Woodside Drops LNG Plan In Canada

By Glenn Dyer | More Articles by Glenn Dyer

It was notable that in January when Woodside surprised the market with a $2.5 billion capital raising that the company failed to mention Canada in explaining what it wanted the money for.

The $2.5 billion raising will help finance Woodside’s acquisition of ExxonMobil’s 50% stake in the Scarborough has project off the NW WA coast for $US444 million, plus an additional payment of $US300 million upon the greenlight to develop the field.

This will give Woodside a 75% controlling stake in the project after it bought out BHP’s share in 2016.

The raising will also provide funding for a second production unit at its Pluto LNG plant and first-stage development of the SNE oil discovery off the coast of Senegal in West Africa.

And this week a new possible drain on Woodside’s resources with news of a big oil and gas strike further south in West Africa.

Malaysian state-owned energy giant, Petronas this week revealed what appears to be a major oil and gas discovery offshore of Gabon which more than 3,000 kilometres southeast of the Senegal fields.

Woodside said in a statement to the ASX "In November 2017, Woodside acquired a 30% non-operated participating interest in the Likuale (F14) Block from the operator, Petronas.

"Completion of the acquisition remains subject to satisfaction of conditions precedent.The Boudji-1 exploration well in the Likuale (F14) Block intersected a 90 metre gross oil and gas column in high quality hydrocarbon-bearing pre-salt sands.The operator, in conjunction with the Government of Gabon, will conduct an assessment to understand the commerciality of the resource.

"Upon completion of the Likuale (F14) Block acquisition, Woodside Energy (Gabon) Pty Ltd will be the largest gross acreage holder in deep water offshore Gabon with interests in four blocks covering an area of 16,776 sq km.”

Canada has not been mentioned very much (not all in the 4th quarter production and exploration report in January) where the company picked up one project in its 2014 acquisition of assets in Australia and Canada from US independent, Apache, on top of an earlier project for a LNG terminal in British Columbia.

Woodside has revealed it had abandoned a proposed LNG project in western Canada to focus on a nearby venture with Chevron (its partner in the huge Wheatstone LNG projects off the WA coast).

According to a report from Reuters this week, Woodside in January quietly chose not to renew its agreement with the British Columbia provincial government to develop an LNG terminal at the Grassy Point site.

Woodside struck the deal with the BC Government in 2014 as a sole operator. Later that year it acquired from Apache a 50% stake in British Columbia’s Kitimat LNG project. That is now the project for choice for Woodside in Canada

Chevron is operator of Kitimat.

The Grassy Point decision follows Malaysian oil and gas producer Petronas last year scrapping a $US36 billion LNG project in British Columbia.

Reuters reported this week Petronas was among groups showing interest in acquiring a minority stake in Kitimat from Chevron. That is a tantalising link given Woodside’s Gabon involvement with Petronas.

Woodside shares ended down 0.6% yesterday on $28.80.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →