Woodside Petroleum is close to justifying why it pulled out of plans to develop a gas hub at James Price Point as it plans to tell the state and federal government how much it would have cost to build.
The submission of the commerciality report will include the forecast development costs, and is expected to be used by the company to bolster its argument that the government agree to a variation of the Browse retention lease conditions.
Current conditions stipulate the LNG plant be built at James Price Point, however Woodside have confirmed they are looking to develop their Browse LNG project with a floating gas processing operation.
The company told the ASX last month that itself and Shell had agreed to undertake a framework which would develop the Browse gas field through Shell’s FLNG technology.
When announcing plans to walk away from James Price Point, Woodside said the current development concept no longer met the company’s commercial requirements for a positive final investment decision. It is estimated the hub would have cost $45 billion.
Speaking on the sidelines of the Australian Petroleum Production and Exploration Association conference in Brisbane yesterday, Woodside chief executive Peter Coleman said the company had "negotiated hard" with consortium partner Royal Dutch Shell for access to Shell's FLNG technology.
Coleman said Woodside had successfully demanded that it retain the project's operatorship and would pay Shell a fee for using the FLNG technology, West Australian reported.
Coleman said he wanted the technological work associated with the project to be carried out in Perth to transform the city into a world-class industry hub.
The Woodside consortium's hold on the permits remains subject to government approval of the request for the retention lease conditions to be varied.
West Australian Premier Colin Barnett has previously slammed the use of FLNG.
"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."
Late last year, Shell Australia chair Ann Pickard touted FLNG as the saviour of LNG development in Australia.
"We do see it as probably the potential saviour of the Australian LNG industry over the next decade or so."
“Australian LNG is the highest cost globally,” she said, stating that countries like the United States and Canada could export to Japan 20 per cent cheaper.
Woodside was part of an LNG industry warning this week that $150 billion dollars worth of investment in Australia could be lost if the high cost of building major projects is not fixed within eighteen months.