North West Shelf partners bicker over maintenance bucks
Buck-passing between oil giants over who pays for the upkeep of the ageing North West Shelf LNG plant has emerged as the biggest hurdle to Woodside sending its Browse gas to the facility.
This story was originally published in The West Australian on 19 January 2018 with the headline "Oil giants clash over NWS costs." © Peter Milne.
Buck-passing between oil giants over who pays for the upkeep of the ageing North West Shelf LNG plant has emerged as the biggest hurdle to Woodside sending its Browse gas to the facility.
Speaking after Woodside issued its fourth-quarter 2017 report yesterday, chief executive Peter Coleman said technical work on developing Browse and building a 1000km pipeline to the NWS plant was progressing well but there was more to do on the deal with the NWS to liquefy the gas.
“It’s not so much about price, as it’s about risk sharing,” he said.
Mr Coleman said the Browse venture needed assurance that when NWS gas no longer flowed through the 29-year-old plant there would be sufficient investment to keep it safe and reliable.
He said possible solutions ranged from the NWS taking the risk of maintaining the plant for a flat fee to Browse paying for the plant upkeep, but equity transfers to make the ownership of the two projects more similar was not being considered.
The Perth-based company yesterday revealed 2017 production of 84.4 million barrels of oil equivalent — just within its guidance of between 84 million and 90 million boe.
The 2018 target has been increased to between 85 million and 90 million boe as LNG from Wheatstone is partially offset by lower oil, condensate and domestic gas volumes.
Wheatstone’s contribution has been welcomed but does not address concerns from analysts about Woodside’s medium-term growth strategy, with both the NWS and nearby Pluto LNG plant seeking supplies.
Mr Coleman said more gas could go to shore at Pluto by either drilling planned Pluto wells earlier or developing the Pyxis field discovered in 2015. Woodside is considering processing this gas by expanding the Pluto plant or building a short pipeline to the NWS plant.
ExxonMobil’s preferred option for gas from the Scarborough field had been a floating LNG facility. It is now negotiating with the NWS and is in discussions with Pluto.
Adding to the possible combinations of upstream gas and downstream LNG plants, Pluto has been approached by Browse and is understood to be talking to Chevron.
Mr Coleman said Pluto would compete to supply plant capacity.
“We’re not going to be left behind, and the North West Shelf is not the only answer,” he said.
He said Woodside had the advantage of having a foot in every camp.
Woodside shares closed at $33.40 yesterday, down 0.8 per cent.
