Energy giant Woodside Petroleum plans to use three massive floating LNG vessels to process gas offshore for its Browse project.
The Perth-based company said it hopes to make an investment decision about building the first of three 3.5 million tonne (Mt) Shell-designed vessels for use in northern WA by mid 2015.
But analysts are worried the company could be rushing into the untested technology, given that Shell’s Prelude floating LNG (FLNG) vessel is still being built and will not be ready for production until 2017.
Woodside chief executive Peter Coleman conceded the company had contemplated waiting until Shell’s project was ready, but said major risks had been mitigated.
“Prelude will be essentially complete and will be in yard commissioning around the time that we would be looking at a final investment decision on the first vessel for Browse so we believe that will give us cost and schedule certainty,” Mr Coleman told a briefing on Wednesday.
He is confident the joint venture partners will agree to the project, but said it would take at least two or three years to bring an FLNG vessel into operation.
Woodside did not release any cost targets, saying it plans to make separate decisions before going ahead with each FLNG vessel.
“That appropriately manages the Capex risk for us,” Mr Coleman said.
The company on Tuesday said it would seek approval from its joint venture partners for a floating development, four months after shelving its onshore proposal near Broome.
Browse joint venture partner Shell is developing what it hopes will be the world’s first FLNG plant, Prelude, which is being built in Korea for another project off WA.
Woodside on Wednesday lifted its half-year net profit more than seven per cent to $873 million due to strong production from its giant Pluto gas plant.
The company is targeting full-year production of between 85-89 mmboe this year.
It has also revised down its 2013 expenditure estimate from $US2.3 billion to $US2.6 billion.
Morgan Stanley analyst Stuart Baker questioned the timing of the FID for Browse and highlighted risks associated with funding and insurance.
“I’m curious to know why you wouldn’t wait to capture full learnings of both the (Prelude) development phase and the subsequent production phase and then bring those over to your projects,” he said.
Meanwhile, Woodside is waiting for a high court decision in Israel before making its first payment towards the $US1.2 billion Leviathan project.
Shares in the company were 83 cents, or 2.2 per cent, lower at $37.87 at 1505 AEST.
