The gloom is starting to lift in Australia over the next round of liquefied natural gas investments as the country’s LNG operators are making positive overtures about the viability of their projects.

Woodside and Santos are indicating that final investment decisions will be made next year on the Scarborough and Barossa projects due to the expected continued recovery in oil and LNG prices into the second half of 2021.

Both operators have already selected their major contractors.

Scarborough is expected to reach a final investment decision in the second half of next year, and its production capacity has increased to 8 million tonnes per annum from 6.5 million tpa, including domestic gas supply, Woodside says.

The company reiterates that channelling Scarborough gas through the North West Shelf LNG facility is not economical, and that it will stick with its plan of building a new train at the Pluto site while also having the option to backfill the first Pluto train.

Woodside is also chipping away at its capital cost forecasts for Scarborough and Pluto 2, which stand at multiple billions of dollars.

Woodside intends to sell a large interest in Pluto 2, and possibly Scarborough, thereby reducing its capital exposure.

As for Santos’ Barossa project, the operator has set a new FID target of the first half of 2021. Santos chief executive Kevin Gallagher explains that Barossa went on hold earlier this year due to the onset of Covid-19 and the project has since been "recycled" to deliver value improvement, acquisition synergies and a lower-cost operating model.

Santos has reduced the Barossa gross capital cost to US$3.6 billion, which is US$1 billion less than the previous estimate, assuming the project's FPSO is leased rather than owned.

The company is currently in negotiations with FPSO provider Modec to finalise a contract.

The plan for Barossa is to provide the gas volumes that keep the one-train Darwin LNG facility operating at full capacity.

The Darwin LNG owners — led by operator Santos — and the Barossa co-owners have just finalised the agreements to transport and process Barossa gas, while Santos is securing Barossa LNG offtake agreements.

Beyond Scarborough and Barossa, Australia has at least four more large offshore gas projects that are waiting in the wings: the Shell-operated Crux-Bratwurst; Chevron’s Jansz-Io compression; Inpex’s Ichthys compression; and Woodside’s Browse.

Shell has not made known its intentions for Crux-Bratwurst, but the ball could start rolling again once the Prelude FLNG facility is operating again.

Chevron and Inpex have expressed caution about making significant spending decisions in the current environment, but are making progress nonetheless on getting themselves into position to be able to award major services contracts.

Jansz-Io compression will be a first-of-its-kind development Down Under with a large floating platform to provide controls and power to an innovative subsea compression system.

Ichthys compression is a more traditional approach in which either McDermott or Saipem will fabricate and install a large compression module on the Ichthys platform.

Woodside’s Browse is on a much slower trajectory with a final investment decision targeted in 2023.

Woodside says the two main themes being examined for Browse are project economics and carbon capture and sequestration to deal with the field’s carbon dioxide.

If Browse materialises, it will most likely provide enormous volumes of backfill gas into the North West Shelf LNG facility’s existing trains.

Other operators with undeveloped gas accumulations offshore Australia include PTTEP with Cash-Maple, Western Gas with Equus and Neptune Energy with Bonaparte.

Commercialisation of these fields is not easy, however, given the operators do not own any LNG infrastructure.

It is the LNG facility operators — Woodside, Shell, Chevron, Inpex and Santos — who have the advantage of being able to bring their discoveries to market.

LNG

Next round of Australian LNG projects poised to restart