Woodside warns global LNG shortfall to come earlier

Woodside says a global LNG shortfall many expected to hit by the mid-2020s now looks likely to occur within two years.

LNG tanker loading in Western Australia.

Woodside Petroleum chief Peter Coleman says a global LNG shortfall that many were expecting to take until the mid-2020s to hit now looks likely to strike within two years.

At its investor day in Sydney today, Woodside dramatically boosted demand forecasts that were presented at its February results as non-Chinese Asian demand gathers pace.

The result is that Woodside now sees a supply gap starting to open in 2020. In August Woodside said the gap was expected in around 2023.

“Consensus has come back to 2021 andwe think it could be as early as 2020,” Mr Coleman said.

“The supply-demand gap is becoming critical today.”

Meanwhile Woodside has boosted the size of its planned Pluto LNG expansion and associated offshore Scarborough gas development, raising the expected cost to $US11 billion from previous estimates of between $US8.5bn and $US9.7bn.

The increased capital costs come after Woodside said it would increase the size of a second LNG production unit, or train, planned at Pluto, on Western Australia’s Burrup Peninsula, as it looks at the potential to help develop third-party fields in the offshore Carnarvon Basin.

The train is now planned to have annual capacity of between four million and five million tonnes of LNG a year, up from previous plans of either a train with annual capacity of two million tonnes or one with 3.3 million, Woodside said in presentations slides filed ahead of the investor briefing.

A final investment decision is planned for 2020.

Woodside revealed it was planning a pipeline route from the Scarborough field, in which BHP has a 25 per cent stake, to the Pluto field that passed close to undeveloped gas fields in the offshore Carnarvon Basin, including Western Gas’s Equus field and Chevron and Shell’s Clio/Acme fields.

The trunkline plan is similar to one floated by Chevron last week, urging a co-ordinated infrastructure response to developing WA’s remaining gas fields.

At the time, Mr Coleman said he doubted Chevron would be ready to commit to a bigger pipeline from Scarborough to process Clio/Acme gas, or other fields in the Outer Exmouth Basin.

But he flagged building a bigger Pluto train that would run through Scarborough’s 7.3 trillion cubic feet of gas faster, opening up pipeline and plant capacity for other fields sooner.