Woodside is trying to show its stalled Scarborough LNG project has momentum by highlighting the unsurprising acceptance of production licenses from the Federal Government.
Yesterday Woodside chief executive Peter Coleman said the move demonstrated the Perth-based LNG specialist and its partner BHP had a "strong commitment" to the $US11.4 ($15. 7 billion) project to bring gas from Scarborough to an expanded Pluto LNG plant.
That commitment, and many other aspects of Scarborough's viability, will be scrutinised tomorrow at Woodside's Investor Briefing Day.
With the Browse LNG project near death, Scarborough is Woodside's future. It is all or nothing.
Federal Resources Minister Keith Pitt supported the charade and said: "thousands of new jobs are to be created after the Coalition and WA Governments offered two production licences."
That is a lot of economic value from two pieces of paper that were never at risk of not being available.
Pitt said the Coalition Government was pleased to see the project's engineering, commercial and regulatory work was well advanced.
In reality, there is a lot to do on Scarborough to achieve a final investment decision by the much-delayed date of the second half of 2021.
Woodside has laid off a good portion of its Scarborough team since the pandemic cratered oil prices earlier this year.
Those remaining are in the middle of determining if upsizing the offshore project by 20 per cent will improve economics that were challenged even before oil and gas prices slumped.
Coleman said Woodside had now secured the key primary Commonwealth approvals required to support a final investment decision.
However, there are many joint venture and WA regulatory hurdles to be completed.
Even the short and straightforward pipeline from Pluto to the North West Shelf LNG plant to allow additional Scarborough gas to be processed is not approved to go.
Stuck in a spin cycle
Last year Woodside tried the same tactic of boosting the insignificant to appear notable before Investor Briefing Day.
"Woodside has taken a final investment decision on the pipeline component of the Pluto-North West Shelf (NWS) Interconnector," a release announced.
However, it was "subject to regulatory approvals by the State of WA and finalisation of commercial arrangements with the Pluto and NWS joint venture participants."
In other words: not final at all.
A year later, that is still the case.
In October Woodside said work was underway within the Pluto site, but there was no mention of the actual pipeline between the plants or the necessary facilities at the NWS plant.
Execution of an agreement for processing Pluto gas at the NWS is planned by December.
"The fully termed agreements are the key enabler for final JV and regulatory approvals" for the pipeline, a Woodside spokesperson said.
So approvals are yet to come, as is the real final investment decision for the interconnector.
Another approval has caught the attention of senior Woodside management over the last few months.
Danger of subsea 'Juukan cave' trouble
Marine archaeology researchers Deep History of Sea Country have appealed the recommendation of the WA Environmental Protection Authority to approve the section of the Scarborough pipeline in State waters.
DHSC in July announced it had found hundreds of ancient artefacts on the seabed to the north of the proposed pipeline route.
At the time Woodside said it welcomed the study "which indicates the potential for artefacts rather than rock art."
The Burrup Peninsula, or Murujuga, where the Pluto LNG plant is located is famous for thousands of examples of ancient rock.
"The proposed Scarborough dredging will not impact any igneous (volcanic) rock, which is the type of rock on which Murujuga rock art has been found," a Woodside spokesperson said.
However, the distinction Woodside drew between artefacts and rock art now looks risky after Rio Tinto sacked its chief executive and two other senior executives over the destruction of the Juukan cave full of artefacts.
Boiling Cold understands Juukan cave has led Woodside to revisit the danger its Scarborough pipeline could pose to indigenous heritage and its social license.
Woodside said it engaged with the Murujuga Aboriginal Corporation and the DHSC researchers many times before and after the July report and will continue to do so.
The Scarborough operator has tasked MAC to facilitate a new ethnographic survey of the area with Traditional Custodians.
Scarborough still beached for now
With an increased upstream capacity, Scarborough's long-term access to the North West Shelf plant is essential.
Woodside submitted plans to extend the life of the North West Shelf project to the WA EPA in December 2019.
The EPA expects to provide a recommendation to the Minister for Environment in the first quarter of 2021, an EPA spokesperson said.
That recommendation will inevitably be appealed by conservation groups, likely triggering a review by the Appeals Convenor.
The expanded Pluto plant has primary approvals in place but needs an updated management plan approved by the EPA for the most sensitive issue of all: greenhouse gas emissions.
Woodside will be well into 2021 at the earliest before it has regulatory certainty about all the elements of the Scarborough development.
All these regulatory issues are on top of achieving alignment with Scarborough partner BHP, finding customers in an oversupplied market, finalising the processing agreement with the NWS, selling down equity in Scarborough and financing the project.
Minister Pitt has been counting jobs well before they were hatched.
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Main image: Pluto LNG plant. Source: Woodside Energy Ltd.