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Western Australia Gas Producers May Profit From Oil Crash

The deferral of numerous liquefied natural gas (LNG) projects around the world amid low energy prices may be an unexpected boon for some producers trying to kickstart new ventures in gas-rich western Australia, according to Reuters. The potential windfall results from the need to plug a looming supply gap at North West Shelf (NWS), Australia’s oldest and largest gas export plant and Australia’s largest-ever resource development.

The gap opened up after Woodside and its partners decided in March to halt development of the giant offshore Browse project, which was expected to be the new anchor source for the NWS from the mid-2020s, eventually feeding 10 mtpa of LNG out of the plant’s 18.5-mtpa capacity. With Browse out, the NWS plant is expected to have 5.5 mtpa of spare capacity in 2026, rising to 7 mtpa in 2027, according to a Wood Mackenzie estimate. NWS project partners—BHP Group, BP, Chevron, Royal Dutch Shell, Woodside, and a joint venture of Japan’s Mitsui and Mitsubishi—are racing to fill the gap.

Keeping the plant’s five production trains fully operational and maintaining the project’s market share in Asia is a priority for the NWS partners as well as the state government, which earns revenues from gas sales.

The supply push is opening new possibilities for both offshore and onshore projects, including:

  • Clio Acme, owned by Chevron
  • Pluto (already operating), owned by Woodside
  • Scarborough (due for final investment decision in 2021), owned by Woodside and BHP
  • Waitsia, one of western Australia’s largest conventional onshore finds in the past 40 years, under consideration for development by Mitsui
  • West Erregulla field, owned by Strike Energy

Stuart Nicholls, managing director of Strike Energy, said, “We’re moving to a period of time where western Australia’s LNG is going to be in an advantaged position, with lower input costs, based on Australian dollar inputs and US dollar pricing for its product, and also its proximity to Asian demand centers,”

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