Woodside floats a new option for Browse

ENERGY giant Woodside Petroleum has confirmed it will move forward with plans for a floating LNG (FLNG) platform offshore WA, following its decision to abandon the $45 billion Browse LNG development at James Price Point near Broome.
About three weeks after Woodside claimed cost pressures had forced it to reconsider the Browse development site, the company entered into an agreement with joint venture partner Royal Dutch Shell to outline the key principles of the FLNG alternative. Woodside chief executive Peter Coleman said FLNG would be the quickest way for the company to develop the 15.5 trillion cubic feet of gas and 417 million barrels of condensate contained within the Browse fields.
“It also provides the opportunity for Western Australia to become an industrial, operational and technology centre for excellence for floating LNG worldwide,” Mr Coleman said.
Speaking at Woodside’s AGM on 24 April Mr Coleman said that while the James Price Point decision was difficult, it was the right one for the company and its shareholders. “From the initial decision in 2009 to commence basis of design work for James Price Point, development costs rose significantly for the full field development,” he said.
“While commodity prices have risen over the same period, this increase was not sufficient to provide commercially acceptable returns.”
Woodside’s decision to bow out of the James Price Point development was met with mixed reactions from WA.
Environmental groups, who opposed the project’s location from the outset, hailed it as a win for the region.
However, as a staunch supporter of the project, WA Premier Colin Barnett expressed his concern about the FLNG option and its lack of economic and employment benefits for the state.
“While I acknowledge that this was a commercial decision by Woodside and its joint venture partners, I am bitterly disappointed,” Mr Barnett said.
“Developing this huge natural resource, which is owned by all Australians, offshore is not in the best interests of the nation or the people of WA.”
Mr Barnett said he would do all he could to ensure the option of a smaller land-based processing plant was still a prospect.
The region’s traditional owners will also miss out on the benefits of the project, with Woodside ruling out making ex-gratia payments to the Kimberley Aboriginal groups with whom it had signed a $1.5 billion social benefits package.
Following the Woodside AGM, Mr Coleman told reporters the company would honour its $18 million native title payments, but that full compensation was based on the successful final investment decision at James Price Point, which was now void.
Aside from Browse, Woodside reported a moderately successful first quarter, with a 55 per cent production increase compared to the corresponding period in 2012.
First quarter production totalled 21.9 million barrels of oil equivalent, and sales revenue was up 50 per cent from the first quarter of 2012 to US$1.45 billion.
Production was 10 per cent below that of the 2012 December quarter, however, due to the Vincent FPSO being off station for planned shipyard maintenance, with sales also down by 16 per cent.
Woodside’s strong financial position in the first quarter prompted it to announce a special dividend to of US$0.63 per share, to be paid out later this month. Chairman Michael Chaney said the company had strong cash flows, namely due to the better-than-expected start up of the Pluto LNG project, the acquisition of a 30 per cent interest in Israel’s Leviathan field and promising expansion projects offshore WA.
“Woodside is in a fortunate position, at the present time, of having a number of promising growth prospects ahead of it and also experiencing strong cash flows,” he said.
“Given the lead times involved with the growth projects and forecasts reductions in the company’s debt levels, the board has concluded that it would be appropriate to pay a special dividend to shareholders now and increase the company’s dividend ratio.”
During the first quarter, work continued at the company’s North Rankin and Greater Western Flank projects offshore WA, and front-end engineering and design began for the Xena gas field as part of Pluto LNG’s ongoing development.
Woodside reported there were no plans to expand the Pluto project, but further exploration was scheduled in the region for coming years.

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