Oil, gas majors float Scarborough plan

The gasfield has an expected life of [about] 25 to 35 years. Scarborough submission

The gasfield has an expected life of [about] 25 to 35 years. Scarborough submission

BHP Billiton and ExxonMobil could approve a new $US10 billion gas project in Australian waters as early as 2014, according to documents published on Tuesday.

The oil and gas majors released planning documents for their proposed Scarborough joint venture off the West Australian coast, and said a floating liquefied natural gas system was their preferred option for developing the resource.

Such technology is not operating in Australian waters, but is rapidly advancing, with Shell building what it says is the world's first floating liquefied natural gas hub for use in Australia's Prelude gasfield.

By processing the gas on board, the floating concept removes the need to build an onshore hub, avoiding many of the environmental and landowner issues that have plagued rival projects including Woodside's Browse gas venture.

Essentially a large ship, the infrastructure can be directly above offshore gasfields, and makes it viable to work in fields uneconomic to exploit from land.

It can also be disconnected and moved to another area once it has finished at a site.

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 on board during commissioning, and once operating the workforce is planned to be closer to 200.

The two companies said the first wells at Scarborough were likely to be drilled in 2018 and 2019, and production would begin in 2020 at the earliest.

"The Scarborough gasfield has an expected producing life of approximately 25 to 35 years," the companies wrote in their submission to the environment department.

The platform would be about 220 kilometres from WA's Ningaloo Reef, but the companies insisted there was unlikely to be significant impacts on the reef, nor the whales and turtles that pass through.

While the two companies will continue to investigate other options for the development of Scarborough, public confirmation that a floating liquefied natural gas system is the preferred option is a blow to Woodside Petroleum, which has been trying to source extra gas from third parties to warrant building another processing unit at its Pluto LNG hub.

Scarborough's proximity to Pluto meant the field had been considered a candidate to help Woodside build volume through its plant.

The revelation that a final investment decision could be less than two years away comes at a time when BHP is cutting costs and seemingly averse to major new spending decisions.

It also highlights how quickly Scarborough has risen in BHP's estimations, given that this time last year its biggest project priorities were its three "mega projects": the Olympic Dam expansion in South Australia, the outer harbour at Port Hedland, and the Jansen Potash project in Canada. It chose to defer all of them indefinitely in mid-2012.

BHP shares closed 4ยข lower at $32.72

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