Woodside raises cost estimate for Scarborough gas field
Woodside, the country’s largest oil and gas producer, has raised the cost estimate for the multi-billion dollar Scarborough gas field it plans to develop off Western Australia in a joint venture with BHP.
With both companies aiming to give the giant gas project the financial go-ahead later this year, Woodside on Wednesday revised the price by 5 percent to $ 12 billion ($ 16.2 billion).
Acting CEO Meg O’Neill told investors that the updated cost expectations were due in part to previously announced changes to the project scope with the goal of generating a 20 percent increase in capacity for produce liquefied natural gas (LNG) and reduce its breakeven point. price.
He said the expected rate of return for the Scarborough project, which also includes the construction of a second gas processing train at the Pluto gas plant on the Burrup Peninsula, would be more than 12 percent.
“Significant progress has been made toward our final investment decision specific to Scarborough and Pluto Train 2 this year,” said Ms. O’Neill.
Woodside and BHP have faced growing opposition from conservation advocates for the additional greenhouse gas emissions that will be generated from the Scarborough project development. The Western Australian Conservation Council has filed a motion in the Washington Supreme Court to try to revoke previous approvals for the project that the group says would classify as one of the largest new fossil fuel fields in the country.
The Scarborough update comes amid growing speculation that Woodside is in talks with BHP to buy some or all of the miner’s oil assets.
Although BHP CEO Mike Henry has previously noted that the company intended to retain and potentially expand its oil and gas interests to meet the world’s current energy needs, the miner is said to be reassessing its options, while That analysts say it makes sense that BHP might be contemplating a way out.
“BHP’s commitment to its oil division remains increasingly unclear to us,” said Credit Suisse analyst Saul Kavonic. “We believe it is ready for divestiture or a full renovation.”