Bloomberg News

Exxon Expects Australia Floating LNG Project Start by ’21

April 02, 2013

Exxon Mobil Corp. (XOM:US) plans to develop the world’s biggest floating liquefied natural gas project off the coast of Western Australia as costs to build onshore plants in the country surge.

Exxon, the largest U.S. oil company, and partner BHP Billiton Ltd. (BHP) expect to decide whether to go ahead with the Scarborough floating LNG venture in 2014 or 2015, with the project starting production in 2020 or 2021, documents lodged on the Australian Environment Department’s website show.

Energy companies from Royal Dutch Shell Plc to Malaysia’s Petroliam Nasional Bhd. want to turn natural gas into liquid at sea. In Australia, Shell is developing the Prelude floating LNG vessel -- expected to be as long as the Empire State Building and weigh six times as much as the biggest aircraft carrier -- after companies including Chevron Corp. (CVX:US) experienced budget overruns at onshore LNG projects in the country.

A floating LNG facility has the potential to lower costs by eliminating the need for pipelines to the coast and reduce the venture’s “environmental footprint,” Jessica Warne, a Melbourne-based spokeswoman for Exxon, said today by phone.

Exxon’s Plans

The Exxon project is expected to cost more than Deutsche Bank AG’s $12 billion estimate for Prelude, John Hirjee, a Melbourne-based analyst at the bank, said today by phone.

Exxon’s plan, which may change, would be to produce about 6 million metric tons to 7 million metric tons of LNG a year, Warne said. Prelude is expected to produce at least 3.6 million tons of LNG annually, according to its website. The development is due to start in about 2017, Shell said in 2011.

Exxon’s floating plant in the Carnarvon Basin off northwest Australia is expected to be about 495 meters (1,624 feet) long and 75 meters wide, according to the filing. Prelude, expected to be the world’s largest vessel, will be 488 meters long and 74 meters wide, Shell’s website shows.

About 12 production wells will be drilled in two phases, Irving, Texas-based Exxon said in the documents.

The Hague-based Shell’s floating LNG venture will cost $10.8 billion to $12.6 billion, according to figures the oil company provided when it approved the project in 2011. Exxon’s Warne declined to provide a cost estimate for Scarborough.

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

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net


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Companies Mentioned

  • XOM
    (Exxon Mobil Corp)
    • $97.12 USD
    • 0.51
    • 0.53%
  • CVX
    (Chevron Corp)
    • $124.8 USD
    • 0.66
    • 0.53%
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