Australia Paves Way for Browse FLNG

Australian Resources Minister Gary Gray today announced his decision to vary conditions on five Browse retention leases, paving the way for the earliest possible commercialisation of the Browse hydrocarbons field.

“The decision to vary the Browse retention leases was taken to ensure the timely development of these gas resources for the benefit of the Australian, Western Australian and Kimberley coast economies,”  Gray said.

“It was clear that the Browse Joint Venture did not consider development of James Price Point to be commercially viable. I take the view that companies, not governments, are best placed to determine which developments are commercially viable, subject of course to environmental and regulatory requirements.”

Gray said his decision restored the browse retention lease to a lease consistent with other Commonwealth leases.

The revised conditions do not specify any particular development concept, consistent with the government’s belief that this should be a commercial decision.

However, Woodside, the operator of the field,  in April entered into an agreement with Shell that sets out the key principles that would apply if the Browse resources are developed using Shell’s Floating LNG (FLNG) technology.

Woodside CEO Peter Coleman in April said that FLNG had the potential to commercialise the Browse resources, comprising three gas and condensate fields, Brecknock, Calliance and Torosa, 425 km north of Broome off the Kimberley coast, in the earliest possible time frame and to further build the company’s long-standing relationship with Shell.

“This agreement enables Woodside, as operator of the Browse LNG Development, to strengthen our development and operational capabilities through the potential use of Shell’s “Design One Build Many” FLNG technology,”  Coleman said.

“It also provides the opportunity for Western Australia to become an industrial, operational and technology centre for excellence for floating LNG worldwide.”

With Australia on track to be one of the largest LNG exporters in the world by the end of the decade, Gray said early commercialisation of the Browse resources was important to Australia, Western Australian and the communities of the Kimberley.

“We must take full advantage of the current window of opportunity for Australia to develop its LNG industry. I want to ensure that Australia and Western Australia benefits from the development of our resources and that those dollars don’t go to competing markets,” he said.

“The risk is that if Australia does not provide the environment for commercial decision-making now, we may miss out altogether. Already it has been more than 40 years since the first Browse fields were first identified, and over a decade since development options were first considered.

“Australia, Western Australia and the communities of the Kimberley cannot afford to delay any longer, which is why I have made this decision.”

Gray said he had advised WA’s Minister for Mines and Petroleum, Bill Marmion, of his decision.

To remind, on April 12, Woodside announced it was not going ahead with the proposed onshore development of Browse LNG at James Price Point near Broome, saying that the development concept does not meet the company’s commercial requirements for a positive final investment decision.

Premier of Western Australia, Colin Barnett, greeted the news that Woodside would not proceed with the James Price Point option with disappointment.

“While I acknowledge that this was a commercial decision by Woodside and its joint venture partners, I am bitterly disappointed,” Barnett said.

“Developing this huge natural resource, which is owned by all Australians, offshore is not in the best interests of the nation or the people of WA,” he said.

While FLNG will deliver royalty income and there will be some jobs for WA in servicing the project, there is no doubt this is a missed opportunity to secure thousands of jobs in construction and in the operation of a gas precinct and to secure gas for our domestic economy,” he said.