In a fresh blow to Western Australian coffers, Woodside has announced it will not move forward with the Browse basin floating LNG project.
The $40 billion project was planned to turn the Browse basin into an offshore LNG hub, which would have seen significant royalties flow to the WA government, however plummeting oil and gas prices and uncertainty in the market have seen the project mothballed.
Woodside CEO Peter Coleman said the company had commissioned high-quality preliminary technical and non-technical work, including Front-End Engineering and Design (FEED) on the project, which enabled the joint venture partners to make the tough decision.
“We have undertaken a comprehensive and rigorous process to assess all elements of the development,” he said.
“The decision represents a disciplined approach to large-scale capital investment and is consistent with our requirements for a development concept to be commercially robust across a range of scenarios.
Coleman said the company would remain committed to developing the Browse Basin at the earliest opportunity with FLNG as the preferred system, but not in the current economic environment.
“Accordingly, we will use the additional time to pursue further capital efficiencies for Browse,” he said.
A statement from the company said Woodside would uphold its work program commitments in order to retain leases in the Browse Basin, which will require renewal in mid-2020.
WA premier Colin Barnett expressed his disappointment at the announcement, but admitted he was not surprised, in an interview with Macquarie Radio.
"Unfortunately Broome and the Kimberley missed a great opportunity a few years ago, an opportunity that may not come back," he said.
"I think it would have been very difficult for them [Woodside] to commit probably north of $50 billion to develop this project when the price of petroleum, including natural gas, is low.
"I expect those prices to recover. That may take two to three years and then maybe this project will get its opportunity."
Barnett acknowledged the ongoing prospects of the Shell Prelude project, under construction in South Korea, and the INPEX Ichthys project off the Kimberley coast.
“There will be activity going through Broome. But not as great as if Browse had gone ahead," he said.