Oil and Gas News

BHP commits to Scarborough feasibility study

BHP has ordered a feasibility study for the proposed $16 billion Scarborough liquefied natural gas (LNG) development offshore Western Australia in the Carnarvon Basin.

The company announced that the feasibility study would be the third and final phase required to finalise a proposal for a final investment decision (FID). BHP owns a 25 per cent interest in the LNG project, which is being developed by joint venture partner Woodside Petroleum (75 per cent).

BHP Petroleum Australia Country manager Graham Salmond said the Scarborough decision was consistent with the company’s petroleum strategy to invest in advantaged gas.

“We will continue to work closely with Woodside so that Scarborough delivers value for our shareholders, partners and the community,” Salmond said.

BHP expects to submit the project to its board for a final investment decision (FID) from the middle of the year.

The company’s decision on a feasibility study adds to progress made on Scarborough over the past few months, including the signing of a non-binding heads of agreement between Woodside and BHP on tolling terms in November 2019.

The agreement refers to the price for processing gas from the Scarborough fields at the Pluto LNG facility on the Burrup Peninsula, with the deal having been one of the last remaining hurdles to clear before a FID on the project will be made.

An FID would see the resource developed via a deep-water floating production unit and a 430km pipeline to a potential second LNG production train at Pluto.

“With respect to the timing with BHP agreements, we expect to complete the toll agreement in the next couple of months and have a binding toll agreement with BHP in the next couple of months with a view that we will be able to go to full FID on Scarborough sometime around the middle of this year,” Woodside chief executive officer and managing director Peter Coleman said.

Earlier last month, the Western Australian Environmental Protection Authority (EPA) recommended approval for the state component of a LNG pipeline that forms part of the joint venture Scarborough project.

The proposal would see the installation of a gas trunkline 32.7km long, located adjacent to the existing Pluto LNG facility 8km north east of Dampier in the Pilbara.

Scarborough is located mainly within the WA-1-R lease offshore Western Australia and the joint venture are aiming for the first LNG to be targeted in 2024.

©2019 All Rights Reserved. Oil & Gas is a registered trademark of Prime Creative Media.