Woodside, Shell strike deal for floating LNG option
The agreement will enable Browse to undertake floating LNG (FLNG) as a development option using Shell's technology.
But any decision still requires the approval of the other Browse joint venture partners.
"Woodside will immediately engage with the joint venture participants regarding the agreement, the extent of work on alternative development concepts and the obligations under the Browse retention leases," Woodside said in a statement to the stock exchange on Tuesday.
Woodside's decision earlier this month to drop its original $45 billion-plus onshore development plans for the Browse project due to rising costs was widely welcomed, but also prompted analysts to question where the oil and gas giant's future growth was going to come from.
Woodside considered other development options, including a smaller onshore plant at James Price Point and a pipeline option with North West Shelf and Pluto.
But comments from Woodside chief executive Peter Coleman on Tuesday appeared to confirm FLNG was the leading option. He said FLNG had the potential to commercialise the Browse resources in the earliest possible time frame.
"This agreement enables Woodside, as operator of the Browse LNG Development, to strengthen our development and operational capabilities through the potential use of Shell's ... FLNG technology," Mr Coleman said.
"It also provides the opportunity for Western Australia to become an industrial, operational and technology centre for excellence for floating LNG worldwide."
The other Browse joint venture partners include BP, Japan Australia LNG and BHP Billiton.
Shares in Woodside closed 99¢, or 2.6 per cent, lower at $37.56 on Tuesday.
Frequently Asked Questions about this Article…
Woodside Petroleum signed an agreement with Shell that enables the Browse gas project to consider floating liquefied natural gas (FLNG) as a development option using Shell's FLNG technology. The deal signals FLNG as Woodside's preferred route to develop the Browse resource, but any final decision still needs approval from the other Browse joint venture partners.
FLNG stands for floating liquefied natural gas, a way to process and liquefy gas at sea on a floating facility. Woodside says FLNG has the potential to commercialise the Browse resources in the earliest possible time frame, which is why it's now the leading option compared with previous onshore plans.
No — the Woodside–Shell agreement allows FLNG to be pursued as an option, but any decision to proceed still requires approval from the other Browse joint venture participants. Woodside will engage with those partners about the agreement and alternative development concepts.
The other Browse joint venture partners named in the article are BP, Japan Australia LNG and BHP Billiton. These partners must be consulted and give approval before a final development decision is made.
Woodside dropped its original more than $45 billion onshore development plan earlier in the month because rising costs made that option unviable. That decision prompted the company to explore alternatives, including FLNG.
Woodside considered a smaller onshore plant at James Price Point and a pipeline option linking Browse to the North West Shelf and Pluto facilities, in addition to the FLNG option now enabled by the Shell agreement.
Yes. Woodside's chief executive, Peter Coleman, said the agreement could give Western Australia the opportunity to become an industrial, operational and technology centre of excellence for floating LNG worldwide, by strengthening development and operational capabilities through Shell's FLNG technology.
On the day of the announcement, Woodside shares closed down 99 cents, or 2.6 per cent, at $37.56, reflecting market movement following the company’s change of development strategy for Browse.
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