Thursday 28/8/2008 Page: 27
Woodside Petroleum has warned that the development of its $US25 billion-plus ($29 billion-plus) Browse liquefied natural gas project could be placed at risk by the Federal Government's proposed emissions trading scheme. The Browse fields contain higher levels of carbon dioxide than the fields feeding the North-West Shelf joint venture and Woodside's Pluto and Sunrise LNG projects, although lower levels than the Chevron-led Gorgon joint venture."Browse is big and it is costly and it is higher CO2 reservoir content," Woodside's chief executive, Don Voelte, said after reporting half-year earnings of $1 billion yesterday. "If the current discussion paper does not get it correct, we will need to dramatically reduce the spending on [Browse] in 2009 and beyond." Woodside signed provisional contracts with China's PetroChina and Taiwan's China Petroleum last year to supply gas from the Browse project but it has the option to supply gas from the second train at its Pluto project, or from its Sunrise project, if those are developed more quickly.
Mr Voelte said the preferred development concepts for Browse - a joint venture with BHP Billiton, BP Chevron and Royal Dutch Shell - had been narrowed to two options. It plans to either build a new LNG facility in the Kimberley or build a long pipeline to send gas to its North-West Shelf or Pluto sites in Karratha. The North-West Shelf has space for three production trains; Pluto can fit two more trains.
The Herald understands Woodside is examining carbon sequestration to help cut emissions at the project, possibly in a similar manner to a proposal for the Gorgon project on Barrow Island. Woodside has disappointed the market by being unable to discover enough gas to underpin the development of a second production train at its $12 billion Pluto project. Mr Voelte said Woodside was in talks with third parties with nearby gas discoveries. The market was pleased by Woodside's first-half underlying earnings, which were 86 per cent higher than the same period last year due to increased production and higher oil prices.
Woodside has maintained its annual production forecast of between 80 million and 86 million barrels of oil equivalent, although a Citigroup analyst, Di Brockman, warned the second half was heavily weighted with production start-ups and associated risk. Mr Voelte said the first oil production at its Vincent project was imminent and the fifth train at the North-West Shelf would start shipping cargoes in October. "Woodside is getting very near the point I have always dreamt it could be." he said.
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