THE Western Australian Government has welcomed the news that the proposed Scarborough gas development is one step closer, with Woodside and BHP agreeing to a tolling price for the processing of gas.
Woodside and BHP have agreed the tolling price for processing gas from the Scarborough offshore field at the Pluto LNG facility on Western Australia’s Burrup Peninsula. The tolling price is valid to March 31, 2020.
The agreed tolling price is complemented by a comprehensive, non-binding heads of agreement on other tolling terms.
The toll is based on BHP maintaining no more than a 25% interest in Scarborough (WA-1-R) up to final investment decision (FID), subject to BHP’s standard pre-emption rights.
Woodside CEO Peter Coleman said the agreement on the tolling price for Scarborough was another significant step towards the realisation of the proposed Burrup Hub.
“This agreement on tolling price, together with the increase in Scarborough gas resources announced earlier this month, provides a compelling and aligned basis for BHP and Woodside to finalise the required conditional binding agreements by the end of the first quarter of 2020.
“It is a key milestone as we target a go-ahead for the development of the high-quality Scarborough gas resource through an expanded Pluto LNG facility. The joint venture is now in a strong position to proceed to FID in the first half of next year,” he said.
Scarborough gas would initially be processed on a deep-water floating production unit and transported through an approximately 430 km pipeline to be processed at the Pluto LNG facility. First LNG from the proposed development is targeted in 2024.
WA Premier Mark McGowan said the WA Government is also encouraged by the news that the project was now in a strong positon for Final Investment Decision in the first quarter of 2020.
“This is an important milestone in a project that is vital for Western Australia. We are now one step closer to the creation of thousands of Western Australian jobs.
“I congratulate Woodside and BHP for all their work to date and look forward to further updates on the final investment decision, earmarked for early 2020.
“As I have said in the Parliament recently, I hope that we will see similar progress on the Browse development and urge the companies involved to finalise negotiations as soon as possible.
“We’ll be doing everything we can to ensure the Scarborough and Browse developments create ongoing jobs for Western Australians, particularly in the Pilbara.”
The Scarborough gas field is located approximately 375km off the coast of the Burrup Peninsula.
The Scarborough Project is expected to create 3,200 jobs in the construction phase and almost 600 jobs will be created or sustained during operations.
Meanwhile, Woodside has taken a final investment decision on the pipeline component of the Pluto-North West Shelf (NWS) Interconnector and has entered into contractual arrangements with DDG Operations Pty Ltd for the construction of the pipeline and its ongoing operation and maintenance.
The Pluto-NWS Interconnector will connect Pluto LNG and the NWS Project’s Karratha Gas Plant (KGP) and is the first component of the infrastructure needed to transport gas between the two facilities.
Construction and operation of the pipeline is subject to regulatory approvals by the State of Western Australia and finalisation of commercial arrangements with the Pluto and NWS joint venture participants.
Mr Coleman said the Pluto-NWS Interconnector was a key component of the proposed Burrup Hub and would provide opportunities to take advantage of future excess capacity at KGP.
“Our vision for the Burrup Hub will unlock the future value of infrastructure which has been supplying gas to Western Australia and the world safely and reliably for more than 30 years. The Interconnector between the Pluto LNG and NWS facilities will enable us to optimise the processing of gas from our offshore fields.
“Delivering the proposed Burrup Hub will help underpin Western Australia’s economic strength for decades into the future. It will provide thousands of jobs, opportunities for local suppliers and tax and royalty revenues to Western Australia,” he said.
Consultants ACIL Allen have estimated the Burrup Hub would generate an average of more than 4,000 jobs per annum in Australia over coming decades, with more than 1,900 of those located in Karratha and Broome. It would boost Australia’s estimated gross domestic product by $414 billion between now and 2063, of which 99% would be in Western Australia.
Woodside is targeting ready for start-up of the Pluto-NWS Interconnector in the first half of 2022.
DDG Operations Pty Ltd is part of the Australian Gas Infrastructure Group, the operator of the Dampier to Bunbury Natural Gas Pipeline.