WESTERN Australian Premier Colin Barnett has raised the stakes in his ongoing stoush with Woodside Petroleum and Shell over the James Price Point gas hub, telling them to hit the final investment decision target or risk up to a decade of delays.
Speaking to ABC Radio in Perth yesterday morning, he said he would be prepared to bog down the project for years to come.
“If that was the decision that the companies came to, I would say the project would be delayed five to 10 years, that would be the first consequence,” Barnett said.
Woodside and its joint venture partners have a June deadline to make a final investment decision on the James Price Point gas hub and development of the Browse gas resource, or they will let a retention lease deadline lapse.
The Australian major had previously been granted an extension on FID from the end of last year to the middle of this year, but the comments from Barnett make it clear that he would not be granting another extension.
“I will be doing all I can to change the fundamentals of the project so it does work, and there are things that can be done,” Barnett said.
He also told the program he had discussions with Woodside chief executive Peter Coleman about the affair “about a week ago” and said Woodside was making a genuine attempt to pursue the JPP option.
“Woodside has given it a good crack to try and bring the gas onshore. I think that’s what they want to do as a company. Some of their partners, probably Shell, don’t want to,” he said.
Shell is thought to be pushing the development of the Browse resource via a floating LNG vessel to take advantage of the technology it developed for the Prelude field.
“If this is an offshore project it won’t be a Woodside project, it will be a Shell project,” Barnett said.
One potential sticking point with FLNG is that it would be too small for the development of the total circa 13 trillion cubic feet of gas resource thought to be part of the Browse field.
Shell’s biggest FLNG vessel, Prelude, can only process 3.8Mtpa.
However, yesterday ExxonMobil and BHP unveiled plans to develop the Scarborough field with a FLNG vessel capable of processing 6Mtpa to 7Mtpa.
Also adding to the complications is the fact that one-third of the resource lies in WA waters with the rest in commonwealth boundaries.
Barnett’s preferred option for the development of LNG projects in Australia has been to bring the gas onshore, and impose a 15% domestic gas reservation requirement as a de-facto royalty.