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Woodside abandon US$40 billion Browse LNG project

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Hydrocarbon Engineering,

Woodside Petroleum Ltd. has abandoned the US$40 billion Browse liquefied natural gas (LNG) project due to slumping prices in the global oil and gas markets. The project, which includes Royal Dutch Shell Plc and BP Plc as partners, sought to construct a floating liquefied natural gas (FLNG) plant at James Price Point to extract and process gas from the Browse Basin off the coast of Western Australia. The global FLNG market is forecast to grow at a CAGR of 15.2% by 2019, according to a report from Research and Markets, but the ongoing surplus of oil and gas could result in lower growth.

The low oil and gas prices has made Browse too expensive to undertake as it currently exists, but Woodside intend to prepare a new plan and budget for future development of the resource. Woodside originally planned to build an onshore plant for a cost of more than US$61 billion, but determined that a FLNG plant would be more cost efficient. The difficulty in bringing this project to fruition, and the oversupply of the LNG market, raises concerns about the viability of other LNG projects in development.

Scrapping the Browse project could have an unforeseen effect on related markets. The global offshore mooring systems market is predicted to be worth US$1.2 billion by 2020, but the abandonment of FLNG projects, like Browse, reduces the demand for mooring systems and the growth of this market.

The Browse project has an estimated resource of 15.4 trillion ft3 of dry gas, plus 453 million bbls of condensate, in a basin roughly 425 km north of Broome in Western Australia. Woodside and its partners decided to move forward with unproven floating technology and undersea development to produce LNG in late 2013, while in the middle of 2015 agreed on the front end engineering and design (FEED) phase of the project.

Woodside has a 31% stake in the Browse venture, while Royal Dutch Shell PLC has a 27% interest and BP has just over 17%. The other partners include Japan Australia LNG and PetroChina Co. (PTR).

Edited from various sources by Francesca Brindle

Sources: Nasdaq, PR Newswire, Bloomberg

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