The Western Australian government and the Woodside Petroleum Ltd.-led Browse joint venture have finally come to an agreement over the supply of gas from the Browse gas fields for the domestic market.
Western Australia Premier Colin Barnett told the state parliament that he had finalized an agreement for the supply of 800 petajoules of gas into the Western Australia gas grid. The deal also includes a local supply chain commitment for the Browse project, which is to be developed using floating LNG (FLNG) technique. The JV’s commitment to a supply chain includes provision of port, marine, aviation, storage, and transport services for the life of the project. The premier said the primary operations base will be in Perth with support locations in the northwest.
The supply figure matches Western Australia’s contentious domestic gas reservation policy that mandates 15% of a field’s reserves in an offshore project be reserved for supply to the local market. For Browse, this works out at about 60 terajoules/day.
Barnett noted that, although the government would prefer the project to be developed onshore—originally earmarked for James Price Point—the new agreement ensures some benefits will flow to the state in terms of domestic gas, business opportunities, and employment.
The deal comes at the end of years of Barnett wrangling against the FLNG concept, particularly after Western Australia lost the Ichthys project development to the Northern Territory because of a dispute over the site of the proposed land facilities and then faced the Woodside group’s decision not to use James Price Point on the Kimberley coast for Browse development.
Finalization of the new domestic gas deal is one of the last remaining hurdles Woodside has to clear before it can lead the Browse JV into final development plans.
A renewal of retention leases covering Torosa, Brecknock, and Calliance fields that straddle state and federal government jurisdiction is now expected to go ahead promptly.
A decision to begin the last stages of the front-end engineering and design process is scheduled for July leading to a final investment decision in late 2016. This would mean an on stream date of 2021. However there is still the proviso surrounding Shell’s Prelude project.
Shell needs to successfully commission the world-first Prelude facility to satisfy the Browse partners and put the validity of FLNG beyond doubt.
The Browse project is planning to supply 11.7 million tonnes/year of LNG and 66,000 b/d of condensate over 40-50 years. The Browse fields have total resources of about 15 tcf of dry gas and 44 million bbl of condensate.
The JV comprises Woodside 31.3% and operatorship, Shell 26.63%, BP 17.14%, Mitsubishi/Mitsui 14.7% and PetroChina 10.23%.