Deadline set on Browse LNG project

The Australian and Western Australian governments set a 4-month deadline for the Browse LNG group, operated by Woodside Petroleum Ltd., to agree on a plan for the proposed $30 billion (Aus.) LNG plant in the Kimberley region of Western Australia.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Dec. 4 -- The Australian and Western Australian governments set a 4-month deadline for the Browse LNG group, operated by Woodside Petroleum Ltd., to agree on a plan for the proposed $30 billion (Aus.) LNG plant in the Kimberley region of Western Australia.

The time limit comes as part of a condition imposed on the Browse partners for the renewal of retention leases on the Browse gas fields—Torosa, Brecknock, and Calliance—about 280 km offshore from Broome and Derby.

The governments want Woodside and partners BHP Billiton Ltd., Chevron Corp., BP PLC, and Royal Dutch Shell PLC to devise a development plan and work towards a final investment decision on the project by 2012.

They want the group to select the Kimberley LNG precinct at James Price Point for the proposed LNG domestic gas plant unless the joint venture can demonstrate an alternative development concept is likely to be commercially viable at an earlier date.

The conditions stipulate the joint venture undertakes a work program over the next 30 months that commits $1.25 billion (Aus.) to ensure the earliest commercialization of the Browse resources. This includes undertaking a basis of design in 2010 and front-end engineering and design in 2011 leading to an investment decision the following year.

The ultimatum backs Woodside Chief Executive Officer Don Voelte’s growing push for rapid development of the project, which would see 14 tcf of gas reserves sent to the Kimberley LNG hub.

The other partners in the JV have not been so keen, all saying they need more time to make a decision. Mostly they prefer a delayed development to add on to the North West Shelf gas project between 2017 and 2027.

However, the 2012 target is a clear sign that the federal government is going to enforce its much publicized “use it or lose it” retention lease policy to speed gas developments off the Western Australian coast.

Woodside has 50% of the Browse fields, and Voelte has said he would like the other partners to join it in development. However, he’s ready to take on more equity in the project if some of the partners want to sell out.

The Browse joint venture was given 30 days to accept the retention lease renewal offers.

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