Woodside increases Scarborough field stake. First production in 2025

Australian energy firm Woodside is set to expand its ownership over the the 7.3 Tcf Scarborough offshore gas field in W. Australia.

The company on Wednesday said it had entered into a binding Sale and Purchase Agreement (SPA) to acquire ExxonMobil’s share of the Scarborough gas field located in the Carnarvon Basin Australia.

Under the terms of the SPA, Woodside will acquire from ExxonMobil an additional 50% interest in WA-1-R which contains the majority of the Scarborough gas field. Upon completion of the transaction Woodside will have a 75% interest in WA-1-R and a 50% interest in WA-61-R, WA-62-R and WA-63-R.

Woodside will pay  an aggregate purchase price of $444 million. In addition, a $300 million payment is contingent on a positive final investment decision to develop the Scarborough field.

Completion of the acquisition is subject to pre-emption rights and customary regulatory approvals, and is targeted by end Q1 2018.

Scarborough, discovered in 1979, is located off the coast of Western Australia approximately 220 kilometers northwest of Exmouth in 900 meters of water. It is one of the most remote of the Carnarvon Basin gas resources. Woodside first bought a stake there in 2016 from BHP Billiton.

Woodside CEO Peter Coleman said on Wednesday the Scarborough acquisition delivered greater alignment, control and certainty for the project while also unlocking shareholder value.

While it has previously been said that the field might be developed using a Floating LNG unit, it seems this option is off the table now, with Woodside shifting focus towards its existing onshore infrastructure for the development of the Scarborough area.

Coleman said: “Our Burrup Hub concept is advanced by our announcement today of an increased stake in the Scarborough gas field. The development concept involves maximizing existing infrastructure at the Pluto LNG plant to meet a market gap we expect will emerge from the early 2020s.”

Final investment decision in 2020

Woodside contingent resource estimate for the Scarborough area resources, being the Scarborough, Thebe and Jupiter gas fields, is gross (100%) 9.2 Tcf of dry gas (at the 2C confidence level). Upon completion of the acquisition, Woodside’s net share of the resources is estimated to increase from 2.8 Tcf to 6.4 Tcf of dry gas.

The Woodside contingent resource estimate for the Scarborough area resources is based on Woodside’s technical evaluation of subsurface and seismic data, has been calculated using deterministic methods and has been based on a development scenario utilizing existing Woodside-operated infrastructure on the Burrup Hub.

Woodside said on Wednesday: “By providing greater alignment between Woodside’s upstream resources and downstream infrastructure and greater control over and certainty of development, this acquisition supports Woodside’s strategy of unlocking shareholder value. This is expected to create a pathway to development of the material, unallocated Scarborough gas field through a lower-cost brownfield expansion of our high-reliability Pluto LNG facility.”

Five years ago in 2013, Exxon and BHP Billiton, then the sole partners in the Scarborough area, had received the environmental approval for the Scarborough field development via what was to be the world’s largest FLNG facility. The FID had been slated for 2014-2015, but the collapse in oil prices then forced the partners to pull the breaks on the project.

Woodside on Wednesday said it was targeting a Scarborough concept select decision in 2018, with FEED targeted in 2019 and FID in 2020. First production from the development is expected in 2025 to meet the expected global LNG supply gap, Woodside said.

Offshore Energy Today Staff