Western Australian Premier Colin Barnett continues to resist efforts by both the federal government and Woodside to permit the development of the Browse LNG project using floating technology.
Federal resources minister Gary Gray and Browse developer Woodside Petroleum are reportedly now urging Barnett to remove lease conditions on the project which require that the Browse gas field be developed onshore at James Price Point, situated 60 kilometres to the north of Broome in Western Australia’s Kimberley region.
Leases for the Browse Basin are situated in both state and federal waters, which means that 30 per cent equity holder and operator Woodside must obtain the approval of government at both levels in order to develop the project.
Gray has reportedly committed to the removal of any conditions on the federals leases for the Browse project, clearing the way for the development of a floating facility.
The Resource Minister’s push for the removal of lease conditions on the Woodside LNG project puts him directly at odds with Barnett, however, who has strenuously opposed the use of floating technology for the development of Western Australia’s offshore gas reserves from the get-go, on the grounds that it will deprive the state of jobs and revenue.
Earlier this year, Barnett said allowing the use of floating LNG to develop Browse would be “stark raving mad,” and that it would at best yield “a silly result” for Western Australia on the grounds of lost jobs and domestic gas supplies.
The Australian reports that Gray’s push for the removal of lease conditions has angered Barnett, and that the Western Australian premier is now mulling his response options.
Woodside itself favours the use of floating LNG as the most practical and economically viable means of developing the Browse Basin resources.
The company announced in April that onshore development at James Price Point as insisted upon by the Premier was economically unfeasible, with the estimated capital costs of $90 billion to 100 billion more than twice prior estimates for the project.
In May, Woodside CEO Peter Coleman said partners in the Browse project – a veritable who’s who of the global resources sector including Shell, BP, PetroChina and Mitsubishi/Mitsui, had nearly reached consensus on the adoption of floating LNG technology. This decision was facilitated by extensive experience possessed in the area by Shell, which holds a 27 per cent equity stake in the Browse project.
Floating LNG entails the construction of LNG plants on huge ocean-going vessels which are then steered to positions directly above offshore gasfields. The new technology permits the economic extraction of gas from deposits too small or remote to be developed via conventional methods.