Woodside says floating LNG the future but partners undecided
Woodside Petroleum chief executive Peter Coleman says the unproven floating LNG technology is shaping up to be the oil and gas industry's future, all but conceding that the high cost environment means it has no other viable alternative to developing the Browse mega-project in Western Australia.
But Mr Coleman said Woodside, technology provider Shell and other joint venture partners had not settled on FLNG as the way forward with Browse. This follows the scrapping of the original $45 billion-plus development plans at James Price Point last month.
"I don't want to have them feel like in any way that we're negotiating outside process," he said 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 development option as it seeks to extend its retention lease. Mr Coleman said the process was expected to be submitted within "weeks".
The rise in the original Browse development price tag has come to typify the cost blow-outs in the oil and gas sector in WA.
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.
"We'll hit it with a kitchen sink," he said.
Mr Coleman rejected suggestions that investors and other joint venture partners, including BHP (which is selling its stake to PetroChina), should be wary of the unproven nature of FLNG. He said that Petronas, and ExxonMobil with BHP, had recently committed to FLNG.
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 outweighed the construction jobs lost.
"And they're lasting jobs because that's a skill set you can export," he said.