Woodside and BHP’s Scarborough gas project, including the Pluto Train 2 developments and Pluto Train 1 modifications, have been approved, as final investment decisions (FID) are finalised. 

Woodside has also taken FID on Train 2 of its Pluto LNG facility near Karratha, which will process the Scarborough resource, along with Global Infrastructure Partners of the Pluto Train 2 Joint Venture.

The Scarborough field is located approximately 375km off the coast of Western Australia and is estimated to contain 11.1 trillion cubic feet (100 per cent) of dry gas. 

Development of Scarborough will include the installation of a floating production unit (FPU) with eight wells drilled in the initial phase and 13 wells drilled over the life of the Scarborough field. 

The gas will be transported to Pluto LNG through a new trunkline of approximately 430km. 

The project, despite igniting environmental concerns from some in the Western Australian community, was approved by Western Australian Environment Minister, Amber-Jade Sanderson, in June 2021. Ms Sanderson approved the Pluto LNG’s new Greenhouse Gas Abatement Program (GGAP), with the State Government stating that the decision has been made following expert, independent advice from the Environmental Protection Authority.

The US$12.0 billion (100 per cent, $6.9 billion Woodside share) LNG development aims to deliver significant cash flow and enduring value to shareholders. 

Scarborough gas processed through Pluto Train 2 will be one of the lowest carbon intensity sources of LNG delivered to customers in north Asia, with first LNG cargo targeted for 2026. 

With the sell-down of 49 per cent of Pluto Train 2 announced on 15 November 2021, the expected investment metrics for the integrated development are: 

• An internal rate of return (IRR) of above 13.5 per cent 

• An all-in cost of supply for LNG delivered to north Asia of approximately $5.8/MMBtu 

• A payback period of six years

Woodside CEO, Meg O’Neill, said approving the development of the world-class Scarborough gas resource is a landmark achievement for Woodside. 

“Today’s decisions set Woodside on a transformative path. Scarborough will be a significant contributor to Woodside’s cash flows, the funding of future developments and new energy products, and shareholder returns,” Ms O’Neill said. 

“This capital efficient development leverages Woodside’s existing infrastructure and our proven expertise in project execution. The contracting model, development concept and execution strategy have been designed to reduce cost risk and protect shareholder value. 

“The Scarborough reservoir contains only around 0.1 per cent carbon dioxide, and Scarborough gas processed through the efficient and expanded Pluto LNG facility supports the decarbonisation goals of our customers in Asia. 

“The final investment decision is underpinned by quality customer support with approximately 60 per cent of Scarborough capacity contracted, including domestic gas for the proposed Perdaman urea project. 

“Developing Scarborough delivers value for Woodside shareholders and significant long-term benefits locally and nationally, including thousands of jobs, taxation revenue and the supply of gas to export and domestic markets for decades to come.”

The Australian Petroleum Production & Exploration Association (APPEA) Chief Executive, Andrew McConville, said the FID was a massive vote of confidence in the future of Australia’s natural gas industry.

“This decision brings announced investment in Australian oil and gas projects to more than $27 billion this year alone,” Mr McConville said. 

“The benefits of this project are significant, creating 3,200 jobs at peak during its four-year construction and securing the future of around 600 Scarborough jobs during operations.

“These jobs are on top of the 80,000 direct and indirect jobs – and hundreds of thousands of Australian jobs – that depend on the affordable, reliable and cleaner supply of oil and gas.

“Woodside can make this investment decision because of the strong outlook for the natural gas industry and the growing global demand for reliable, cleaner energy.”

APPEA WA Director, Claire Wilkinson, said the project will play an important role in reducing emissions in Australia and overseas.

“Natural gas is replacing coal and wood-fired power across the Asia Pacific region to help meet net zero targets. Scarborough gas will play a critical role in reducing global emissions and ensuring energy security in those countries,” Ms Wilkinson said.

“Because the Scarborough reservoir contains only around 0.1 per cent carbon dioxide and the project will involve highly advanced low emissions technology, Scarborough will be one of the least emissions-intensive sources of LNG globally that can be delivered to north Asian customers.”

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