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Woodside lining up more bidding for Browse

Australian player lays groundwork for contest between Asia-Pacific engineering houses for next phase of design work for development

Woodside Petroleum is clearing the decks for the next crucial engineering phase of the offshore development of its massive gas and condensate reserves linked to the Browse liquefied natural gas project in Western Australia.

The idea is to move into the pre-front end engineering and design stage at the end of this year or the beginning of 2018.

This will necessitate a competitive bidding round that most, if not all, of the major engineering houses in the Asia-Pacific region would like to participate in, sources said.

Browse is a key target for the regional oil and gas services sector, which in Australia has been surviving on crumbs for the past year or two.

The Browse offshore development is currently in a concept selection phase, and sources said IntecSea Engineering is one of the contractors engaged in study work on two very large gas floating production, storage and offloading vessels.

The two newbuild FPSOs are at the heart of Woodside’s thinking.

The base case development scenario comprises two 360-metre-long floaters and a 900-kilometre subsea pipeline running south to the North-West Shelf liquefied natural gas facility at Karratha.

Sources suggested at least one more contractor is involved in concept work on additional aspects of the proposed offshore infrastructure, most likely on the subsea side.

There was a suggestion that there might be an alternative offshore facility being considered to anchor the development, but as it stands the two 90,000-tonne floaters are the top pick.

Woodside has spoken recently about wanting to confirm its development concept before the year is over and be ready to enter FEED in 2019.

The operator has not yet decided on a contracting strategy — whether the two FPSOs are to be delivered on a turnkey construction and installation basis or by a project manager that will sub-contract the construction.

Sources said Woodside is busy sorting out alignment between its joint venture partners in the Browse project and at the North-West Shelf project.

According to Woodside, the Browse joint venture has agreed that a tie-back to the North-West Shelf LNG facility is the reference development concept.

However in order for Browse to fly, the North-West Shelf partners must be receptive to the idea, meaning the two sides must agree terms and conditions, while the governments of Australia and Western Australia must also approve.

The Browse joint venture comprises Woodside on 30.6%, Shell with 27%, BP on 17.33%, Mitsubishi-Mitsui (MiMi) with 14.4% and PetroChina on 10.67%.

The North-West Shelf co-owners are Woodside, Shell, BP, Chevron, BHP Billiton and MiMi, all with equal one-sixth interests.

According to Woodside, the North-West Shelf owners have identified that ullage is available at their LNG plant in the early 2020s and they are eager to extend the plant’s life significantly.

For this reason, they recently formulated a tolling proposal which they have presented to third-party gas owners in Western Australia.

There is still some uncertainty among market experts about the timing and economic viability of the Browse project, although the concept of a tie-back to the North-West Shelf facility has been well accepted. The previous concept was a series of floating LNG vessels.

Woodside chief executive Peter Coleman told shareholders recently that he anticipates first gas from Browse into the North-West Shelf plant from the mid-2020s, coinciding with a forecast LNG supply crunch.

“Utilising the existing facilities has the dual advantage of ensuring the most efficient use of capital while minimising risk by relying on proven technologies," Coleman said.

The Browse development covers three offshore fields — Torosa, Brecknock and Calliance — which lie in water depths of up to 750 metres and are estimated to hold a combined best estimate contingent resource of 15.4 trillion cubic feet of gas and 453 million barrels of condensate.

The North-West Shelf project is a five-train LNG scheme designed to produce at least 16.3 million tonnes per annum of LNG.