Government prods producers on extending NWS – The West Australian

Karratha Gas Plant, North West Shelf Project

The Federal Government is showing signs of taking a more interventionist role in ensuring the life of the North West Shelf LNG project is extended, according to a research report.

The report by resources consultants Wood Mackenzie said the Government was motivated by an NWS life extension being worth up to $US48 billion in additional taxes.

Industry regulator the National Offshore Petroleum Titles Administrator had written to resource owners in North West waters requesting more information about the viability of prolonging the project, the report said.

There are signs the Government is becoming more proactive in the sector, and has leverage under the retention lease system to push developments forward, a summary said.

There are now real drivers pushing for the projects life extension, and conditions are unlikely to get more favourable than what we have now.

The three-decade-old NWS needs new sources of gas in the 2020s to keep its five production train Karratha Gas Plant going.

Wood Mackenzie said a life extension development should be able to take advantage of lower costs during the construction phase and a tightening energy market once production began.

It said a new industry focus on costs and margins had made resource owners more open to sharing third party infrastructure.

NWS operator Woodside Petroleums preferred option for the Browse joint venture it leads is to pipe the gas to Karratha.

While citing Browse as the leading candidate, other developments the report identified as potential suppliers were the ExxonMobil-led Scarborough field and the Chevron-led Clio and Acme fields and undeveloped Greater Gorgon fields.

Woodside in May said the NWS partners had agreed on a proposed toll for resource owners to process gas through the Karratha plant.

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Government prods producers on extending NWS - The West Australian