25/08/2009 - 10:36

Woodside offers Browse partners an exit

25/08/2009 - 10:36

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Woodside Petroleum chief executive Don Voelte said the company had suggested a range of exit options to its wavering partners in the $30 billion Browse LNG venture to facilitate the timely delivery of the massive project off the Kimberley coast.

Woodside Petroleum chief executive Don Voelte said the company had suggested a range of exit options to its wavering partners in the $30 billion Browse LNG venture to facilitate the timely delivery of the massive project off the Kimberley coast.

Woodside, which holds 50 per cent of the project, is a strong supporter of the WA government's proposed LNG hub at James Price Point near Broome as the best option for being able to approve development as early as 2011.

However, it is yet to convince all of its four joint venture partners, most notably Shell and Chevron, that the onshore hub is a better option than piping the gas to the North West Shelf facilities in the Pilbara to replace declining reserves there.

Premier Colin Barnett has already vowed to block the pipeline proposal as an alternative for gas development at Browse.

Speaking to reporters after addressing a business breakfast in Perth, Mr Voelte said Woodside had prepared a range of alternative options for the partners to consider should they feel unable to agree on the best development route for Browse.

"Woodside has tried to think through those. We've done some things that I don't really want to go into too much detail (about), to offer the venturers out if they don't want to go forward," Mr Voelte said.

"And we've even offered them an option that allows them to have their reserves, which are very important to them, in respect of possibly offering to buy their gas at the well head of the platform, and then downstream they don't have to worry.

"So we are going to give them a lot of offers - I suspect there are other companies that would like to replace them - but each company has a valuable asset there and they are going to have to make up their own mind what their future course is. And it's completely their decision."

Mr Voelte said it was natural for there to be a difference of opinions between partners in a major project such as Browse, but those differences would not prevent the project from going ahead. He noted that similar differences emerged before the development of the North West Shelf took place in the early 1980s.

However, he said time was the critical issue, not just for Woodside, but also for the state and federal governments which were determined to ensure companies comply with the "use it or lose it" provisions of petroleum leases once a major discovery has been confirmed.

Mr Voelte said Woodside had set the benchmark for development timeframes with its $12 billion Pluto LNG project, which will come onstream next year - just six years after the initial discovery was made.

In comparison, the Browse gas fields were discovered in 1971, the year before the first discovery at the North West Shelf.

The onshore hub option would enable Browse to be in production as early as 2015, at least seven years earlier than if a pipeline was built to gradually "backfill" declining reserves at the North West Shelf, he said.

Mr Voelte said the best option he had seen for piping gas from Browse would not see production start until 2022, and that production volumes would not be enough to fill even a single LNG production train until 2028.

"That's kind of a long time to wait for the citizens of Australia to make money off that project," he said. "I believe five to seven years is probably the right time frame."

Mr Voelte said Browse could realistically be approved and developed "about 12-18 months behind Gorgon if everybody is on the same page."

Given the slew of competing LNG developments on the drawing board in WA, Woodside is eager to maintain its significant edge over its chief rivals in establishing itself as one of the world's leading producers.

It has already commenced front end engineering and design (FEED) for a second and third train at its 90 per cent owned Pluto LNG plant on the Burrup Peninsula that could see Pluto's output rival that of the Gorgon project as early as 2014.

At that pace, all three Pluto trains will be up and running two years before the first gas is produced by Chevron's rival Wheatstone LNG project in 2016, which also entered the FEED stage last month.

On Woodside's schedule, Browse would also be running by the time Wheatstone comes onstream, at which point its Sunrise LNG venture may also be under development.

Asked about the continuing oil spill at the Montara oil field in the Timor Sea, Mr Voelte said Woodside had offered its full assistance to the field's Thai owner, PTTEP Australasia, and the state and federal governments to help contain and clean-up the spill.

"We have contacted the Government and have put all of Woodside's resources at their use if they want them, we've got a rig that they can take if they a rig," he said.

Although confident in the industry's ability to respond to the spill, Mr Voelte said the incident was regrettable and was not good for the industry's reputation.

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