Woodside agrees on US$12bn LNG investment and BHP oil merger

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Green light given for Scarborough and Pluto expansion in Australia

WOODSIDE has approved a US$12bn investment in the Scarborough gas field and expansion of its Pluto LNG plant in Australia, alongside a A$40bn (US$28.8bn) merger with BHP’s oil and gas business.

The Scarborough field is located around 375 km off the coast of Western Australia and contains an estimated 11.1trn ft³ of gas. Plans are to initially drill eight wells, expanding to 13 wells, which will supply a floating production unit. The unit will contain separation, dehydration and compression facilities and will be remotely operated from Perth. The gas will be sent through a 430 km pipe to the Pluto LNG facility near Karratha in the northwest of Western Australia. The Pluto LNG facility already has one LNG train capable of processing around 5m t/y of gas. This will be modified to process up to 3m t/y of dry gas from Scarborough. And a second train called Pluto 2 will be built with the capacity to process a further 5m t/y of gas from the Scarborough field. The EPC contract for Pluto 2 and the integration work with Pluto 1 has been awarded to Bechtel.

Woodside will also build a new plant at Pluto with the capacity to supply an additional 225 TJ/d of domestic gas.

In a call with investors, Woodside CEO Meg O’Neill defended the decision not to send gas from Scarborough to the nearby NW Shelf LNG plant. Delays to investments in production from the Browse field mean the NW Shelf is likely to close one of its five LNG trains and investors had suggested that filling the supply gap there would be better than building new capacity elsewhere.

The Australian reports that O’Neill told investors that the NW Shelf plant is ill-suited to processing Scarborough’s dry gas, saying: “We looked many times at the possibility of taking Scarborough across to North West Shelf. The plant modifications required to do that at volume would be extensive. And for those of you who are concerned around capex risk, when you’re doing that sort of complicated modification on a live plant the capital risk is tremendous.”