The Australian has a report on the unfolding gas age with Woodside now being tipped to process natural gas from the Browse field at the North West Shelf LNG plant to replace declining gas reserves rather than a new LNG development at James Price Point in the Kimberly - Woodside's $30bn Browse LNG plant in doubt . There is also more speculation about LNG exports of shale gas from North America to Asia.
Woodside Petroleum's plans to build the $30 billion-plus Browse liquefied natural gas plant near Broome appear to have become less appealing against the alternative of piping the gas 1000km for processing at the North West Shelf plant near Karratha when reserves there run low.
After recent industry developments here and in the US, analysts now put a greater probability on the Browse project's offshore gas fields being turned into LNG at the North West Shelf and say this would give the project a greater value. ...
Credit Suisse analyst Sandra McCullagh said she was now using a North West Shelf option as a base-case scenario. "Woodside maintains a preference for James Price Point, but we expect that competition for skilled labour and recent LNG sales from the US at prices linked to Henry Hub (domestic US gas prices) could see a shift in the company," Ms McCullagh said.
On top of this, development cost pressure, competition for scarce labour from eight other regional LNG plants under construction, no certain gas to extend the life of the Woodside-operated North West Shelf and LNG buyers' preference for expanding existing plants rather than building new ones make a James Price Point plant less likely, according to Credit Suisse.
Credit Suisse has boosted its expected Browse development cost to $US36bn, compared to a development cost of $US26bn to use the gas to backfill the North West Shelf. …
One of the game changers in Credit Suisse's analysis has been a plan to export US shale gas.
Even at US domestic gas prices of $US7 a gigajoule, which is double current prices, it would be profitable to export to Asia at current Asian spot LNG prices.
"Less than 12 months ago, most commentators didn't see much of a threat from North America, but within the space of one month, 7 million tonnes of LNG a year has been sold from Louisiana, earmarked for Asian and European markets," Ms McCullagh said. "We expect unsanctioned Australian LNG projects will struggle to stack up against North American imports."