Bloomberg: BHP Backs Floating LNG Plan off Australia With Partner Exxon

BHP Billiton Ltd. (BHP), Australia’s biggest oil and gas producer, backed plans to develop what may be the world’s largest floating liquefied natural gas project, saying it’s “fully aligned” with partner Exxon Mobil Corp.

“We’ve progressed it far enough now that we’re confident in the technology and the commerciality, so we know it will go forward,” Tim Cutt, president of BHP’s petroleum and potash division, told reporters today on a conference call.

BHP, the world’s largest mining company, will weigh the proposed Scarborough floating LNG development off the west coast of Australia against other investments, Cutt said. While Exxon has made significant progress, it needs to find ways to make the venture more profitable and overcome challenges including the location and water depths, its Australian unit wrote today in an e-mail response to questions.

Turning natural gas into liquid at sea is potentially cheaper than processing it onshore as it eliminates the need for pipelines to the coast. Royal Dutch Shell Plc in Australia is developing the Prelude floating LNG vessel, expected to weigh six times as much as the biggest aircraft carrier.

BHP has studied floating LNG for years and spent a “huge amount of money” evaluating the technology, Cutt said.

The company is looking for large liquids-rich basins in Western Australia, and sees prospects in the Great Australian Bight off the south coast as less attractive than other regions with technical challenges and higher costs, he said. MORE