Woodside chooses floating LNG for Australia project

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August 22, 2013

(Reuters; Aug. 20) - Woodside Petroleum has called for the construction of a floating liquefied natural gas plant to develop the Browse gas fields off Western Australia, rather than an onshore plant, to help beat high labor and construction costs. Woodside, which has previously indicated a preference for the floating LNG option, scrapped a $45 billion onshore proposal in April. The recommendation for an offshore production and processing ship may mark a new era of focus on offshore LNG projects in Australia.

With half a dozen LNG plants under construction in Australia, developers have warned that soaring costs will inhibit new projects as the country faces increasing competition from North America and East Africa. Shell is expected to bring the world's first floating LNG plant, Prelude, online in waters off northwestern Australia before 2017. It may cost 20 to 25 percent less to build gigantic floating ships to liquefy gas close to offshore wells, rather than pipe the gas to an onshore facility, according to analysts at Bernstein.

But an offshore plant faces opposition in Western Australia, where the state government is concerned it will create fewer jobs and reap much smaller benefits for the local economy. Woodside CEO Peter Coleman said Aug. 20 that following a review of alternatives, including a pipeline to the North West Shelf LNG facilities and another onshore option, the company has decided to recommend floating LNG to its partners Shell, BP, PetroChina, Mitsui and Mitsubishi.

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