A Browse hurdle on the road to resource excellence

The Conversation

Last Friday, Woodside announced it would no longer be developing a gas processing plant at James Price Point in Western Australia. The announcement was greeted with enthusiasm by environmental groups. But this is by no means the death knell for gas development in the Browse Basin.

Peter Coleman, chief executive and managing director or Woodside, has reinforced the value of the Browse Development and Woodside’s continued commitment to develop resources in the area.

A particular hurdle to development in the Browse Basin is its relative isolation. The majority of development off the shore of north-west Australia is concentrated in the Carnarvon Basin, south-west of the Browse Basin, and in the Bonaparte Basin, north-east of the Browse Basin. Each region has the accumulated experience of many existing platforms and pipelines and operating onshore production facilities. But the Browse Basin is essentially undeveloped.

The Browse Basin covers approximately 140,000 sq km – about twice the land area of Tasmania. If it was easy to develop Browse, it would have been done before now: the gas fields were discovered in 1971

Woodside’s Browse Basin gas development is big – even by that state’s standards. It has estimated resources of 15.5 trillion cubic feet of dry gas and 417 million barrels of condensate. Developing the reserves was always going to be challenging: it involves three fields (Torosa, Brecknock and Calliance) 425km offshore in water depths of 750m.

The other key project in the Browse Basin is the Ichthys Development, on the eastern fringe of the basin, about 200km offshore in relatively shallow water. Gas from Ichthys will travel nearly 900km through a subsea pipeline to an onshore LNG plant in the Northern Territory (following speculation that the gas may be brought onshore in Western Australia). The project is now in the construction phase, following a Final Investment Decision in January 2012, and is due for first gas in 2017.

The Prelude Development, operated by Shell, is also located in the Browse Basin. It is due to produce first gas in 2016-2017. In contrast to the Browse JPP solution and the Ichthys Development, Prelude requires no onshore processing or long pipeline to shore due to the “floating” technology that will be used so it is relatively unaffected by isolation issues.

The table below compares some of the major projects off the shore of north-west Australia, providing some perspective to the positioning of the Browse Development in the current mix of development projects.

Woodside’s decision to rethink the initial Browse Development concept ended months of speculation about the project’s feasibility. The initial concept, developed in 2009, involved floating tension leg platforms at the deepwater locations. These would be tied back to a central processing facility closer to shore in shallower water, with a 350km trunkline to an onshore processing plant at James Price Point.

Since the initial concept was selected, costs and technology have changed. This will affect the options on the table when Woodside and the joint venture partners work out the alternative strategy for developing Browse.

At this point alternative concepts may include a pipeline to existing facilities in the Pilbara, a smaller onshore option around James Price Point or floating LNG technology.

Any decision about the development of Browse is going to be complex at many levels – in terms of technology, regulation and balancing needs across the social and environmental spectrum.

In the days since the announcement, the media has featured articles representing the pros and cons and winners and losers of the current decision and potential future decisions, underlining the complexity of the situation.

Woodside’s chief executive reinforced that the decision was a commercial one and was not influenced by environmental or public policy issues. As a publicly listed company, Woodside’s ultimate responsibility is to its shareholders.

The market viewed the decision positively, with the share price increasing following Woodside's announcement.

But it is simplistic to believe development of WA’s offshore reserves benefits only the oil and gas company shareholders.

On the 25th anniversary of the North West Shelf Venture, Martin Ferguson, then federal resources minister told parliament it is: 

... an economic and engineering feat of the same national significance as the Snowy Mountains hydro scheme. The project adds 0.7 per cent to Australia’s gross domestic product and 5 per cent to Western Australia’s gross state product.

The North West Shelf Project has not only spawned a thriving WA oil and gas sector. It has driven the application of cutting edge technologies and has led to the emergence of a world class petroleum services hub in Perth.

Many oil and gas services providers now have expanded and diversified into new markets and technologies. This diversification and growth is driving a broadening and deepening of the Western Australian economy.

The skills and technologies developed by this project and its suppliers continue to underpin new and planned oil and gas developments. More fundamentally – gas from the venture has provided energy to fuel WA’s minerals boom and industrial sectors and 20 years of LNG exports.

Technical expertise during development of the North West Shelf Venture was mostly brought in from overseas. In the subsequent 30 years, WA engineers have provided significant input into local projects and exported expertise to global projects.

Perth is growing into a world-recognised engineering centre of excellence. Woodside, Chevron and Shell have all sponsored industry chairs at the University of Western Australia, fostering large research groups in the areas of offshore engineering, geophysics and gas processing.

Beyond Browse, the expertise and experience growing in Perth will contribute to a long term vision of WA having the same global status as other 'go to' hubs of oil and gas engineering excellence, like Houston, Oslo or Aberdeen.

Susan Gourvenec is a professor of offshore geomechanics at University of Western Australia. This story first appeared on The Conversation. Reproduced with permission.