Browse would have cost $80b; Woodside

Written By Unknown on Rabu, 18 Desember 2013 | 11.25

ENERGY giant Woodside Petroleum has revealed the cost of its controversial Browse onshore gas project would have exceeded $80 billion, almost double the previous estimate.

Woodside and its joint venture partners spent $2 billion studying the viability of using James Price Point near Broome as an onshore gas processing hub.

But the company shelved the project with an original $45 billion price tag in April and announced plans to process gas offshore using up to three massive floating LNG (FLNG) vessels.

Vice president of corporate affairs Roger Martin said Woodside would have lost about $1 billion on the onshore project, and Woodside's share would have been about $25 billion of the $80 billion development cost.

"Effectively, we would have spent almost the entire value of our company on an uneconomic project," Mr Martin said in a statement.

"The challenge would have been limiting our losses in an environment in which almost all major resources projects in Australia have increased significantly in cost."

Woodside has a market capitalisation of $30.7 billion.

The release of the Browse figures comes a day after a group of large industrial gas users, including Fortescue Metals Group, Alcoa and Newmont, urged West Australian Premier Colin Barnett to stand firm in insisting the Woodside-led Browse gas project is developed onshore.

But Woodside said that arguing about the benefits of a land-based development versus a floating development was a pointless exercise.

"There is no commercially viable land-based development," Mr Martin said.

"If James Price Point or another land-based option was commercially viable, we would now be undertaking site preparation works for this project."

He said the company was "deeply disappointed" it was not undertaking an onshore project, but it hopes FLNG will allow it to develop the resource.

The James Price Point project option attracted widespread community opposition due to environmental concerns.

However, in October, a WA Parliamentary inquiry into floating LNG heard the difference in the return on investment between an onshore or floating Browse project was about one per cent.

Last week, Prime Minister Tony Abbott called on Mr Barnett to embrace floating LNG technology, saying it was better to have a floating project than no project at all.

Mr Barnett has rejected a floating development for Browse, saying an onshore processing plant in the Kimberley would bring more benefits to the state including jobs. He also fears the massive purpose-built vessels may not be able to withstand severe cyclones.


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