$10bn gas plan for BHP and Exxon

BHP Billiton and Exxon Mobil are planning to kick off the approval process for a $10 billion dollar floating LNG project in WA.

The resource giants are reportedly close to securing a deal to develop floating LNG in the offshore Scarborough field in Western Australia's Carnarvon Basin.

The plan comes after discussions to develop the gas through expansions of Woodside Petroleum's Pluto LNG plant and Chevron's Wheatstone plant fell through, The Australian reported.

BHP and Exxon hope to begin advanced engineering studies by mid-2013, at a cost of around $500 million.

The plan would see the creation of a floating LNG ship which could export between six to seven million tonnes of LNG per year.

The pair are expected to submit documents to the Environment Department next week.

Neither company confirmed the report, and an Exxon spokesman said no decision had been made on the preferred option.

“Exxon Mobil is considering a number of onshore and offshore concepts for development of Scarborough, including FLNG.”

If the plan goes ahead for a FLNG at Scarborough it is expected to see the shelving of a potential LNG site on the coast at Ashburton North, near the Pilbara town of Onslow.

Western Australian Premier Colin Barnett has previously slammed plans by Shell to develop gas offshore.

Speaking at a conference in Perth last year, Barnett slammed the push by Shell to develop Browse via floating LNG technology saying it would mean less jobs and gas supplies for Australia

"We would be stark raving mad as a country not to have Australian participation in the development of Australian resources," he said.

Barnett said Shell had been pushing for a behind-the-scenes FLNG deal with its project partners including project operator Woodside Petroleum.

"If the project is offshore, there's very few jobs for Australia, the whole structure will be built offshore, and indeed there'll be no gas coming onshore at all," he said. "That'd be a disastrous result for Australia and Australia's natural resources."

FLNG technology involves using the same components of a traditional land-based LNG plant onto a ship that sits directly above offshore gas fields.

The technology is being used for the first time at Shell’s Prelude gas field off northern Western Australia and allows for the development of gas fields considered too remote or too small to develop via traditional methods previously.

Image: adelaidenow.com

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