Woodside CEO Meg O’Neill backs Browse project for WA gas boost
Supplies from the $US20bn Browse gas project would be piped 900km to top up the North West Shelf LNG plant in WA’s Karratha.
Woodside Petroleum is hopeful of pushing ahead with development of its giant Browse gas field off Western Australia after decades of delays, and says gas producers are in the box seat with buyers given the market’s booming LNG prices.
Supplies from the $US20bn Browse gas project would be piped 900km to top up the North West Shelf LNG plant in WA‘s Karratha where one of the five LNG trains is expected to shut in 2024 given a dearth of new gas to keep it filled.
Woodside chief executive Meg O’Neill told the Macquarie Australia Conference that Browse was back on the table as its partners including Shell, BP and PetroChina work up a development plan.
“I think we have the development concept that will be the right one for Browse. Taking Browse gas through a very long pipeline into the existing Karratha gas plant economically is probably about as attractive as we can get it to be,” Ms O’Neill said at the conference on Wednesday.
Before Browse moves to a final investment decision, the Woodside chief said it would require a carbon capture and storage solution, environmental permits from the WA and federal governments and commercial agreements between the Browse and NW Shelf ventures.
Misalignment between the two gas joint ventures has historically hampered progress.
“We are continuing to have discussions between Browse and the North West Shelf joint venture, but I don’t want to put a timeline as to when that’s going to conclude. It could be really fast or it could be really slow and we just need to make sure we get the right risk-reward balance for the two parties.”
Woodside also said producers were in pole position on LNG pricing given tight supplies as buyers clamour for fresh deals.
“I think it is fair to say that the pricing has swung in favour of the producers, particularly compared to two years ago,” Ms O’Neill said.
“We are facing the consequences of under-investment in new oil and gas developments. And that’s probably been about five years of under investments. So we’re seeing buyers come back to the table. So two years ago, buyers were happy to kind of roll the dice and buy on the spot. Now we’re seeing buyers who are much more interested in longer-term arrangements.”
Woodside will look to sell extra volumes from its Scarborough gas project off WA once its BHP Petroleum merger takes effect, as BHP had yet to agree any deals, in addition to selling off equity in the project.
“We’ll be working through the sell down and then looking for opportunities to contract additional LNG in parallel,” Ms O’Neill said.
Woodside said it will be more selective about selling down a stake in its Senegal oil project given booming markets and said it won’t be rushed until it gets a strong price.
Its first big decision once the BHP deal completes will be whether to give the go-ahead on its Trion oil discovery in the Gulf of Mexico, Ms O’Neill added.
“We need to look at the investment opportunity at Trion and how it stacks up against our capital management framework. So we’re going to run it through the lens that I talked about: looking at the economic measures, looking at the country risk, looking at what it does for the combined company’s portfolio going forward and looking at what does it mean for our corporate financials.”
Woodside was also quizzed over a renewed attempt by East Timor’s national oil company to start producing gas from its Greater Sunrise field by 2028 or 2030. The project has been blighted by a broader multi-decade standoff between the two countries on how the $50bn shared gas resource in the Timor Sea should be developed.
The Woodside chief said it remained complex dealing with both the Australian and Timor governments but said there was new momentum about the development partly due to Bayu-Undan supplies depleting in the next year, which will drain the nation of revenues.
“I think the Timor-Leste government is feeling the financial pressure associated with that loss of revenue stream. So we are seeing quite good engagement from the Timorese, but we need to first work through the production-sharing agreement,” she said.
“And then secondly work through the development concept and make sure that it’s a development concept that all of the JV partners can support. It’s a nice gas field and has nice assets. I think it would be really valuable for Timor Leste as a nation for it to be developed. But we’ve got a lot of hard work ahead of us.”
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