30/07/2009 - 09:58

Barnett vows to block Kimberley pipeline

30/07/2009 - 09:58

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Premier Colin Barnett has vowed to block any move to pipe gas from the Browse Basin to existing LNG facilities on Burrup Peninsula, in a bid to shore up support for his preferred Kimberley LNG hub at James Price Point near Broome.

Barnett vows to block Kimberley pipeline

Premier Colin Barnett has vowed to block any move to pipe gas from the Browse Basin to existing LNG facilities on Burrup Peninsula, in a bid to shore up support for his preferred Kimberley LNG hub at James Price Point near Broome.

Speaking at the 25th anniversary of the North West Shelf project last night, Mr Barnett was forthright that gas from the Browse Basin, “will not come to the Pilbara”.

“That (gas) will be developed in the Kimberley,” he told reporters.

A subsea pipeline to the Burrup Peninsula has long been Woodside Petroleum’s main fallback option for the $30 billion Browse LNG project if it cannot convince its wavering partners to support an onshore plant at James Price Point.

Asked if he had the power to stop any such move, Mr Barnett simply answered “yes”.

Mr Barnett said the government would not grant the necessary approvals, such as pipeline easements, for such a plan to proceed.

And though the state government would have no jurisdiction to stop the only other mooted alternative, a potential floating LNG facility at Browse, he said the technology was only suitable for smaller LNG projects, such as Shell’s proposed $3 billion Prelude FLNG venture nearby.

Nonetheless, Shell and Woodside have in the past identified FLNG technology as a possible option for both the Browse project and the big but remote Sunrise LNG project in the Timor Sea.

Mr Barnett said it was time Woodside’s Browse partners – Chevron, Shell, BHP Billiton and BP – accept reality and back the Kimberley hub. Chevron and Shell are understood to be the main parties still unconvinced that the onshore hub is the best option, although that is against a backdrop of their own rival LNG investment proposals in WA such as Gorgon (Chevron and Shell) Wheatstone (Chevron), Prelude (Shell) and Sunrise (Shell and Woodside).

Earlier, Woodside chief executive Don Voelte said he remained confident that the Browse partners would ultimately support James Price Point.

“I think we've just kind of come to a conclusion where probably, you know, possibly everyone will end up at," he said. "I just don't think you can have a world-class, 15 tcf [trillion cubic feet] opportunity, with the commitments that people make to governments, on the new terminology use it or lose it. It's going to have to get used."

Mr Voelte also left the door open to possible changes to the ownership structure of Browse if one or more of the partners could not agree on the best way forward.

“I don’t know if the equity structure will be the same,” he said. “There’s a thousand different ways that could go.” However, he stressed Woodside would “not be giving up any of our 50 per cent interest”.

Meanwhile, Mr Voelte said he hoped Woodside would be in a position to expand its $10 billion Pluto LNG project under construction at the Burrup Peninsula from one to four production trains over the coming years.

Although the Pluto field currently has only sufficient gas reserves to support a single LNG production train, Mr Voelte said discussions were progressing well with third parties – understood to include Hess Corporation and Apache Energy – to provide gas from their own permits to feed a second Pluto production train.

But given his own confidence that exploration in Woodside’s surrounding permits would itself find sufficient gas to support his ambitious expansion plans, Mr Voelte said he was now increasingly concerned about the possibility of Woodside “giving too much capacity to third parties”.

Mr Voelte identified the expansion of Pluto, the development of Browse and Sunrise, and further expansion of gas production at the North West Shelf as his four main ambitions before leaving the company.

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