage Barnett’s ego while also helping keep a pro-development premier in power."

      Hasn't that been the problem from the start?

    2. "Within days of the latest court action being lodged, Woodside stopped work at James Price Point, removed all of its machinery and buildings and placed "revegetation site" signs around the area. The company said the site had been prepared for the coming cyclone season but there was still work to do this year."

      Reading the Slugcatcher piece above I guess we now know why.

  3. interesting blog. It would be great if you can provide more details about it. Thank you...

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