MELBOURNE/PERTH, Aug 20 (Reuters) - Woodside Petroleum Ltd has called for the construction of a floating liquefiednatural gas plant to develop the Browse gas fields off WesternAustralia, rather than an onshore plant, to help beat highlabour and construction costs.
Woodside, which has previously indicated a preference forthe floating LNG option, scrapped a $45 billion onshore proposalin April, and the recommendation may mark a new era of focus onoffshore LNG projects in Australia.
With around $190 billion worth of LNG developments under wayin Australia, LNG developers have warned that soaring costs willinhibit the development of new projects as the country facesincreasing competition from North America and East Africa.
Royal Dutch Shell is already expected to bring theworld's first floating LNG plant, Prelude LNG, online in watersoff northwestern Australia before 2017.
"The question is whether there will be any more onshoregreenfield developments ... it does mark quite a distinct shiftif we're talking about the next set of projects being offshorefloating developments," said Chris Graham, an analyst with WoodMackenzie in Perth.
It may cost 20-25 percent less to build gigantic floatingbarges to liquefy natural gas close to offshore wells, ratherthan pipe the hydrocarbon to a similar facility on dry land,according to analysts at Bernstein.
But an offshore plant faces opposition in Western Australia,where the state government is concerned it will create fewerjobs and reap much smaller benefits for the local economy.
Woodside Chief Executive Peter Coleman said on Tuesday thatfollowing a review of alternatives, including a pipeline to theNorth West Shelf LNG facilities and another onshore option, thecompany had decided to recommend floating LNG to its partners.
"Through this review, a compelling case has emerged forfloating LNG as the best option for early commercialisation ofthe world-class Browse resource," he said.
Woodside has already signed on Shell, a joint venturepartner and considered to be the global front-runner in floatingLNG technology, to develop the field, but has yet to specify thesize of any floating LNG development.
STILL HURDLES
The Browse LNG development still faces significantchallenges, especially from the Western Australian government,which holds some of the retention leases underlying the field.
The Australian federal government, which also hold retentionleases for the gas field, has indicated support for Woodside'sintentions to develop Browse.
In addition, Woodside has yet to get its joint venturepartners in the development to sign off on the floating LNGdevelopment.
The company said in April that it would take at least twoyears to make a final investment decision on an alternativeplan.
Woodside owns a 31 percent stake in Browse, alongside partners Shell, BP Plc, PetroChina, Mitsui &Co and Mitsubishi Corp.
