Matt Chambers – Woodside Petroleum expects development of the Greater Sunrise gasfields through a floating liquefied natural gas platform to cost more than $US11 billion ($13 billion) – but this will be $US5 billion cheaper than building an onshore plant in East Timor.
Chief executive Don Voelte yesterday revealed the difference in cost between the Sunrise joint venture's preferred floating LNG (FLNG) option, and East Timor's preference for an onshore plant, as tensions over the big Timor Sea gasfields worsened.
East Timor argues that floating LNG is untested, risky technology. Mr Voelte said the East Timor option had been thoroughly investigated.
"We found that there were no technical impediments to TLNG (a Timor plant). However, it has the highest capital cost by approximately $US5 billion compared to FLNG, and presents technical risks," he said.
East Timor has previously accused the Sunrise partners – Woodside, Shell and ConocoPhillips – of failing to seriously consider a plant on East Timor, but the partners deny this.
Mr Voelte said the Sunrise project was a sister to Shell's more advanced Prelude FLNG project, pointing to Wood Mackenzie analysis that showed Prelude had an internal rate of return of about 15 per cent.
Wood Mackenzie also estimated Prelude would cost $US11 billion to develop. "It is anticipated Sunrise will have a higher capex than Prelude... driven by Sunrise's larger resource and higher planned production rates," Mr Voelte said.
Sunrise was in calmer waters, with a larger resource base and lower levels of carbon dioxide and other impurities, he said. It is understood costs for the other rejected option for Sunrise – a Darwin LNG plant – are somewhere between the other two options.
East Timor has said the risks to FLNG take away from its competitiveness. Government spokesman Agio Pereira warned FLNG was a complex, untested option.
"(It is) hardly the cheapest option given the uncertainty, long-term maritime risks and the significant technical challenges, many of which have yet to be identified," he said.