Woodside shelves Browse FLNG project
WOODSIDE PETROLEUM has shelved plans to develop the US$40bn Browse LNG project, off the coast of Western Australia (WA) due to recent low oil prices.
The decision was made following completion of front-end engineering and design (FEED) work. Woodside said the FEED work showed “significant progress” to improve the project’s value for money, however, oil prices of under US$43/bbl since November 2015 have led the company to focus on cost saving measures.
A consortium of Samsung and Technip won the contracts in 2015 to complete the FEED and engineering, procurement and construction (EPC) work to build three floating LNG (FLNG) units for the Browse project.
Peter Coleman, CEO of Woodside, said: “Woodside remains committed to the earliest commercial development of the world-class Browse resources and to FLNG as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time.”
Woodside originally planned to build an onshore LNG plant worth US$28bn in 2010. The onshore plan was shelved in 2012 as costs had increased to US$41bn, and Woodside was unsure of the financial viability of the project. A proposal for a US$40bn FLNG project was endorsed by Woodside in 2013, with FEED work for the FLNG project beginning in 2015. Three large FLNG ships were to be located the 425 km off the coast of WA over the Browse gas fields.
Woodside owns a 30.6% share interest in the Browse resources, which include 142m bbl of condensate and 139bn m3 of dry gas. The company will continue to retain its lease in the Browse partnership until mid-2020.
The company intends to use the work done by its partners to agree principles for supply chain arrangements and to manage maritime boundary changes to find an alternative path for the project. The WA government has given Woodside 120 days to propose a work programme.
The decision was made following completion of front-end engineering and design (FEED) work. Woodside said the FEED work showed “significant progress” to improve the project’s value for money, however, oil prices of under US$43/bbl since November 2015 have led the company to focus on cost saving measures.
A consortium of Samsung and Technip won the contracts in 2015 to complete the FEED and engineering, procurement and construction (EPC) work to build three floating LNG (FLNG) units for the Browse project.
Peter Coleman, CEO of Woodside, said: “Woodside remains committed to the earliest commercial development of the world-class Browse resources and to FLNG as the preferred solution, but the economic environment is not supportive of a major LNG investment at this time.”
Woodside originally planned to build an onshore LNG plant worth US$28bn in 2010. The onshore plan was shelved in 2012 as costs had increased to US$41bn, and Woodside was unsure of the financial viability of the project. A proposal for a US$40bn FLNG project was endorsed by Woodside in 2013, with FEED work for the FLNG project beginning in 2015. Three large FLNG ships were to be located the 425 km off the coast of WA over the Browse gas fields.
Woodside owns a 30.6% share interest in the Browse resources, which include 142m bbl of condensate and 139bn m3 of dry gas. The company will continue to retain its lease in the Browse partnership until mid-2020.
The company intends to use the work done by its partners to agree principles for supply chain arrangements and to manage maritime boundary changes to find an alternative path for the project. The WA government has given Woodside 120 days to propose a work programme.
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