A price has been set for processing Scarborough field gas at the Pluto LNG facility, Woodside Petroleum and BHP announced today, the second boost for the $15 billion project in recent weeks.
The Scarborough project is 75 per cent owned by Woodside, with BHP holding the remainder.
Pluto is 90 per cent controlled by Woodside, with Kansai Electric and Tokyo Gas owning equal portions of the remainder.
Gas from Scarborough will be piped back to the existing Pluto LNG facility, where they plan a second processing train to be built.
“This agreement on tolling price, together with the increase in Scarborough gas resources announced earlier this month, provides a compelling and aligned basis for BHP and Woodside to finalise the required conditional binding agreements by the end of the first quarter of 2020,” Woodside chief executive Peter Coleman said.
“It is a key milestone as we target a go-ahead for the development of the high-quality Scarborough gas resource through an expanded Pluto LNG facility.
“The joint venture is now in a strong position to proceed to final investment decision in the first half of next year,” he said.
BHP said the agreement meant the two businesses were aligned on a final investment decision by mid-2020.
The Big Australian committed not to exercise an option to increase ownership of the Scarborough gas title by a further 10 per cent.
BHP country manager for petroleum Australia Graham Salmond said the company was committed to Scarborough.
"It is a project that can compete for capital within our capital allocation process and provides potential for our Australian business to grow value and returns," Mr Salmond said.
“We are pleased to align on a non-binding commercial heads of agreement with Woodside, which includes a competitive processing tariff that reflects BHP’s view on value and risk, and agreement to fully assess optimisation to process additional Scarborough gas through the North West Shelf.
“We will continue to work closely with Woodside to ensure Scarborough delivers value for our shareholders, partners and the community.”
Notably, BHP said the agreement also meant work would continue to evaluate processing extra Scarborough gas through North West Shelf, potentially in competition with the Browse development.
Earlier this month, Woodside raised its estimated reserves at Scarborough by 52 per cent to be 11.1 trillion cubic feet.
First gas is still targeted for 2024.
