also Dow Jones: Sunrise JV Opts For Floating LNG Platform; Bloomberg: Woodside, Shell Pick Floating LNG to Develop Sunrise (Update2)

Woodside Petroleum says floating gas plant is preferred option for developing Timor Sea field

By: Rod Mcguirk, THE ASSOCIATED PRESS

29/04/2010 2:16 AM

CANBERRA, Australia - A consortium developing a massive gas field in the Timor Sea said Thursday its preferred option is to build a floating liquefied natural gas platform, rebuffing the Australian and East Timorese governments who had each pushed for a pipeline to their own country.

The announcement by the consortium led by Australian energy firm Woodside Petroleum Ltd. is the latest step in the development of the massive Greater Sunrise gas field in a disputed area of sea between Australia and East Timor. The consortium said its preferred option for developing the field is to load tankers at sea from a world-first floating plant.

Australia's preference was a gas pipeline to the northern city of Darwin while East Timor has said a pipeline to its south coast was the only acceptable option.

As the East Timorese pipeline firmed as the least likely option, Malaysia's national oil company Petronas said in January that it had been invited by Dili to help develop Greater Sunrise, estimated to hold 240 million barrels of light oil and 5.4 trillion cubic feet (154 billion cubic meters) of natural gas worth tens of billions of dollars.

Woodside, on behalf on joint venture partners Royal Dutch/Shell, Osaka Gas and ConocoPhillips, said in a statement that a 2007 agreement between Australia and East Timor, also known by its Portuguese name Timor Leste, required Greater Sunrise to be developed to best commercial advantage.

"Following an extensive and rigorous commercial and technical evaluation of the various development options ... including building onshore processing plants at Darwin and in Timor Leste, a floating LNG processing facility best satisfies the key development requirements," Woodside chief executive Don Voelte said in the statement.

Voelte said the consortium would continue to work with both the Australian and East Timorese governments on the development of Greater Sunrise.

Woodside spokesman Roger Martin there were several steps to go before the partners made a final investment decision on the field.

Australia's Resources Minister Martin Ferguson did not comment on the consortium's preferred option, but said in a statement the government looked forward to receiving Woodside's development plan.

"The development of the Greater Sunrise field will bring significant economic benefit to both Australia and Timor Leste," he said in the statement.

An East Timorese government official was not immediately available for comment.

Darwin is 280 miles (450 kilometres) from Greater Sunrise. While impoverished and newly independent East Timor is closer, Woodside argued that a deep trench off the East Timorese coast made a pipeline there technically difficult to build.

---

* APRIL 29, 2010, 12:52 A.M. ET

2nd UPDATE: Sunrise JV Opts For Floating LNG Platform

(Adds size of facility, Shell comment)

By Ross Kelly

Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--Woodside Petroleum Ltd. (WPL.AU) said Thursday that the Sunrise joint venture wants to export gas from a floating platform in the Timor Sea, firming Australia's potential as the world's first testing ground for floating liquefied natural gas technology.

The Sunrise development, however, still has to overcome a major obstacle in the form of the East Timorese government, which wants gas from the Greater Sunrise field, jointly administered by Australia and East Timor, processed onshore in East Timor.

LNG plants super-cool natural gas so it can be transported by ship to countries not connected by pipeline. So far, no floating LNG processing plants have been used anywhere in the world, but Royal Dutch Shell PLC (RDSB.LN) has placed an order with Samsung Heavy Industries Co. (010140.SE) to build one, with an agreement to possibly build another nine.

Shell, a partner in Sunrise along with Woodside and ConocoPhillips (COP), is already planning to use a floating LNG platform to develop its separate Prelude field offshore Western Australia state by 2016.

Floating LNG is increasingly being considered as an effective way to commercialize stranded gas resources too small to support the construction of onshore LNG terminals and their associated pipeline infrastructure.

The Sunrise partners had been mulling whether to use floating LNG, or pipe gas from the Greater Sunrise field to ConocoPhillips' existing LNG plant at Darwin.

Woodside ruled out the onshore East Timor option long ago, saying it would be too expensive to build a subsea pipeline across a deep trench that lies between the gas field and East Timor.

A spokesman for East Timor wasn't immediately available for comment Thursday.

Earlier this month, a government spokesman said East Timor is "firmly committed" to an onshore plant in its country.

Unofficially though, the Australian Broadcasting Corp. this month quoted East Timorese President Jose Ramos-Horta as saying that a floating platform might benefit all sides.

Secretary of State for Natural Resources Alfredo Pires has said that studies indicate that the onshore East Timor option is viable.

Pires has warned that floating LNG is a "guinea pig experiment" but has also said "we might allow other countries to try it first then come back to us".

Woodside is targeting first gas from Sunrise in 2016. Analysts, however, aren't sure it will be constructed so quickly, given the East Timorese government's stance and Woodside's involvement in other, more immediate prospects like the expansion of its Pluto LNG project and construction of the Browse LNG project.

Global energy consultants Wood Mackenzie last year said a floating LNG option for Sunrise was likely but first gas isn't expected until after 2018, according to a Deutsche Bank note in December.

Woodside Chief Executive Don Voelte said in a statement Thursday that the Sunrise joint venture will "continue to work with" Australian and East Timorese authorities to progress the development.

Shell said the facility, of which it will operate and manage the construction, will process 4 million metric tons of LNG each year.

A joint venture between Santos Ltd. (STO.AU) and GDF Suez S.A. (GSZ.FR) also has plans to construct a floating LNG terminal off northeastern Australia in the medium term.

"Sunrise is a significant resource, but is remote and technically challenging, so Shell's FLNG technology provides the best technical and commercial development option," Shell Australia Executive Ann Pickard said in a statement.

-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692;

Ross.Kelly@dowjones.com

---

Woodside, Shell Pick Floating LNG to Develop Sunrise (Update2)

April 29, 2010, 1:12 AM EDT

(Adds use of Shell design in second paragraph.)

By James Paton

April 29 (Bloomberg) -- Woodside Petroleum Ltd., Australia's second-largest oil and gas producer, said it plans to develop the Sunrise liquefied natural gas project in the Timor Sea using a floating plant to process the fuel.

Royal Dutch Shell Plc, a partner in the venture, said Sunrise would become the second project, after Prelude, to use Shell's technology to chill gas to liquid on board a vessel. The Sunrise floating LNG plant would produce 4 million metric tons of fuel a year, Shell Australia said in a statement today.

Sunrise is among more than a dozen proposed LNG projects in Australia seeking to tap increasing Asian demand for cleaner- burning alternatives to coal. The use of floating facilities to process gas may suit fields that are too far from the country's coast to be profitably developed through onshore plants.

The floating LNG option for Sunrise has "got the best economics," David Wall, an oil and gas analyst at Hartleys Ltd., said by telephone from Perth. "The industry is moving toward this new technology. There's quite a lot of stranded gas up there, so I'd expect to see a few more of these."

The Sunrise partners must still make a final investment decision and gain government approvals. East Timor previously has opposed any Sunrise plan that doesn't include a plant on its soil. Agio Pereira, a spokesman for the East Timor government, couldn't be reached by phone or e-mail today for comment.

Woodside declined 0.7 percent to A$45.42 at 1:58 p.m. in Sydney trading, compared with a loss of 0.5 percent for the benchmark S&P/ASX 200 Index.

'Remote, Challenging'

Shell plans to deploy a vessel much larger than an aircraft carrier to process the gas from the Prelude and Concerto fields, the Hague-based company said last year. Santos Ltd., Australia's third-largest oil and gas producer, and GDF Suez SA propose relying on the method to tap fields in the Bonaparte Basin.

Samsung Heavy Industries Co., the world's third-largest shipyard, won an order from Shell in March to build a floating natural gas facility, the first deal between the two companies under a 15-year supply contract signed last year.

Under the Shell contract, Samsung Heavy and Technip SA will design, construct and install floating LNG facilities. Shell may order as many as 10 units that may be worth as much as $5 billion each, according to Samsung, citing industry estimates.

Woodside is operator of the Sunrise project, with a 33 percent stake. ConocoPhillips has a 30 percent interest, Shell has 27 percent and Osaka Gas Co. has 10 percent.

'Best Option'

Shell will manage the design of the floating LNG plant and will oversee the facility, its Australian business said.

"Sunrise is a significant resource, but is remote and technically challenging, so Shell's FLNG technology provides the best technical and commercial development option," Ann Pickard, Shell Australia executive vice president, said in the statement.

Floating technology would satisfy the agreement signed by Australia and East Timor requiring the joint venture to develop the Sunrise fields to the "best commercial advantage," Woodside said today. Woodside and its partners had also considered piping the Sunrise gas to Darwin.

The floating LNG option will generate significant revenue and jobs for East Timor and its people, Don Voelte, chief executive officer of Perth-based Woodside, said in the statement. The Sunrise partners will work with Australia and East Timor officials to advance the field's development, Voelte said.

Australia and East Timor completed a treaty in 2007 for the administration of the field, which straddles a boundary between Australian waters and an area jointly managed by the two countries. They agreed to share royalties.

--With assistance from Kyunghee Park in Singapore. Editors: John Viljoen, Clyde Russell.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net. 

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