Floating LNG most viable, says Coleman
But Mr Coleman said Woodside and technology provider Shell had not yet formally settled on FLNG as the way forward to Browse with the other joint-venture partners after the company scrapped the original $45 billion-plus development plans at James Price Point.
"I don't want to have them feel like in any way that we're negotiating outside process," he said in a briefing with reporters on the sidelines of the APPEA conference in Brisbane on Monday. "But I expect they'll come to resolution soon."
The lack of formal agreement with its joint venture partners means Woodside has not specified FLNG as the only option as it seeks to extend its retention lease. Mr Coleman said it would not delay the process, which is expected to be submitted within "weeks".
The spectacular rise in the original Browse development price-tag has come to typify the cost blow-outs in oil and gas out west.
But Mr Coleman said Woodside now had a target cost in mind for Browse and was designing the development plan. He said another cost blow-out rendering the project unviable was not an option.
He rejected suggestions that investors and other joint venture partners, which include BHP (which is selling its stake to PetroChina) should be wary of the as yet unproven nature of FLNG. He pointed out that Petronas, and ExxonMobil with BHP, had recently committed to FLNG for their respective projects.
Opposition energy spokesman Ian Macfarlane said floating LNG was not "optimal" given the states would miss out on "thousands of construction jobs" including career opportunities for local indigenous communities.
But Mr Coleman said the potential for a FLNG technology hub to be based in Perth far outweighed the construction jobs lost.
"And they're lasting jobs because that's a skill set you can export," he said.
Frequently Asked Questions about this Article…
Floating LNG (FLNG) is a technology that processes and liquefies gas offshore. Woodside Petroleum’s chief Peter Coleman says FLNG is shaping up to be the industry’s future and is being considered for the Browse mega-project after the company scrapped the original onshore James Price Point development.
No. Woodside and technology partner Shell have not yet formally settled on FLNG with the other joint-venture partners. Because there is no formal agreement, Woodside has not specified FLNG as the only option while it seeks to extend its retention lease.
According to Woodside, the lack of a formal FLNG agreement with partners will not delay the retention-lease process. The company expects to submit its lease extension within weeks and expects the partners to reach a resolution soon.
The original Browse development experienced a spectacular rise in its price tag—typified as part of wider cost blow-outs in west Australian oil and gas projects. Woodside says it now has a target cost in mind and is designing the development plan so another cost blow-out that would render the project unviable is not an option.
The article notes Woodside and Shell collaborating on FLNG for Browse, and Peter Coleman pointed out that Petronas and ExxonMobil (with BHP) have recently committed to FLNG for their respective projects. The article also mentions BHP is selling its stake to PetroChina.
Opposition energy spokesman Ian Macfarlane warned that choosing FLNG would be sub-optimal for states because they would miss out on thousands of construction jobs and career opportunities for local indigenous communities. Woodside’s Coleman argues the potential for a Perth-based FLNG technology hub, which creates lasting and exportable skills, outweighs the construction jobs lost.
Peter Coleman suggested a Perth-based FLNG technology hub could generate lasting jobs and a skill set that can be exported, which he believes outweighs the short-term construction jobs lost with an onshore build. For investors, this points to a shift toward service, technology and long-term capability rather than one-off onshore construction activity.
Investor risks raised in the article include the unproven nature of FLNG technology, historical cost blow-outs on the original Browse plan, and community/job impacts from choosing offshore rather than onshore development. Woodside contends these concerns are being managed by setting a target cost, designing a new development plan, and noting industry commitments to FLNG by other major players.
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