$50 billion Browse Basin project on hold


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23-03-2016 06:17 PM


ABC Canberra 666

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ABC Canberra 666


23-03-2016 06:17 PM



23-03-2016 07:19 PM

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2016-03-23 18:17:03

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$50 billion Browse Basin project on hold -

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MARK COLVIN: It was the massive project that would bring huge benefits to the West Australian economy. Now even its shrunken version is on hold. It's the $50 billion Browse Basin project, originally designed as a massive onshore gas processing plant near Broome.

In 2013 that was mothballed in favour of a plant off the Kimberley coast. Now even that has been put on hold.

Collapsing oil prices led Woodside to today's announcement.

Browse will be put on hold until economic conditions improve.

Anthony Stewart reports.

ANTHONY STEWART: Despite an abundance of gas, the West Australian resources sector continues to run out of fuel.

Woodside has today announced it's shelving the multi-billion dollar Browse Basin gas project off the Kimberley coast.

COLIN BARNETT: I'm not surprised. I think it would have been very difficult for them to commit to north of $50 billion to develop this project when the price of petroleum, including natural gas, is low.

ANTHONY STEWART: That's the WA Premier Colin Barnett reacting to the news on Macquarie Radio.

COLIN BARNETT: I expect those prices to recover. That may take two or three years, and then maybe this project will get its opportunity.

ANTHONY STEWART: Woodside has been developing the project for a decade, but has released a statement explaining falling gas prices forced the company's hand.

EXCERPT FROM WOODSIDE STATEMENT: The Browse Joint Venture participants have decided not to progress with the development at this time considering the current economic and market environment. The economic environment is not supportive of a major LNG investment at this time.

ANTHONY STEWART: Woodside's plans involved constructing a massive floating liquefied natural gas plant 450 kilometres off the WA coast.

Mark Beyer is from WA Business News.

MARK BEYER: We've had this massive flurry of big gas projects both in Western Australia and Queensland and the Northern Territory. So we have got this big increase in supply, we've got very soft demand; a lot of parallels to what has happened in the iron ore market.

ANTHONY STEWART: The decision is also connected to the sustained low price oil is fetching around the world.

Tim Treadgold is a resources analyst.

TIM TREADGOLD: There's just too much liquid fuel around, and by liquid fuel I mean oil and I mean LNG. So the liquids are flooding the market.

ANTHONY STEWART: This is the second time investment in the Browse project has been delayed. Woodside had originally pushed to construct a gas plant at James Price Point near Broome.

The proposal caused heated community protests and a Supreme Court challenge. Ultimately the option was abandoned in April 2013.

Mark Beyer again.

MARK BEYER: The Premier, a lot of his political capital rests on these big resources projects. In fact one of the very early decisions he made after being elected Premier back in 2008 was to advocate an onshore gas plant at James Price Point.

So the move away from that concept was a big disappointment to him, and this is just another nail in the coffin if you like.

ANTHONY STEWART: As a result of the decision, the WA Government is expected to miss out on more than $1 billion in forecast royalties.

But Colin Barnett is keen to stress there is still a thriving gas sector in the state's far north.

COLIN BARNETT: Look it is obviously disappointing from that perspective, and unfortunately Broome and the Kimberley missed a great opportunity a few years ago, an opportunity that may not come back. However, to be more positive, you do have the Shell Prelude project under construction, and the INPEX-Ichthys project, which is also off the Kimberley coast.

So there will be activity going through Broome but not as great as it would have been had Browse gone ahead.

ANTHONY STEWART: Woodside has control of the Browse Basin gas lease until 2020.

MARK COLVIN: Anthony Stewart reporting.