Western Australian Premier Hints James Price Point Supply May Become FLNG

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Researched by Industrial Info Resources Australia (Perth, Australia)--Despite the decision by Woodside Petroleum Limited (ASX:WPL) (Perth, Australia) to abandon its plans for an onshore gas processing plant at James Price Point in Western Australia's Kimberly Region, the Western Australian state government has gone ahead with the compulsory acquisition of the controversial site.

The state government announced that it had completed the purchase of 3,414 hectares of land at James Price Point for future use as a gas precinct. Although Premier Colin Barnett was a vocal advocate of the Browse Project partners using James Price Point, he has all but conceded that if the project goes ahead, it will likely be through the use of floating liquefied natural gas (FLNG) technology.

FLNG vessels, such as the one proposed for the Browse Basin and the Prelude Vessel, owned by Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands), which will be operating in the Prelude and Concerto gas fields when complete in early 2017, will not need to come ashore. But they will need to be supplied with personnel and consumables on a regular basis. Currently, the only option for this within Western Australia is the port of Broome, which already is near capacity.

The Premier now hopes that Woodside and other Browse developers will utilize the land as a supply base. The site is owned by the government, and it will be managed by Landcorp, but Barnett says it will be up to oil and gas companies to develop it.

"Then companies using that site will lease the land off the government, but the government will not be building infrastructure for the oil and gas industry," Barnett said. "I think they've enough money to build their own infrastructure."

Most oil & gas industry leaders have criticized the premier for his hard-line stance on the issue, especially considering that only 15% of the resource sits within state waters. The bulk of the estimated 15.9 trillion cubic feet of dry gas and 436 million barrels of condensate are within the jurisdiction of the federal government.

In justifying his stance, the premier pointed to the creation of local jobs and a major benefits package for Kimberley indigenous groups.

The purchase of the land triggers a $28 million (AU$30 million) benefits payout to the traditional owners, much smaller than the anticipated $930 million (AU$1 billion) payout if the onshore gas processing plant had continued. However, because the Jabirr-Jabirr Goolarabooloo group recently split, that money will be held in a trust until the Native Title Tribunal determines the rightful land owners.

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