Browse Explores Options for Domestic Gas Supply in Western Australia

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Researched by Industrial Info Resources Australia (Perth, Australia)--The Western Australian state government policy that requires that 15% of all natural gas produced within the state be reserved for the domestic market is not popular with the gas industry. It aims to ensure that local consumers and industry can take advantage of Western Australia's gas reserves through lower energy costs. Typically, gas producers have sought to export all of the gas to foreign markets, where it attracts a higher price.

The policy played a part in the decision by Woodside Petroleum Limited (ASX:WPL) (Perth, Western Australia) to shelve the onshore liquefied natural gas (LNG) processing plant proposed for Browse earlier this year. If the $40 billion project had received the go-ahead, it would have begun the construction of a 12-million-metric-ton-per-year LNG production plant, an offshore gas processing platform, natural gas subsea pipelines, a condensate jetty, marine offloading facilities, and a 5,700-person accommodation village. The investment value of the construction workforce accommodation village alone was more than $950 million.

The current plan would see the Browse gas field developed through the use of floating LNG (FLNG) technology, which, according to Woodside, is a far more economically viable option. However, as part of the Browse field is within Western Australian waters, the reserve policy still applies.

Industry insiders have suggested two options that would allow Browse to be developed using FLNG, and would allow the state to receive its mandatory 15% of all gas produced:

• The first option would include construction of a small re-gasification plant in either Broome or Karratha, supplied with LNG by a small, purpose-built LNG tanker. LNG re-gasification is the process whereby LNG is allowed to expand and turn back into natural gas. It forms part of the standard international LNG trade process. The re-gasification plant would be connected to the state gas pipeline network and would supply gas directly to the system.
• The second, more likely option, would see an increase in the percentage of gas reserved for the domestic market from the North West Shelf project as a substitute for gas from Browse. The North West Shelf Project supplies oil and gas to Australian and international markets from huge gas and condensate fields in the Carnarvon Basin, on Australia's northwestern continental shelf. As Woodside is part-owner of the project, it could potentially supply additional gas to the domestic market through the established infrastructure and avoid the cost of constructing the additional facilities required to link Browse to the domestic market.

At this stage, Woodside has not confirmed its plans for Browse, or for supplying the domestic market.

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