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TheStreet Open House

Woodside Shelves $47 Billion Australian LNG Plant

PERTH, Australia (AP) â¿¿ Woodside Petroleum's chief executive said he is confident that a major gas field off the northwest Australian coast will be exploited despite the energy company on Friday shelving plans for a 45 billion Australian dollar ($47 billion) plant to process the gas for export.

Woodside said in a statement that it scratched plans to build a processing plant at James Price Point in the wild West Kimberley region of Western Australia state because "the proposed concept doesn't provide the economic return required to proceed."

Woodside will now begin talks with its joint venture partners, which include Shell Australia, about alternatives for the Browse gas field.

Options include building a floating liquefied natural gas plant or piping the gas to existing LNG facilities to the southwest.

Woodside CEO Peter Coleman said the decision to dump the plan for James Price Point was the result of rising costs. Australia's mining and natural gas boom has increased wages and pushed up the Australian dollar.

"We do believe that Browse will get developed," he told reporters.

Woodside had been looking at alternatives to a processing plant at James Price Point, but said they were not nearly as far developed as the original plan for the facility there.

"We've already come out and said things like floating technology, for example, is a technology that Woodside supports," Coleman said. "Whether that's appropriate for a Browse development will need to be determined by the joint venture over time."

Coleman said it could be another four or five years before an alternative for the Browse gas field was ready for final approval. The James Price Point plant, which would have been among the world's biggest, had been on the drawing board since 2009.

Shell's Australian boss Ann Pickard reiterated that it believed its floating technology would be the fastest, most economic and best technical solution for processing gas from the Browse field.

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