Woodside banks on Scarborough as revenue plunges

When Scarborough was approved in late 2021, drilling gas wells and laying a 434-kilometre pipeline to shore were both scheduled to start in mid-2023. Woodside submitted plans for both activities to the offshore environment regulator NOPSEMA more than 18 months ago.

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According to the regulator’s website, these environment plans, sometimes called secondary approvals, are now back with the company for more work.

A 2022 court win by Tiwi Islanders, which determined a drilling approval obtained by Santos for its Barossa gas project was invalid, has further slowed down the pace at which approvals are processed.

O’Neill said the construction of Scarborough’s offshore production vessel in China – on the critical path determining when a project will be finished – was on schedule.

“Everything else, we have quite a bit of flex,” she said.

In the longer term, O’Neill was upbeat about possible changes made to the approvals process from a $6 million review announced in May’s federal budget.

“I think there is an opportunity for legislative clarity, which will benefit not just players like ourselves and the regulator, but also the communities that right now are feeling a bit inundated with consultation requests.”

Onshore, Woodside is expanding its Pluto LNG plant to process gas from Scarborough just as mining projects in WA’s north are not routinely reporting significant delays and cost blowouts, with a shortage of labour normally the principal reason.

O’Neill said much of the Pluto construction effort went into building modules in Indonesia that would start arriving in the Pilbara in 2024.

US contractor Bechtel now has about 400 workers on site, with numbers rising slowly this year and then building to a peak of about 2000 in late 2024.

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“I have full confidence that they will continue to be able to bring in the talent that’s required,” O’Neill said.

“We’re feeling really good about Pluto Train 2.”

Woodside is heavily exposed to any cost blowouts as it owns all the Scarborough gas field and sold 49 per cent of the Pluto expansion to US-based Global Infrastructure Partners in a deal where it kept much of the cost, schedule and regulatory risk.

O’Neill said the company’s operational performance for the quarter had been strong, with a planned maintenance shutdown at the Pluto LNG project completed on time.

The work on Pluto, which is Woodside’s largest source of production due to its 90 per cent stake in the project, had been disrupted by an explosion at the onshore LNG plant that delayed work for some days.

On Tuesday, Woodside announced that production from its Sangomar oil project off Senegal in West Africa would be delayed by a further six months after problems were found in the floating production vessel under construction in Singapore.

O’Neill said the quarter – marred by the death of rope access worker Michael Jurman on the North Rankin gas platform in June – was “an extremely difficult period for everyone at Woodside”.

WA Police and NOPSEMA are investigating the accident.

Woodside shares closed on Wednesday up 1.4 per cent or 50 cents to $36.05 a share.

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