Offshore staff
LONDON – Australia’s North West Shelf (NWS) LNG project could have up to 7 MM metric tons (7.7 MM tons) of spare capacity by 2027, according to Wood Mackenzie.
This is equivalent to 40% of the project’s nominal capacity.
The Woodside-operated five-train NWS plant has produced LNG since 1989. In 2021, production capacity is set to become available for the first time.
Wood Mackenzie senior analyst Daniel Toleman said: “Decisions on how to fill this gap need to be made now, not only because time is running out, but also because the joint venture is breaking-up.
“Chevron is running a process to sell out of the NWS, and we see other majors likely to follow.
“We see two windows of opportunity for backfill: one for smaller projects with short lead times, and the second for larger-scale resources that can extend the life of the NWS through to 2050.”
Woodside is progressing discussions on the Pluto and Waitsia projects which will could add incremental supply to the NWS from 2022, but according to the consultant, larger-scale developments are needed for the long term.
Of these, the Woodside-operated offshore Scarborough and Browse developments are the most likely backfill options due to their size. The former is currently earmarked to supply a second (new) LNG train at the Pluto plant, while the latter is a more remote and high-capex greenfield mega-project.
Other candidates such as Clio-Acme, or excess gas from Chevron’s Greater Gorgon field development, are less likely options, the consultant claimed.
According to Toleman, “challenges aside, there are compelling reasons for keeping NWS full. Once third-party gas flows through the plant, partners will receive a tariff for liquefaction.
The government will receive additional tax revenue, the Dampier to Bunbury pipeline operator receives more revenue and there will be more domestic gas supply for the local market.
“Upstream participants can also monetize undeveloped resources and gain access to potentially higher LNG prices on a low capital outlay.”
09/08/2020
