April 30, 2013 / 4:41 AM / in 5 years

Australia's Woodside in tech deal with Shell for Browse floating LNG

PERTH, April 30 (Reuters) - Australia’s Woodside Petroleum Ltd has signed a preliminary technology agreement with shareholder Royal Dutch Shell to develop its Browse gas field using Shell’s floating liquefied natural gas (LNG) technology in case it finally opts for that route.

The agreement, which Woodside announced on Tuesday, boosts expectations it will eventually use floating LNG to tap the Browse gas field. It comes on the heels of the Australian company’s decision to scrap plans to build a $45 billion onshore plant to tap the resource due to its high cost.

Woodside has outlined several potential development options for Browse, including a smaller onshore plant, but the company is widely expected to choose floating LNG to develop the Browse gas resource.

Floating LNG has “the potential to commercialise the Browse resources in the earliest possible time frame”, Woodside chief executive Peter Coleman said, according to a company statement.

Shell, which owns 24 percent of Woodside and is the second-largest shareholder in Browse, is considered to be the global frontrunner in developing floating LNG technology and has lobbied for the Browse gas field to be developed.

Other joint venture partners include BP Plc, PetroChina, Mitsui & Co and Mitsubishi Corp .

According to analyst estimates, choosing to use floating LNG technology would mean a cost savings of 20 percent.

Ballooning costs have become a major challenges for LNG developers in Australia.

With $190 billion worth of LNG projects underway, the country is set to become the world’s largest LNG exporter by the end of the decade, but more than half of the seven LNG plants currently under construction have had cost blowouts ranging from 15 percent to 40 percent.

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