As legal challenge for $12.5 billion gas project gets dropped, first LNG cargo on track for 2026

Australia’s energy giant Woodside has struck a deal with the Australian Conservation Foundation (AFC) to ensure a two-year legal challenge, concerning a primary environmental approval for its giant energy project off the coast of Australia, will be dismissed.

The ACF, represented by the Environmental Defenders Office, began the legal proceedings at the Federal Court of Australia regarding the offshore environmental assessment of the Scarborough energy project in June 2022, seeking an injunction to stop offshore activities. However, the AFC has now agreed with Woodside to dismiss the legal; process against the project.

The gas project has been the subject of environmental assessments by regulators, including the National Offshore Petroleum Safety and Environmental Management Authority; the Commonwealth Department of Climate Change, Energy, the Environment and Water; the Western Australian Department of Energy, Mines, Industry Regulation and Safety; the Western Australian Department of Water and Environmental Regulation and the Western Australian Environmental Protection Authority.

Meg O’Neill, Woodside’s CEO, highlighted: “Litigation against energy projects like Scarborough is an ineffective way to pursue solutions to global climate and energy challenges. Such approaches create needless uncertainty for businesses, communities and the people who depend on the energy these projects produce.”

With all primary environmental approvals in place, the offshore work is said to be progressing well, thus, the Australian energy giant and the ACF have agreed to seek orders from the court to dismiss the proceedings. This energy project comprises the Scarborough joint venture (JV), the Pluto Train 2 JV, and modifications to Pluto Train 1 to process Scarborough gas.

O’Neill underlined: “The Scarborough reservoir contains less than 0.1% carbon dioxide and combined with processing design efficiencies will be one of the lowest carbon intensity sources of LNG delivered into north Asian markets.

“The Scarborough energy project will make an important contribution to energy security in Western Australia while providing energy to Asian economies as they decarbonise. The project is supported by and aligns with the energy policies of both the Australian and Western Australian governments.”

The project was 67% complete at the end of June 2024 and is slated to deliver the first LNG cargo in 2026, generating more than A$50 billion ($33.43 billion) in direct and indirect taxes for Australia’s economy, more than 3,000 jobs during the construction phase and create or sustain almost 600 jobs on average during operations.

Located 375 km off the Pilbara coast of Western Australia, the Scarborough gas project in the Carnarvon Basin entails new offshore facilities connected by an approximately 430 km pipeline to a second LNG train at the existing Pluto LNG onshore facility.

This project encompasses the installation of a floating production unit (FPU) with eight wells drilled in the initial phase and thirteen wells drilled over the life of the gas field. All wells will be tied back to a semi-submersible FPU moored in 950 meters of water close to the Scarborough field.

As the total project cost estimate recently increased to $12.5 billion, representing $8.2 billion Woodside share for the integrated Scarborough energy project, this is a 4% jump from the previous cost estimate of $12 billion when a final investment decision (FID) was disclosed in November 2021.

Woodside pinpoints the scope maturation of the Pluto Train 1 modifications project as the main culprit for the cost hike. Out of 51 modules required for the Scarborough project’s Pluto Train 2, 29 have been delivered to the site, with 25 modules set in position at the end of the quarter.