Woodside Petroleum Shelves Browse LNG Project
23 March 2016 - 11:40AM
Dow Jones News
MELBOURNE, Australia—Woodside Petroleum Ltd. has shelved
proposals for a floating gas-export operation off Australia's west
coast due to belt-tightening and the slump in oil prices.
The Australian company on Wednesday said the partners in the
Browse venture have decided not to push ahead with development of
the floating liquefied natural gas project at this time, given the
current economic and market environment.
The project had already been delayed several times and Woodside
Chief Executive Peter Coleman in February told investors it wasn't
the time to be "reckless" with capital or to make bets on the
future being rosier simply because people wanted it to be.
Still, the decision is likely to reinforce investor and analyst
concerns about Woodside's efforts to lift production and reserves
without output from Browse. In 2014, Woodside abandoned a planned
US$2.5 billion investment in the Leviathan natural-gas discovery
off Israel's coast.
Australia has been an epicenter of gas development in recent
years, with more than US$200 billion committed to vast projects to
chill and ship natural gas, setting it up to overtake Qatar as the
world's leading LNG exporter. The planned Browse project promised a
further wave of gas exports targeting Asia, despite the current
raft of projects now beginning production having been hit by cost
overruns, delays and falling prices.
On Wednesday, Mr. Coleman said Woodside remained committed to
the earliest commercial development of the Browse resource and to
floating LNG technology but the economic environment didn't support
investment in a major LNG project at this time.
"We will use the additional time to pursue further capital
efficiencies for Browse," he said.
The Browse project sits on an estimated resource of 15.4
trillion cubic feet of dry gas, plus 453 million barrels of
condensate, in a basin about 425 kilometers north of Broome in
Western Australia. Woodside and partners in late 2013 decided to
push ahead with unproven floating technology and undersea
development to produce LNG and in the middle of last year agreed on
the front-end engineering and design phase of the project.
Woodside has an almost 31% stake in the Browse venture, while
Royal Dutch Shell PLC has a 27% interest and BP PLC a little over
17%. The other partners include Japan Australia LNG and PetroChina
Co.
International energy companies have placed large bets on
Australia's gas fields and proximity to Asian markets in recent
years. The US$54 billion Gorgon project off Western Australia led
by Chevron Corp. recently began pumping LNG and shipped its first
cargo on Monday. That comes on the heels of initial exports from
other multibillion-dollar projects over the past year involving BG
Group PLC, France's Total SA, ConocoPhillips and others. Chevron
recently pushed back the forecast for first gas from its Wheatstone
LNG project in Western Australia to mid-2017 from later this
year.
Mr. Coleman said Woodside planned to work with the Browse
partners on a new work program and budget for the development,
leveraging the work done to date. The retention leases for the
Browse project were renewed last year and are due to expire in
mid-2020.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
March 22, 2016 20:25 ET (00:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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