Woodside Petroleum has raised the estimated costs for its Scarborough LNG project in Western Australia by 5 per cent to $16.2 billion, despite market rumblings that the number would be higher.
Acting chief executive Meg O’Neill reconfirmed the company was aiming to give the go-ahead for construction of the project by the year-end, telling investors the updated cost expectations were partly due to previously announced changes to the scope of the project aimed at delivering a 20 per cent increase in capacity to produce liquefied natural gas (LNG) and lower its break-even price.
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She said the expected rate of return for the Scarborough project, which also includes constructing a second gas-processing train at the Pluto gas plant on the Burrup Peninsula, would be more than 12 per cent.
“Significant progress has been made towards our targeted final investment decision on Scarborough and Pluto Train 2 this year,” Ms O’Neill said.
The Scarborough LNG project has faced mounting opposition from conservationists over the additional greenhouse gas emissions that will be generated from its development. The Conservation Council of Western Australia filed a motion in WA’s Supreme Court attempting to overturn previous approvals for the project that the group says would rank as one of the biggest new fossil fuel fields in the country. However, Woodside points out that Scarborough is extremely low in carbon dioxide compared to conventional oil and gas reservoirs.
The voice of the oil and gas industry welcomed Woodside’s updated advice on the progress of the Scarborough gas project.
APPEA WA director Claire Wilkinson said significant headway had been made towards Woodside’s targeted final investment decision on Scarborough and Pluto Train 2 this year.
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“If approved, Woodside’s proposed Scarborough development would deliver significant benefits,” Ms Wilkinson said.
“Scarborough gas would be a source of cleaner energy for Western Australia and play an important role helping overseas customers meet decarbonisation targets in their own countries.
“The development would provide thousands of construction jobs and hundreds of ongoing operational jobs for Western Australians and opportunities for local businesses.”
