Subject: Timor hurdle next for Sunrise gasfields
Timor hurdle next for Sunrise gasfields
Matt Chambers and Paul Cleary
April 30, 2010 12:00AM
HAVING finally decided to exploit the Greater Sunrise gasfields through a $US5 billion ($5.4bn) floating LNG platform, Woodside Petroleum and Shell now face a long struggle with an East Timorese government that says it is prepared to reject the proposal.
It is believed high-level executives from Woodside and Shell will travel to East Timor in coming weeks to begin talks with the government, which is digging in for a long fight for an onshore Sunrise development in the tiny nation.
A source close to the government said it was becoming increasingly "nationalistic" and was prepared for a protracted battle to secure the maximum benefit for its economy and people.
Yesterday, Woodside and its partners -- Shell, ConocoPhillips and Osaka Gas -- confirmed a report in The Australian that said they had chosen a floating LNG plant as the best option to develop the big Sunrise gasfields in the Timor Sea, jettisoning their other option of an onshore plant at Darwin.
"We expect that the selection of a floating LNG processing option will, in addition to generating significant long-term petroleum revenue, provide a broad range of social investment, employment and training opportunities for Timor-Leste (East Timor)," Woodside chief executive Don Voelte said.
Under the plans, which are not expected to be approved at board level until 2012 or later, Shell would develop and operate a 480m long LNG processing ship that would be able to withstand cyclones. Woodside would build and operate underwater gas wells at Sunrise.
The Greater Sunrise fields contain 5.13 trillion cubic feet of gas and straddle the Timor Sea joint petroleum development area.
Under a 2006 agreement, Australia and East Timor would split the production equally and would both need to approve development of the field.
In recent weeks a government spokesman for the East Timor cabinet declared the country would not be a "guinea pig" for the floating LNG plant.
East Timor was "firmly committed to building an onshore petroleum industry, inclusive of a pipeline to Timor-Leste from the Greater Sunrise field," the East Timor cabinet spokesman said.
Floating LNG is still untested technology.
East Timor, led by Prime Minister Xanana Gusmao, is pushing for the onshore option as the best way of meeting twin goals in resource projects of strong participation by the Timorese people and maximum benefits for them.
With strong revenue flow from the existing Bayu-Undan field, and more than $5bn saved from surplus earnings, the government can afford to bide its time and get the deal it wants.
Woodside rejects call for offshore gas hub
Woodside has rejected the Wilderness Society's call for the company to use floating LNG technology to process gas from the Browse Basin.
Woodside and its joint venture partners plan to build an LNG processing plant at James Price Point, north of Broome, to process the gas.
The company plans to use floating LNG technology to develop its Greater Sunrise project in the Timor Sea, and the Wilderness Society says if it is good enough for that project it should be good enough for Browse.
But Woodside's chief executive Don Voelte says the Kimberley's cyclonic weather would pose safety risks for floating LNG and he does not think it would be economically viable.
"Effectively we would have to build three or four of these FLNGs to produce the Browse and every one of those is like a greenfield," he said.
Earlier today the Wilderness Society set up an inflatable whale outside Woodside's annual general meeting in Perth in protest over the company's plans.