Australian giant sets its sights on sanctioning and commissioning several energy projects this year

After recording record high production in the fourth quarter of 2022, Australia’s energy giant Woodside is putting the wheels into motion to make final investment decisions (FIDs) and bring online multiple energy projects by year-end, including oil and gas, low-carbon and renewable ones.

Woodside reported on Wednesday, 25 January 2023, that it delivered record quarterly production of 51.6 MMboe (561 Mboe/day) in 4Q 2023, up 0.7 per cent from 3Q 2022. The company also delivered a sales volume of 52.2 MMboe during the same period, down 8.5 per cent from 3Q 2022, primarily due to reduced third-party trades.

Woodside also achieved a record full-year 2022 production of 157.7 MMboe, outperforming the production guidance of 153 – 157 MMboe due to strong operational performance in the fourth quarter.

Meg O’Neill, Woodside’s CEO, remarked: “The result lifted output for calendar 2022 to 157.7 million boe, surpassing guidance and marking the highest annual production in Woodside’s history. Consistent strong operational performance and favourable operating conditions across the combined portfolio was a key driver in achieving record quarterly and full-year production.”

The Australian player’s revenue for the fourth quarter of 2022 is $5.16 billion, down 12.0 per cent from 3Q 2022, impacted by reduced trading activity and lower realised prices. The firm achieved a portfolio average realised price of $98 per barrel of oil equivalent and sold 29 per cent of produced LNG at prices linked to gas hub indices.

“Strong progress was made across our portfolio of growth projects, both in Australia and globally. The teams working on Scarborough and Pluto Train 2 have done an outstanding job over the latter part of the year. The combined projects are now one quarter of the way to completion and are on track for targeted first LNG cargo in 2026, bringing essential volumes into a market demanding more LNG,” highlighted O’Neill.

Woodside has confirmed plans for taking final investment decisions on several energy projects in 2023 while also ensuring that several of its projects will be coming on stream this year.

• What’s new with Scarborough?

Following the final investment decision to proceed with the Scarborough project in November 2021, Woodside received key primary approvals from the Commonwealth-Western Australian Joint Authority in April 2022 to support the execution of the project.

The development of the Scarborough field, located in the Carnarvon Basin, approximately 375 km off the coast of Western Australia, and estimated to contain 11.1 trillion cubic feet of dry gas, will feature up to 13 subsea production wells to be tied back to floating platform moored in a water depth of 900 metres.

Woodside and its Scarborough offshore gas project run into a legal challenge last year as the Australian Conservation Foundation (AFC) was seeking an injunction to restrain project activities. At the time, the AFC said that Woodside’s project was “a disaster for nature and a methane bomb waiting to be detonated.” The group also claimed that the project’s greenhouse gas emissions would have a significantly detrimental impact on the World Heritage-listed Great Barrier Reef.

After the Pluto Train 2 site in Western Australia was handed over to Bechtel, LNG train module construction started in Indonesia. This will be the second LNG train at Woodside Energy’s existing Pluto LNG onshore facility and will process gas from the Scarborough development. The construction site for the train is within the existing Pluto LNG boundary.

According to Woodside, the pipeline manufacturing is 59 per cent complete and 92 per cent of tagged equipment has been ordered for the floating production unit (FPU). The Australian giant outlined that the engagement with regulators on secondary environmental approvals continued for offshore execution activities, with no impact on the critical path.

The company elaborated that FEED activities for Pluto Train 1 modification were completed and the project was 25 per cent finished at the end of 4Q 2022, targeting the first LNG cargo in 2026.

• What’s in store for Sangomer?

Woodside has been working on the Sangomar field development Phase 1, targeting approximately 230 million barrels of crude oil, since the project was sanctioned in January 2020. As a result, Woodside awarded the contract for the supply of the FPSO, named after Senegal’s first president, Leopold Sédar Senghor, for this project to MODEC that same year.

In an update on the Sangomar field development Phase 1, the Australian firm points out that the subsea installation campaign progressed with rigid pipeline installation now 69 per cent complete. The development drilling programme continued with seven of 23 wells finished while the construction phase for the FPSO was completed in China.

Afterwards, the FPSO was relocated to Singapore to complete topsides integration and pre-commissioning. The company underlined that the project was 77 per cent complete at the end of the fourth quarter of 2022. The first oil is targeted in late 2023.

• How do things stand for BP’s Mad Dog 2? 

Woodside says in its latest update that the operator (BP) of the Mad Dog Phase 2 is working through project commissioning issues and is planning start-up in 2023. The giant Mad Dog oil field, discovered in 1998, started production with its first platform in 2005. The first Mad Dog platform has the capacity to produce up to 80,000 gross barrels of oil and 60 million gross cubic feet of natural gas per day.

Further appraisal drilling doubled the resource estimate of the field to more than 4 billion barrels of oil equivalent, spurring the need for another platform. As a result, the $9 billion Mad Dog Phase 2 project was sanctioned by BP in December 2016 and by its partners BHP, now Woodside, and Chevron in February 2017.

Under the initial timeline, the first oil production was expected to begin in late 2021. The construction of the  60,000-ton Mad Dog 2 platform, named Argos, started in March 2018 at the Samsung Heavy Industries yard in South Korea, following a contract award from early 2017. It was completed and delivered to BP in February 2021.

The second floating production platform for this project is already at the site location in the Gulf of Mexico where it is being prepared to start production. A few months ago, BP cast doubt over its Mad Dog 2 start-up date, following issues detected during testing, as the project was expected to come online in 2022.

The platform will produce up to 140,000 barrels of oil equivalent per day (boe/d) at peak through a subsea production system from 14 production wells. It will be connected to and export oil and gas through nearby existing pipeline infrastructure. This is BP’s fifth-operated platform in the Gulf of Mexico and the first new one in the Gulf since 2008 when Thunder Horse came online.

• How far has Trion come?

Back in December 2022, Westwood pointed out that one of the FPS units to watch in 2023 was Woodside Energy’s Trion FPSS in Mexico. Citing the need to optimise the development and execution plan, cost, and development schedule, Woodside delayed the FID from 2022 and expects bid submission for the Trion unit in 1Q 2023.

Based on Woodside’s statement, competitive tenders were issued for the drilling rig, subsea equipment, long-lead rotating equipment and installation scopes for subsea, the FPU and the floating storage and offloading vessel for this project. The company also received confirmation from the National Hydrocarbons Commission (CNH) in December 2022 that the minimum work programme obligation associated with the Trion licence was completed.

• What awaits Wheatstone?

Wheatstone is said to be one of Australia’s largest resource developments and its first LNG hub with two LNG trains with a combined capacity of 8.9 million metric tons per annum (MTPA) and a domestic gas plant. The first shipment of LNG took place in October 2017.

Chevron previously highlighted that the project’s platform was the largest offshore gas-processing platform ever installed in Australia, with a topside weight of about 37,000 metric tons, and the largest float-over installation the company ever delivered. Chevron acts as the operator, while the other stakeholders are KUFPEC, Woodside, Kyushu Electric Power, and JERA.

According to Woodside, concept selection has been completed for Julimar-Brunello Phase 3, which will entail the tie-back of additional production wells to the Wheatstone platform. The company is setting the wheels into motion to be FID-ready in 2023.

Woodside Energy is the operator of the Julimar field production system (FPS), located in Commonwealth waters about 160 km northwest of Dampier and adjacent to the Chevron-operated Wheatstone platform. The approval for the second phase of the Julimar-Brunello project was received in March 2021.

• Is Sunrise on the horizon?

The Sunrise development comprises the Sunrise and Troubadour gas and condensate fields, collectively known as Greater Sunrise, which are located approximately 450 kilometres northwest of Darwin and 150 kilometres south of Timor-Leste.

The Sunrise Joint Venture comprises Woodside as the operator with 33.44 per cent interest and two partners: Timor GAP (56.56 per cent) and Osaka Gas (10 per cent). Ever since the establishment of a new maritime boundary treaty between Australia and Timor-Leste in 2019, negotiations have been underway regarding a new Greater Sunrise production sharing contract (PSC).

Woodside pointed out in its latest update, that the Sunrise Joint Venture and Australian and Timor-Leste governments held two further Greater Sunrise trilateral meetings in 2022 to progress a new production sharing contract while subsequent to the quarter, retention lease renewals were granted for Australian titles NT/RL2 and NT/RL4.

The Australian giant is also working on expanding its energy portfolio with low-carbon and renewable projects in pursuit of the transition to more sustainable sources of energy.

• What’s up with H2OK?

The first phase of Woodside’s H2OK project – which is a liquid hydrogen production facility proposed for the Westport Industrial Park in Ardmore, Oklahoma – involves the construction of an initial 290-megawatt (MW) facility, producing up to 90 tonnes per day (tpd) of liquid hydrogen through electrolysis, with potential expansion to 550 MW and 180 tpd.

Back in October 2022, the Australian player hired Nel Hydrogen Electrolyser, a subsidiary of Norwegian hydrogen company Nel, to provide the alkaline electrolyser equipment for the project, disclosing that the front-end engineering design (FEED) for the project was targeted for completion in 2022.

In line with this, Woodside has now confirmed the completion of FEED activities, which have matured the facility design, cost and schedule. In addition, the firm added that contracts were awarded for the engineering and fabrication of electrolysers and liquefaction equipment in support of targeted FID readiness in 2023.

Aside from this project, Woodside is pursuing ways to expand its new energy footprint in the U.S. while working on two proposed hydrogen projects in Australia: H2Perth and H2TAS.

Additionally, Woodside was selected as the preferred partner to progress to the next stage of Meridian’s proposed Southern Green Hydrogen (SGH) project in New Zealand. Japan’s Mitsui & Co. is also in discussions to join the project and develop the potential market for ammonia offtake to create a collaboration that covers the full hydrogen and ammonia supply chain.

This proposed project will target the production of 500,000 tonnes per year of ammonia using electrolysis from renewable power. Subject to finalising commercial arrangements, the next steps will involve project participants working towards commencing FEED for the project, outlines Woodside.

• Setting the solar energy ball rolling

Woodside is proposing to develop a solar photovoltaic power facility, approximately 15 km southwest of Karratha in Western Australia while also progressing plans with Heliogen for a 5 MW commercial-scale demonstration facility in California, using Heliogen’s AI-enabled concentrated solar technology.

“In Australia, Woodside entered into an Indigenous land use and modern benefits sharing agreement for the Woodside Solar project and is targeting FID readiness in 2023,” added O’Neill.

In the update on its progress, Woodside underlined that it had entered into a bilateral indigenous land use agreement and a modern benefits-sharing and relationship agreement with the Ngarluma Aboriginal Corporation (NAC), which holds the native title rights on behalf of the Ngarluma people, in respect to the land on which the proposed solar project would be developed.

Moreover, the lands are within part of the Ngarluma people’s native title-determined area located in Maitland, 15 km southwest of Karratha in Western Australia. Woodside explained that the power opportunity would pave the way for the long-term solar energy supply to local industrial customers.

Furthermore, the company is investigating the supply of approximately 50 MW of solar energy from the power opportunity to the Pluto LNG facility, which would directly reduce Scope 1 greenhouse gas emissions from Pluto. According to the firm, the power opportunity is proposed to initially generate electricity from a large-scale solar farm, complemented by a battery energy storage system.

The Australian player plans to supply this solar energy through the Horizon Power-operated section of the North West Interconnected System (NWIS) to its customers connected to the NWIS. With this in mind, the Australian giant executed an option to lease the land while progressing NWIS connection and transmission access arrangements.

Every 100 MW of solar electricity supplied to customers connected to the NWIS is expected to reduce greenhouse emissions by 100 kt per annum, as well as reducing emissions of other pollutants, such as nitrogen oxides and sulphur oxides, underscores Woodside while adding that this is subject to various factors, such as a customer’s existing electricity source and demand profile.

The Australian company also said that it had completed the drilling of the second development well on the Shenzi North project in the Gulf of Mexico and started well completion operations with the project being 42 per cent complete at the end of 2022.

Meanwhile, the Pyrenees Phase 4 infill campaign kicked off during 4Q 2022, with final completion of the campaign expected in 1Q 2023. The infill campaign is targeting one workover well and one infill well and is expected to increase recovery from Australia’s Crosby and Stickle fields.

The company further added that the Enfield plugging and abandonment (P&A) campaign continued with four wells permanently plugged and one xmas tree removed in the fourth quarter of 2022 while a total of five wells were permanently plugged and 13 xmas trees were removed during 2022. The Balnaves P&A campaign consisting of four wells was also completed.

Regarding Woodside’s other recent activities, it is worth noting that the firm, together with North West Shelf (NWS) project participants, signed non-binding agreements with Western Gas for processing 2-3 Mtpa of Equus gas from 2027, initially through the Karratha gas plant and then later through Pluto LNG.

“Woodside’s production guidance for full-year 2023 remains 180 million to 190 million barrels of oil equivalent,” emphasised O’Neill.

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