By Andrew Hobbs, Group Editor
ALMOST one year ago Woodside confirmed what pundits had been guessing about the future of the Browse joint venture – that the future was Floating LNG.
Using FLNG technology developed by Shell was selected as the better option against other proposals including a pipeline to existing facilities in the Pilbara and a modified version of the James Price Point option the company had dismissed in April.
Oil and Gas Australia takes an in-depth look at Woodside this month in celebration of the company’s 60th anniversary, in a supplement which accompanies this issue.
But it is strange that, almost one year later, FLNG is in the news again – but this time, because a joint venture has walked away from the idea.
The Bonaparte LNG project, a joint venture between France’s GDF Suez and Santos, announced in June that it would consider building a pipeline from its fields to Darwin – about 250 kilometres away.
The project partners said in their respective announcements that the concept did not meet their commercial requirements – delaying the proposed front-end engineering and design phase of the project at the same time.
In subsequent interviews with mainstream media outlets, Santos vice-president for Asia, WA and the Northern Territory John Anderson said the potential level of risk in capital exposure and complexity had turned the companies off the idea.
Some industry watchers suggest gas from the field may be piped to the ConocoPhillips-operated Darwin LNG plant at Wickham Point, which currently converts gas from the Bayu-Undan field into LNG for export to Japan.
Satos part-owns the plant, which is connected to the Bayu-Undan field by a 502-kilometre pipeline, alongside Inpex, Eni and the gas buyers – Tokyo Electric and Tokyo Gas.
While Mr Anderson didn’t give anything away, he said he was optimistic that field operators would work more closely together in future, helping to bring projects forward.
“I think there is a growing sentiment and recognition that we have to move on with deep-sea collaboration,” he told The West Australian.
The new push by the Bonaparte partners for collaboration is set to have positive knock-on effects for Darwin – regardless of the option the companies take – owing to the city’s position as a new oil and gas hub.
Shadow Resources Minister Gary Gray, in an address given at the Australian Gas Export Outlook in Brisbane, said brownfield expansion from existing facilities “ought to be easy to win.”
“It’s a mistake, in my view, to obstinately prosecute the case for on-shore LNG production while the immediate prospect of any new, onshore LNG project in Australia looks remote,” he said.
Instead, Mr Gray is publicly advocating for Australia to embrace Floating LNG – saying that while it may not always be the right solution, it will play an important role in future.
“FLNG projects will underpin our envied position as an energy super power. strong in coal; strong in uranium; dominant in LNG,” he said.
“Floating LNG is an opportunity for us – Australian industrial designers, scientists, operators, mechanics, petroleum engineers, clerks and marine engineers – to shine.”
This is a fair observation – FLNG remains in its relative infancy, and the opportunities afforded to the Australian industry are substantial.
But at the same time, it would be reckless for companies to pursue FLNG at the expense of considering different options for field developments.
While for major companies this might go without saying, the designers, scientists, engineers and clerks Mr Gray mentions might do well to pay attention too.
Because that is the burden of industry pioneers – they might get there first but they often travel alone.