Woodside Faces Cost Increase at $11B Scarborough Gas Project

Sonali Paul
Wednesday, June 9, 2021

Woodside Petroleum is in the final stages of working out costs on its Scarborough gas and Pluto LNG expansion project, as it faces rising labor and steel costs, the company’s boss said on Tuesday.

The Scarborough development offshore Western Australia will feed an expansion of Woodside’s Pluto LNG (liquefied natural gas) plant, with the combined project previously estimated at $11.4 billion.

Acting CEO Meg O’Neill, who took the reins in April, said the company is facing skyrocketing steel prices for a project where raw steel costs amount to 10% or 15% of total costs, and acknowledged that there is tight competition for workers amid a mining boom in Western Australia.

At the same time, she said Woodside had been able to work out some cost savings in the project design with its contractors after putting it on hold last year, when oil and gas prices crashed amid the COVID-19 pandemic.

“It’s probably too early to say, but there’s some cost pressures on the ledger, there’s some cost savings on the ledger and as soon as we have those updated bids from our contractors, we’ll be communicating with our shareholders,” O’Neill said at Credit Suisse’s 8th Australian energy conference.

The Scarborough and Pluto LNG expansion project is the company’s only big growth option in the near term.

Woodside is targeting a final investment decision with its partner BHP Group within the next six months.

The Western Australian government said on Tuesday it had approved Woodside’s plan to cut emissions from the Pluto LNG project by 30% by 2030 and reach net zero by 2050, which the state’s environment minister said represented a sharp reduction in emissions from levels approved in 2007.
The gas industry two years ago fought to block a proposal by the state’s environment regulator that would have required all new projects with carbon emissions of more than 100,000 tonnes to fully offset their emissions.

(Reporting by Sonali Paul; editing by Jason Neely)

Categories: Energy LNG Industry News Activity Production Gas Australia/NZ

Related Stories

Allseas-Boskalis Consortium Bags $1.4B Offshore Gas Pipeline Job in Taiwan

China Starts Production at Major Oil Field in Bohai Sea

CNOOC Finds Oil and Gas in South China Sea

Woodside Agrees Long-Term LNG Supply with Petronas Unit

Fugro Lands Deepwater Gas Field Job in Southeast Asia

Indonesia's Medco Starts Production at Natuna Sea Fields

China's ENN, Zhenhua Oil Ink LNG Supply Deals with ADNOC

CNOOC Puts Into Production New Oil Field in South China Sea

Pakistan’s OGDC to Start Production at ADNOC’s Offshore Block by 2027

INEOS Wraps Up Acquisition of CNOOC’s US Oil and Gas Assets

Current News

Sapura Energy Rebrands to Vantris Energy

BP, ONGC, Reliance Industries Ink Deal for Offshore Exploration in India

Allseas-Boskalis Consortium Bags $1.4B Offshore Gas Pipeline Job in Taiwan

CNOOC Brings New Offshore Gas Field On Stream

Yinson, PTSC Get $600M Contract for Vietnam-Bound FSO

PTTEP Buys Chevron's Hess Unit Share of Southeast Asia’s Offshore Block for $450M

Valeura Energy, PTTEP Partner Up on Gulf of Thailand Blocks

Sapura Scoops Over $118M for Chevron, PTTEP Subsea Ops off Thailand

Pandion Energy Divests Interests in Three Norwegian Assets to Inpex

China Starts Production at Major Oil Field in Bohai Sea

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com