LNG

Woodside Petroleum, the Australian liquefied natural gas operator, plans to make the proposed Burrup Hub in Western Australia a globally competitive LNG venture with measures such as debottlenecking the offshore Scarborough gas field.

“The debottlenecking we are looking at is aimed at increasing the capacity of the offshore part of the system for Scarborough and we can do that for a modest amount of anywhere between $100 million to $200 million of capital,” explained Chief Executive Peter Coleman in a recent briefing to analysts.

“It's mainly around increasing the pipeline size and so telescoping the pipeline,” said Coleman.

“Some parts of the pipeline are limited in diameter because of the water depth they are in, but as we get into the shallower waters, we have identified an opportunity to increase the diameter, therefore decreasing the backpressure on the platform,” the CEO added.

Coleman stated that this move has the potential to take the project from an offshore LNG equivalent of 6.5 million tonnes up to 8 million tonnes, plus the company’s domestic natural gas commitments.

The CEO added that minor modifications to the onshore plant would also be necessary.

“The assumption is that we've got two options that we are still optimising,” said Coleman.

“One is a closed loop option within the Pluto site itself where we would potentially back out Pluto Train 1 volumes,” he added.

“The other option there on that side is increasing the capacity of Train 2 and this type of design of Train has a history of being able to produce above nameplate capacity so we're looking to see if we can bring that opportunity forward,” stated Coleman.

He also explained that there was a second main option to side stream it across to the North West Shelf (field).

Coleman also noted that the foundation contract holders for Pluto LNG Train 1, the Japanese utilities Tokyo Gas and Kansai Electric, would face changes to their plant status.

Coleman said the company had chosen not to extend the contract of one of the buyers and was in negotiations with the second one.

Coleman also mentioned progress on the Sangomar field development offshore Senegal in West Africa for which a final investment decision was made at the start of the first half.

“We moved straight into project execution to support our targeted first oil in 2023,” said Coleman.

“A number of activities have progressed, although we've also been closely managing the risks of Covid-19 on the supply chain and project schedule,” he added.

He mentioned advances made on the Sangomar field’s floating production, storage and offloading (FPSO) unit.

“The oil tanker, which will be converted to the FPSO, was purchased by our contractor in February and will undergo tank inspection and cleaning this year, with modifications targeted to commence in the fourth quarter,” he added.

“Technical work is steaming ahead with detailed design engineering for the FPSO and the commencement of major topsides equipment fabrication,” said the CEO.

“Our contracting and procurement team has also been busy with purchase orders for long lead items being awarded in readiness for drilling operations targeted to commence in mid-2021,” he concluded.

Woodside has also given notice of exercising its pre-emption rights on the sale by UK oil and gas developer Cairn to Russian company Lukoil of its Sangomar assets.

Lukoil agreed to purchase the entire Cairns participating interest in Senegal’s Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture.

In accordance with the joint operating agreement, the terms of Woodside's acquisition of Cairn's entire stake will reflect those of the Cairn-Lukoil transaction.

These include the upfront purchase price of US$300 million plus working capital adjustments, including reimbursement of Cairn's development capital expenditure incurred since 1 January 2020.

Woodside's equity interest in the RSSD joint venture after completion of the acquisition will increase to approximately 68 percent and Woodside will remain operator.

Coleman said the acquisition represented an opportunity for Woodside to deepen its interest in a well understood, world-class asset with near-term production, while also protecting shareholder interests by removing the potential uncertainty of US sanctions applying to the Sangomar Field Development because of Russian involvement.