Woodside Shelves Browse FLNG Project
Woodside on Wednesday said Browse FLNG project has been shelved.
In a statement published on its website, Woodside said, “that following completion of front-end engineering and design (FEED) work, the Browse joint venture participants have decided not to progress with the development at this time considering the current economic and market environment.”
“Since FEED entry, Woodside has been focused on delivering targeted cost savings and value enhancements. While significant progress was made to improve project value, this has been offset by an extremely challenging external environment.”
Woodside CEO Peter Coleman acknowledged the high quality of technical and non-technical work completed on the Browse FEED program to enable the Browse joint venture participants to reach this decision.
“We have undertaken a comprehensive and rigorous process to assess all elements of the development. The decision represents a disciplined approach to large-scale capital investment and is consistent with our requirements for a development concept to be commercially robust across a range of scenarios. Woodside remains committed to the earliest commercial development of the world-class Browse resources and to FLNG [floating LNG] as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time. Accordingly, we will use the additional time to pursue further capital efficiencies for Browse,' he said.
The company said it will now work with the Browse joint venture participants to prepare a new work program and budget to progress development activities.
Shelving of the Browse floating LNG project had been widely expected, given the number of Australian, US and other LNG projects coming onstream between 2014 and 2020, and the existing global market glut.
Three weeks ago Australian newspaper Perth Now reported that Woodside was expected to delay a financial investment decision (FID) until oil prices recover; FID had been scheduled for 2H2016.
Browse FLNG’s cost had risen from US$40bn to as much as US$50bn according to recent reports, also raising questions about what the final cost will be of Royal Dutch Shell's Prelude FLNG project now being developed and due to start production next year offshore Australia.
Last week Eni said that engineering design work for its planned Mozambique Coral FLNG offshore Africa had reduced the latter’s estimated cost to levels comparable with an onshore project, although it too has yet to take FID on that project and has already delayed the decision for a year.
Three years ago Woodside shelved an earlier version of Browse based on an onshore LNG plant that would have cost A$45bn (US$35bn).
Woodside’s participating interest in the Browse resources is 30.6% (net Woodside 2C share of 4.9 trillion cubic feet of dry gas and 142.6 million barrels of condensate). Other joint venture partners are Shell Australia Pty Ltd, BP Developments Australia Pty Ltd, Japan Australia LNG (MIMI Browse) Pty Ltd and PetroChina International Investment (Australia) Pty Ltd.
The Browse resources are located in the Browse Basin, located offshore approximately 425 km north of Broome in Western Australia.