Woodside applies pressure for action on LNG plant

Peter Klinger

May 1, 2009

THE Woodside Petroleum boss Don Voelte has fired a first salvo across the bows of his Browse Basin joint-venture partners, saying there were no "stumbling blocks" for the massive project to be developed in the Kimberley rather than the Pilbara and that he expected the West Australian Premier, Colin Barnett, to exert pressure on the partners to make it happen.

Speaking outside Woodside's annual meeting in Perth yesterday, Mr Voelte said construction of a liquefied natural gas plant at James Price Point, north of Broome, could start in two years.
And, in his first public crack at his Browse joint-venture partners BP, Royal Dutch Shell, Chevron and BHP Billiton, he said it was not up to Woodside to convince them that a greenfields development in the Kimberley was a better option than a cheaper brownfields set-up on the Burrup peninsula in the Pilbara.

A greenfields LNG plant at James Price Point, when combined with the offshore development costs, is likely to come with a $25 billion price tag.

It is understood that Woodside's Browse partners favour developing the Browse gas field either through the North-West Shelf venture or even through Woodside's wholly owned Pluto project. "We are of the view, not from an operator's point of view but from an equity point of view, that there are very few stumbling blocks left to argue that it is not an economic development," Mr Voelte said.

He said the technical and operational issues of a Kimberley processing option had been satisfied while the long-term outlook for the global LNG market remained promising, despite the worldwide economic slump. Last month's access agreement with the traditional owners meant another hurdle had been overcome.

"The [LNG] market is there," Mr Voelte said. "All that is left is just the underlying permits for the gas precinct, so we say why not construct in 2011?"

In a far from subtle message that the West Australian Government would be putting pressure on Woodside's partners to move to the Kimberley, Mr Voelte said "it's not us trying to get the JV in line".

Mr Voelte has set a June 30 deadline for Woodside, as the operator of the Browse venture, to select between Mr Barnett's Kimberley LNH hub at James Price Point and the Burrup peninsula for the project's onshore location.

Although his commitment to the Mr Barnett's Kimberley LNG hub is well documented, Mr Voelte has privately suggested that reaching agreement with the joint-venture partners by June 30 would be a challenge.

Any significant delays could threaten his Browse development timetable, which includes the start of front end engineering and design work by next year.

Mr Voelte said yesterday the Chevron-operated $50 billion Gorgon LNG venture on Barrow Island, which is likely to receive final investment decision later this year, should not have a negative impact on the development timetable for Woodside projects, in particular an expansion of the $12 billion Pluto asset.

Addressing market speculation about an asset-sales program, Mr Voelte admitted Woodside was considering testing the market for interest in its 51.6 per cent-owned Otway gas project off Victoria. He stressed there would be no fire sale but admitted he saw limited upside in the asset.
Source: The Sydney Morning Herald