Browse could cost Woodside $45bn, says Citi | The Australian:
"James Price Point is unlikely to make final investment decision in the first half of 2013 because of prohibitively high capex," Mr Greenwood said, adding the joint venture looked likely to spend more time reassessing other options, including plans for more modularised construction at the site.
"While Woodside is focused on James Price Point, a North West Shelf tieback now looks more attractive on our analysis."
Woodside and joint venture partners BHP Billiton, BP, Chevron and Shell have told the federal government they will be ready to make a decision on Browse by the end of the year.
Mr Greenwood says building near Broome has an 11 per cent internal rate of return at his forecast development cost of $45bn, which was unlikely to be acceptable to the partners.
Piping the gas to the North West Shelf would have a 15 per cent rate of
"James Price Point is unlikely to make final investment decision in the first half of 2013 because of prohibitively high capex," Mr Greenwood said, adding the joint venture looked likely to spend more time reassessing other options, including plans for more modularised construction at the site.
"While Woodside is focused on James Price Point, a North West Shelf tieback now looks more attractive on our analysis."
Woodside and joint venture partners BHP Billiton, BP, Chevron and Shell have told the federal government they will be ready to make a decision on Browse by the end of the year.
Mr Greenwood says building near Broome has an 11 per cent internal rate of return at his forecast development cost of $45bn, which was unlikely to be acceptable to the partners.
Piping the gas to the North West Shelf would have a 15 per cent rate of
Photo Damian Kelly
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"....for more modulised construction..."
ReplyDeleteThat means less local content = save money.
It doesn't matter what they say or what they plan this is going to be a disaster for them no matter what,if they actually start building it at JPP of course.
If their only reason is they are pig headed fools then so be it.
$45 billion blows out to $60 billion,delays and more delays.The modularised construction backfires,it's a new concept dreamt up by Woodside.
It would only take a couple of big wet seasons and their gamble would be a full blown nightmare.
Biggest gamble ever,win and they have a shit load of problems making money out of the place,loose and it's game over for Woodside.
This project is doomed,it will fail no matter what.
If it gets cancelled half way through there's always the "Scrap Metal" right.
Back when Pluto was estimated to cost $11.2 billion the estimated internal rate of return was between 10 and 15 %.
ReplyDelete"The funding of up to A$11.2 billion approved by the board represents a goforward
estimate of costs from this decision onward.
Does this project meet your required rate of return for LNG projects?
As a general guide, typical LNG projects target an internal rate of return of 10 - 15%. Pluto is
within this range."
http://dampierrockart.net/media/2007-07%20Pluto%20LNG%20Project%20Project%20Approval%20FAQ-Woodside.pdf
But before that when the price had been $6 billion the IRR was much higher.
and then...."UBS AG in a separate July 27 report estimated the rate of return from the initial Pluto project of 13.2 percent. It had earlier estimated the cost as A$9 billion."
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajNwFBLRrY_0
That was in 2007,by the time we get to 2011 things get worse.
"Macquarie Securities analyst Adrian Wood said Pluto was in danger of being remembered as the most expensive LNG project ever built. He estimated Pluto's internal rate of return had dropped to an "uninspiring" 10 per cent and Woodside had been effectively "bailed out" by a rising oil price and reserve additions since it approved the project in 2007."
The above article "Browse could cost Woodside $45 billion" says,"Mr Greenwood says building near Broome has an 11 per cent internal rate of return at his forecast development cost of $45bn, which was unlikely to be acceptable to the partners.
Piping the gas to the North West Shelf would have a 15 per cent rate of return."
It's easy to see how the cost of building at JPP could blow out beyond the $45 billion,whereas running a pipe to already built and operating trains would have much less chance of a catastrophic cost and time blowout.
No wonder the 15% looks much better.
Time to run the pipe.
What's the rate of return on FLNG?
ReplyDeleteI couldn't find anything really up to date with a quick search,but must be some somewhere.
Anyone like reading bullshit,well heres an old speech of the loud mouth yanks.Is ok only need to read first couple of pages and the stink gets too much.
http://www.woodside.com.au/Investors-Media/Announcements/Documents/03.06.2010%20UBS%20Presentation%20-%20FLNG%20at%20Sunrise.pdf
3rd June 2010 - just over 2 years ago.
Opening remarks:
"Good morning. It’s great to be here in Sydney again. Last year I took this
opportunity to speak to you about “how size matters” in the LNG industry,
how Woodside had built an enviable portfolio of growth projects. Today I’m
excited to be talking to you about the quiet achiever in our portfolio, the
Sunrise LNG development."
Lucky for him his next words were:
"Now before I proceed, our usual disclaimer."
Hi
ReplyDeleteTks very much for post:
I like it and hope that you continue posting.
Let me show other source that may be good for community.
Source: Citigroup interview questions
Best rgs
David