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* Woodside says to consider other floating LNG, otheroptions
* Western Australian govt wanted onshore plant for jobsboost
* Floating LNG option could cut Browse capex by 20pct-analyst
* Woodside shares rise 3 percent
By Rebekah Kebede
PERTH, April 12 (Reuters) - Woodside Petroleum hasshelved plans for its $45 billion Browse liquefied natural gasproject in Western Australia, saying it will consider a floatingLNG plant after deciding the onshore development did not makeeconomic sense.
Global energy firms have invested $140 billion into six LNGplants in just two and half years as Australia ramps upproduction on its way to becoming the world's largest exporterof the clean burning energy source.
But Australia's LNG sector has seen investor interest cooldue to huge costs overruns and with competition from NorthAmerica where new supplies of gas have been exploited fromshale.
The Browse decision could spell an end to new onshore gasprojects in Australia in favour of offshore plants that can bebuilt more cheaply and face fewer environmental and landownerhurdles.
"This decision will surprise few as the proposed onshoredevelopment always looked too economically, technically,environmentally and socially risky for too little reward,"analysts at Macquarie said in a note.
Woodside also appears to be pivoting its focus towards NorthAmerica, confirming on Friday that it had lodged an expressionof interest to develop a Canadian LNG project.
Browse LNG was to be Woodside's biggest LNG development yet,but has been plagued by controversy over its proposed locationat James Price Point on the northwest coast, coming under firefrom environmentalists and some indigenous landowners.
The site is also home to the world's largest dinosaurfootprints and sacred Aboriginal sites known as "songlines".
Woodside CEO Peter Coleman said any new development wouldhave to provide significant costs savings, adding: "ourcustomers are saying to us very clearly,'No longer can we payfor your expensive projects'."
A floating LNG plant is considered to be the most likelyalternative for Browse by many in the industry.
JP Morgan has estimated that a floating project would mean a20 percent cost saving with capital expenditure of $35.5 billionversus $44.6 billion for the onshore development option.
Estimates of the cost of the onshore plant vary, but someanalysts had said it could be as high as $48 billion.
Of seven LNG plants under construction in Australia, all ofwhich are due to come online in 2014 or later, four have alreadyannounced cost blowouts ranging from 15 to 40 percent.
Woodside owns a 31 percent stake in Browse, which it isdeveloping with partners Royal Dutch Shell, BP Plc, PetroChina, Mitsui & Co andMitsubishi Corp.
CHEAPER FLOATING
Shares in Woodside, which is worth around $30 billion, rose3 percent on expectations it will develop a cheaper option, butJapan's Chiyoda Corp, which has a contract for theproject, tumbled 11 percent.
Building a floating plant in Asia and towing it into placeoff the Western Australia coast is likely to save billions ofdollars in construction costs.
Shell, which owns 24 percent of Woodside and is thesecond-largest shareholder in Browse, is considered to be theglobal frontrunner in developing floating LNG technology.
"We believe Shell's floating LNG technology is the fastest,most economic and the best technical solution available forBrowse," Shell Australia country chair Ann Pickard said in anemailed statement.
Another joint venture partner, PetroChina, said on Friday itis still deciding whether it will invest in Browse and isstudying the project's feasibility.
Earlier this month, Exxon Mobil and BHP Billiton revealed plans to build the world's largest floatingLNG vessel offshore northwestern Australia, producing 6-7million tonnes per annum (mtpa) of LNG from 2020-2021.
Woodside's Browse had been targeting 12 mtpa.
POLITICAL BLOW
The decision to shelve Browse is a blow to West Australia'spremier, Colin Barnett, who won reelection last month and hasbeen a vocal proponent of establishing a gas export hub at JamesPrice Point, with Browse LNG as the cornerstone project.
Another option for the plant would be for it to be delayeduntil construction costs ease, something some analysts expect tooccur once the existing plants under construction in Australiacome online.
"If Shell were to persuade Woodside that they need to takemore time on this, I don't think Shell would be criticized. Ithink that would be seen as a sensible decision at this point,"Tony Regan, an analyst with Tri-Zen International in Singaporesaid.
Shell has delayed its Arrow LNG development in easternAustralia and has said it is in no hurry to proceed with anexpansion of Gorgon LNG, in which it is a stakeholder, leadingsome to believe that the company would prefer to wait for coststo decrease before making more large investments in Australia.
Prime Minister Julia Gillard said the decision was acommercial one and did not mark the end of the country's neardecade-long boom in resources.
"We haven't seen the peak of the investment phase intoresources yet. And we are yet to see the peak of the productionphase," Gillard told reporters in Sydney.
"So we will be seeing the resources boom at work in oureconomy for a long time to come."
