Australia Grants Conditional Environmental Approval for Scarborough Floating LNG Project

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Researched by Industrial Info Resources Australia (Perth, Australia)--The Scarborough Floating LNG (FLNG) project has received conditional approval from Australian Environmental Minister Greg Hunt. A final investment decision is slated for early 2015. Environmental approval was granted November 8, 2013.

ExxonMobil (NYSE:XOM) (Irving, Texas) had submitted a "referral of proposed action" for the Scarborough Floating LNG project to the government in April 2013, as part of the application for environmental and regulatory approval. The proposal was under consideration by the Australian Federal Department of Sustainability, Environment, Water, Population and Communities. The approval comes with a proviso that 17 conditions must be met under the "Environmental Protection and Biodiversity Conservation Act of 1999."

The project is transitioning from Pre-FEED into FEED phase. The operators, ExxonMobil and venture partner BHP Billiton (NYSE:BHP) (Melbourne, Victoria), will make the final investment decision following completion of the FEED, which is anticipated in early 2015. Construction will begin in 2017, and offshore installation and commissioning is slated for 2019-20. Production is expected to begin 2020-21. The Scarborough gas field, situated in the Carnarvon Basin, will have a field life of 23 to 35 years.

The field is remote, and FLNG is deemed the best option at this point for natural gas exploitation. The subsea infrastructure, which includes 12 production wells, umbilicals, risers and flowlines, will be installed at a depth of between 900 and 970 metres, roughly 200 kilometres off the coast of Western Australia. The FLNG concept has not been finalised by partners ExxonMobil and BHP Billiton; further engineering and design is necessary before a land-based LNG plant is ruled out entirely.

The proposed FLNG facility will process between 6 million and 7 million metric tonnes of liquefied natural gas per year, operating five LNG trains 24/7. The vessel is expected to measure at 495 metres long and 75 metres wide. If the project goes ahead, Scarborough FLNG likely will boast the title of biggest FLNG facility globally.

Support from the Australian government at this early stage in the FLNG concept stage is positive for the proponents. It may seem early considering the project status, yet ExxonMobil and BHP Billiton (50:50 joint venture partners, with ExxonMobil in operatorship position) have been working on the exploitation of the Scarborough resources for many years. Land at the Ashburton North Industrial Precinct, near the town of Onslow, in the Pilbara region of Western Australia, was allotted for development of the project over the initial years that the proponents considered the land-based concept. Those that have tracked the project development for many years will recall it was originally labelled the "Pilbara LNG Project."

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