Woodside Gives Green Light For Scarborough, Pluto Train 2

Australia’s Woodside has made the final investment decision (FID) to approve the Scarborough offshore gas project in the North Carnarvon Basin as well as the Pluto Train 2 development.

Apart from Scarborough and Pluto Train 2, Woodside approved the development of new domestic gas facilities and modifications to Pluto Train 1. The company sold 49 percent of Pluto Train 2 to Global Infrastructure Partners just last week.

Woodside said that the $12.0 billion LNG development is expected to deliver significant cash flow and enduring value to shareholders. Scarborough gas processed through Pluto Train 2 will be one of the lowest carbon intensity sources of LNG delivered to customers in North Asia, with the first LNG cargo targeted for 2026.

“Today’s decisions set Woodside on a transformative path. Scarborough will be a significant contributor to Woodside’s cash flows, the funding of future developments and new energy products, and shareholder returns,” Woodside CEO Meg O’Neill said.

“The Scarborough reservoir contains only around 0.1% carbon dioxide, and Scarborough gas processed through the efficient and expanded Pluto LNG facility supports the decarbonization goals of our customers in Asia.”

“The final investment decision is underpinned by quality customer support with approximately 60 percent of Scarborough capacity contracted, including domestic gas for the proposed Perdaman urea project.”

“Developing Scarborough delivers value for Woodside shareholders and significant long-term benefits locally and nationally, including thousands of jobs, tax revenue, and the supply of gas to export and domestic markets for decades to come,” she stated.

The Scarborough field is located approximately 233 miles off the coast of Western Australia and is estimated to contain 11.1 trillion cubic feet of dry gas. Woodside holds a 73.5 percent interest and is the operator in the WA-61-L and WA-62-L production licenses which contain the Scarborough field. The partner in the project is BHP with a 26.5 percent stake.

The development of the Scarborough field comprises 13 subsea wells, a semi-submersible floating production unit, and a subsea export pipeline to Pluto LNG. Field development will be completed in two phases with eight wells drilled in Phase 1. The upstream production facilities will be installed to supply 8 Mtpa LNG and 180 TJ/day of domestic gas.

As for Pluto LNG, it is an onshore LNG processing facility located near Karratha in the northwest of Western Australia. The first cargo from the single-train facility was delivered in 2012.

Expansion of Pluto LNG will include the construction of Pluto Train 2, associated domestic gas processing facilities, supporting infrastructure, and modifications to Pluto Train 1 to allow it to process Scarborough gas. Bechtel has been selected as the EPC contractor for Pluto Train 2 and integration into existing Pluto LNG facilities.

The Pluto JV is led by Woodside with a 90 percent stake while its partners are Kansai Electric Power and Tokyo Gas with 5 percent each.

Woodside must pay $150 million to BHP Petroleum upon the Scarborough FID under the 2016 divestment of BHP’s 25 percent Scarborough JV interest to Woodside. BHP also holds an option for it to sell its 26.5 percent interest in the Scarborough JV and its 50 percent interest in the Thebe and Jupiter JVs to Woodside if the Scarborough JV makes an FID for the project by December 15, 2021, and the merger does not complete.

This option is exercisable by BHP in the second half of 2022. If exercised, consideration of $1 billion is payable to BHP with adjustment from the effective date of July 1, 2021. An additional $100 million is payable contingent upon a future FID for the Thebe development.

To contact the author, email bojan.lepic@rigzone.com