SHELL Australia chairman Russell Caplan has capped an extraordinary week for Western Australia's LNG industry, with a swipe at Premier Colin Barnett's attempt to dictate how the $30 billion Browse LNG project in the Kimberley should be developed.
SHELL Australia chairman Russell Caplan has capped an extraordinary week for Western Australia's LNG industry, with a swipe at Premier Colin Barnett's attempt to dictate how the $30 billion Browse LNG project in the Kimberley should be developed.
Mr Barnett last week effectively ordered the Browse partners to use the proposed James Price Point LNG hub by vowing to block any attempt to pipe Browse gas to the Pilbara for processing.
"That gas will be developed in the Kimberley," Mr Barnett said, adding that the Browse partners should "take a reality check, recognise the policy position and deal with it."
Woodside holds 50 per cent of the Browse project and enthusiastically supports the hub in a bid to commence Front End Engineering and Design (FEED) later this year.
However, partners Shell and Chevron are not yet convinced it is a better option than piping gas to the Pilbara's established LNG production base.
Speaking outside a CEDA function in Perth this week, Mr Caplan questioned the premier's approach.
"Governments can say no to things ... but at the end of the day, (the premier) can't say that a project must be delivered," Mr Caplan said.
"He can only say that a project can't be delivered.
"He has all the power in the world within his mandate. But that power is to stop something, not to make something go ahead.
"And those who are going to make it go ahead have to be prepared to invest (billions) to make it go ahead. They won't go ahead because Colin Barnett says it has to go ahead."
Mr Caplan said the James Price Point hub was an excellent initiative that had created an option not previously available.
"But whether it's good enough to make everything fall in place, we are a long way from knowing that," he said.
Mr Caplan said multiple floating LNG facilities could also be possible at big fields like Browse, if environmental, economic or social considerations made onshore development unattractive.
Mr Caplan also confirmed Shell's smaller Prelude field nearby was a frontrunner to become the first of several Shell-owned fields globally to be developed using innovative FLNG technology.
Addressing the CEDA function earlier, Mr Caplan shed some light on the regular differences between partners in major projects (such as Browse), noting that the competing investment priorities of partners had to be reconciled for any project to proceed.
Mr Caplan's comments followed a flurry of local LNG news over the preceding week.
Firstly, environmental approval was secured for the Chevron-led $50 billion Gorgon project at Barrow Island, which clears the way for a final investment decision within six weeks.
The same day, Woodside Petroleum said approval was imminent for the second of four LNG processing trains planned at its $12 billion Pluto LNG project on the Burrup Peninsula.
Two days later, Chevron formally approved FEED for its $25 billion Wheatstone project off Onslow, initially comprising two processing trains with the potential to add three more.
While the news bodes well for LNG investment in WA, the order in which projects will be developed remains uncertain, and is exacerbating tensions between proponents.
With both Pluto and Wheatstone actively courting third-party gas suppliers to support their rival expansion proposals, Woodside boss Don Voelte fired a shot across Chevron's bow last week when asked if competition for third party gas was hot.
"It's always competitive, but we've got a real project," he said, noting that Pluto 2 was a simple addition to an existing project, rather than a greenfields development.
Two days later, Chevron Australia chief Roy Krzywosinski denied outright that FEED had been approved at Wheatstone to counter Woodside's attempt to have Chevron's tenure over the field revoked under federal "use it or lose it" provisions.
