BHP Billiton’s boss has given unequivocal backing to what could be the world’s largest Floating LNG (FLNG) project yet to emerge, although any eventual final go-ahead remains some way off.
Tim Cutt, president of the company’s petroleum division, said his company and equal partner ExxonMobil were now “fully aligned” that FLNG is the best option to commercialise the gas on its remote deepwater Scarborough discovery in the Carnarvon Basin off the west coast of Australia. The large field has been the subject of tension and debate between the two majors for years.
But Cutt commented in a conference call, “We’ve progressed it far enough now that we’re confident in the technology and the commerciality, so we know it will go forward.”
However, this by no means a sudden sprint by the companies towards a rushed development decision for the project to progress. Australia remains plagued at present by high labour costs, general offshore industry cost inflation, and projects elsewhere in the world competing for the same internal investment dollars, in addition to the sheer scale and technological challenge of any development this far from shore and in extreme water depths and metocean conditions.
This means BHP and ExxonMobil are now weighing up the proposed Scarborough FLNG scheme against other investments – for BHP that goes beyond just oil and gas projects, of course, as it just also happens to be the world’s largest mining company.
Operator Exxon Mobil has been the keener partner to go for the FLNG option on the 8-10 Tcf Scarborough field, which was discovered in permit WA-1-R way back in 1979 around 220 km northwest of Exmouth offshore in around 900 m (2,953 ft) of water. But work still remains to be done to make the potential project more economically viable.
However progress on Shell’s high-profile Prelude FLNG project, and several other operators in the region including Woodside and Petronas also opting for FLNG schemes for similar remote gas fields, has given it increased confidence in the technology’s long-term use.
According to Cutt, BHP has studied FLNG for years and spent a “huge amount of money” evaluating the technology. But he added that the company remained “excited” about FLNG and described Scarborough as “big (and in) a big tier-one basin” that it was happy as a company to be in.
“FLNG is the direction we’re heading. We’ve got a lot of confidence in the technology. The fact the gas is dry actually helps floating technology quite a bit. The quality of the material work is good and ExxonMobil is an excellent operator. So, we know it’ll go forward, it’s a good commercial project.”
As recently as last year Cutt made comments about developing Scarborough via existing processing infrastructure at Onslow on the Western Australian coast, directly against ExxonMobil’s own preference for an offshore facility.
The proposed permanently-moored facility with an internal turret mooring system and its subsea infrastructure (including 12 production wells) was last year detailed by ExxonMobil, with the double-hulled vessel to be 495 m (1,624 ft) in length and capable of processing around 6-7 MM tons per year of LNG (1,100 MMcf/d).
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