Woodside's bold prediction: big plans for Pluto
Sydney Morning Herald
Saturday July 25, 2009
WOODSIDE has moved to quell doubts that it could move quickly to expand its $12 billion Pluto gas export project, boldly predicting it will award an engineering and design contract for the expansion in the current (September) quarter.But the prediction came with the proviso that Woodside first secure additional gas supplies to underpin Pluto's expansion something Woodside has yet to resolve, testing the patience of the market.Hopes that Woodside could secure additional gas for Pluto by striking a deal with Chevron on the nearby Wheatstone gas field were dashed in June when the US giant said it planned to use Wheatstone's gas to underpin the development of a $30 billion liquefied natural gas processing hub to be built near Onslow, initially with two LNG processing "trains" but with the intention of eventually going to five processing trains using third-party gas.Woodside had been looking to send Wheatstone gas for processing at an expanded Pluto processing plant, the first stage of which is being built at Karratha. This involves a single processing train and is 65 per cent complete, with Woodside aiming for first gas shipments in late 2010.Goldman Sachs JBWere recently argued that the expansion of Pluto was a necessity for Woodside. It said it would a poor outcome for Woodside if additional gas was not secured and Pluto stayed as a one-train development. The broker also estimated synergy benefits of up to $4 billion if an "unlikely" compact with Chevron was reached.Beyond Pluto, the market is also waiting on Woodside to provide greater certainty on its development plans for the Browse and Sunrise LNG projects, given that competition is coming thick and fast from LNG projects owned by others.Woodside's Pluto prediction was contained in the group's June-quarter oil and gas production report. It showed that lower prices and the loss of some high-margin oil production slashed June-quarter sales revenue by $53 million, or 36 per cent, from $1.47 billion to $938 million.The revenue hit was expected given the collapse in oil prices that came when the global financial crisis hit in September last year. June-quarter production was 19.4 million barrels of oil equivalent (boe), up modestly from 19.3 million boe in the previous corresponding period. Woodside has maintained its 2009 (calendar) year production target at 81-86 million boe.The main area of weakness was at the Vincent oil project. Production fell from 1.49 million barrels in the preceding March quarter to 525,806 barrels (Woodside's 60 per cent share) in the June quarter due to a fire in a high-pressure compressor on board the floating production vessel.
© 2009 Sydney Morning Herald