UPDATE 1-Australia's Woodside shelves $40 bln Browse LNG project
* Woodside says to consider other floating LNG, other options
* WA govt wanted onshore plant for jobs boost
* Australia on track to become world's biggest LNG exporter
PERTH, April 12 (Reuters) - Woodside Petroleum on Friday shelved plans for the $40 billion Browse liquefied natural gas project in Western Australia, saying the massive onshore development did not make economic sense.
Browse LNG was to be Woodside's biggest LNG development yet, but has been plagued by controversy over its proposed location at James Price Point on the northwest coast.
A series of cost blowouts on Australian LNG projects has rattled investors, while the proposed site has also been opposed by some environmentalists and Aboriginal landowners. Some analysts believe its cancellation spells an end to new onshore gas projects in Australia.
Woodside said it would immediately begin evaluation of other options including a floating LNG plant, pipelines to existing facilities elsewhere in the region or a smaller onshore plant.
Woodside owns a 31 percent stake in Browse, which it is developing with partners Royal Dutch Shell, BP Plc , PetroChina Mitsui & Co and Mitsubishi Corp.
Estimates of the cost of the onshore plant option vary, but some analysts estimate that if it is on par with other LNG plants underway, such as Chevron Corp's Gorgon plant, it may be as high as $48 billion.
Analysts and industry sources have long doubted the likelihood of the James Price Point proposal going ahead given cost blowouts on other LNG projects and opposition to the site.
"This decision will surprise few as the proposed onshore development always looked too economically, technically, environmentally and socially risky for too little reward," analysts at Macquarie said in a note.
"While the JV appears to have finally seen sense, this decision probably also calls an end to greenfield onshore projects in Australia."
Of seven LNG plants under construction in Australia, all of which are due to come online in 2014 or later, four have already announced cost blowouts ranging from 15 to 40 percent.
A person with knowledge of the joint venture partner discussions said Shell had been pushing the partnership to go with a floating LNG option given the high costs of an onshore plant.
The decision to shelve the project is a blow to West Australia's premier, Colin Barnett, who won reelection last month and has been a vocal proponent of establishing a gas export hub at James Price Point, with Browse LNG as the cornerstone project.