Australia’s energy players are looking at offshore gas processing to ensure resources such as the Browse and Scarborough fields are exploited in the near future.
BHP Billiton, which sold its 10 per cent stake in the controversial Browse project last year, confirmed it is considering developing the Scarborough gas field, also off the coast of Western Australia, with ExxonMobil using either offshore floating technology or processing the gas onshore.
A final decision on Scarborough is yet to be made, but analysts say cost pressures in WA are making floating liquefied natural gas (FLNG) technology a more economic option.
WA Premier Colin Barnett opposes a floating option for the Browse project, potentially setting him on a collision course with newly appointed federal Resources Minister and former Woodside executive Gary Gray who is in favour of FLNG.
Mr Gray recently backed the preference for a FLNG operation at Browse by Woodside’s joint venture partner, Royal Dutch Shell, and said the technology could reduce capital investment costs and improve environmental effectiveness.
“Floating LNG brings a unique capability and solution to the development of offshore oil and gas resources,” Mr Gray said on Monday.
Meanwhile, Woodside is sticking to its schedule for a final decision on the Browse project by June but analysts expect the decision to be delayed by at least a year.
A Woodside spokeswoman declined to comment on the implications for the company’s Browse project following speculation over the Scarborough project and the appointment Mr Gray as the resources minister.
Morningstar analyst Mark Taylor said the Scarborough field, which is about 300 kilometres offshore from Exmouth, was a potential gas feed for Woodside’s Pluto project.
“If they’re going to do their own floating LNG, that’s one less potential source of gas for expanding Pluto,” Mr Taylor said.
“Piping gas all the way to the coast potentially makes the economics work in favour of floating LNG.”
A floating option could be favourable where there were competing environmental and cultural interests.
Another analyst said floating LNG had previously been ruled out at Scarborough, but cost pressures made FLNG more viable.
Nexus Energy is examining a FLNG option for its Crux project in the Browse Basin.
