BHP, Exxon set to approve $9.5b floating LNG venture off WA coast
The companies released planning documents for their proposed Scarborough joint venture, off Western Australia's coast, and declared that a floating LNG system was their preferred option for developing the resource.
Such technology is not operating in Australian waters at present.
By processing the gas on-board, the floating LNG concept removes the need to build an onshore processing hub and thereby avoids many of the environmental and landowner issues that have plagued rival projects, including Woodside's Browse LNG venture.
Essentially a large ship, the floating LNG can be located directly above offshore gas fields, and makes it viable to work in fields that would be uneconomic to exploit from land.
It can also be disconnected and shifted to other parts of the world.
In documents submitted to the federal Environment Department, Exxon and BHP said the floating platform would be 495-metres long and 75-metres wide, and would house the equipment needed for gas treatment, liquefaction and transfer into vessels that will ship the product to market.
Up to 600 people would work during the commissioning period and once operating, the workforce could reach 200.
The companies said the first wells were likely to be drilled in 2018 and 2019, and production would begin in 2020 at the earliest.
Frequently Asked Questions about this Article…
The Scarborough gas project is a proposed offshore gas development off Western Australia being progressed as a joint venture between BHP Billiton and ExxonMobil. Documents published by the companies describe it as a major gas project that could move toward approval and development.
BHP and ExxonMobil have outlined a project cost of about US$10 billion (roughly A$9.56 billion) for the Scarborough development in planning documents submitted to Australian regulators.
The companies selected a floating LNG (FLNG) system as their preferred option. FLNG is essentially a large ship-platform that processes, liquefies and transfers gas at sea, removing the need to build an onshore processing hub.
Floating LNG can avoid the environmental and landowner issues that often delay or complicate onshore projects, making some offshore fields economically viable. It also offers mobility — the platform can be disconnected and moved to other fields — which can reduce long-term project risk.
According to the companies' submission, the floating LNG platform would be about 495 metres long and 75 metres wide and would house equipment for gas treatment, liquefaction and transfer into vessels that will ship the product to market.
Planning documents said the first wells were likely to be drilled in 2018 and 2019, with production possible as early as 2020. The companies also indicated the project could be approved as early as 'next year' in their filings to regulators.
BHP and ExxonMobil estimate the workforce could reach up to about 600 people during the commissioning period, with an operational workforce around 200 once the facility is running.
For everyday investors, the Scarborough plan signals a large-capex offshore gas play by two major companies using FLNG technology not yet operating in Australian waters. Key things to watch are regulatory approvals, the companies' final investment decisions, project cost control and the start-up timetable — all factors that can influence the investment outlook for the companies involved.
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