Woodside has delayed a final decision on its Pluto LNG project expansion until next year, according to comments with the company’s interim 2010 profit statement yesterday.
Woodside said its final investment decision on its Pluto expansion was dependant on securing enough gas resources for the extra "trains", or processing facilities to produce LNG.
"Pluto Train 1 now 92% complete and on track for target start-up by end February 2011 and first LNG by end March 2011.
"Pluto Train 2 and 3 onshore front-end engineering and design (FEED) on schedule for completion 2H 2010. Exploration drilling to support Pluto expansion has encountered gas in 6 wells from 10 targets.
"Final Investment Decision (FID) on Pluto expansion trains remains contingent on identification of economically viable gas resources either through exploration volumes and/or other resource owners.
"Work will continue into 2011 to achieve the investment case for Pluto expansion."
"Our concerns regarding competition for construction resources from other LNG projects have not materialised and, with the delays in drilling our 20 well program, the additional time provides the opportunity for us to further our exploration efforts," Woodside explained yesterday.
Woodside has reported two big gas strikes this week, which analysts suggest could help boost reserves for the Pluto project’s expansion.
Woodside CEO, Don Voelte told a results briefing that the company expects to complete discussions with other energy firms about extra gas to underpin Pluto’s expansion by the end of the year.
Woodside has spoken previously with US companies Apache Energy and Hess Exploration about buying gas, but has so far not got an agreement.
AAP reported the CEO as saying:" We’re continuing discussions with various parties to send large volumes of gas to Pluto for processing," Woodside chief executive Don Voelte told a briefing on Wednesday.
"The Pluto site can accommodate a further four LNG trains in addition to our foundation train.
"So this has opened up options for us the option to conserve both equity gas development and ORO (other resource owners) gas supply.
"In fact, our ORO options … are at a point of deliberations where we’ve actually reserved two LNG train footprints for the remainder of the discussions that we’re having that hopefully will reach a conclusion by the end of this year," Mr Voelte was reported as saying.
Mr Voelte said in the ASX statement the company had put back its target date for a final investment decision to proceed with the second Pluto train from late 2010 to 2011 so that it could conclude the discussions.
In the meantime Woodside says it expects solid production in the second half of the year after a strong rise in first half earnings for the 2010 year.
Woodside said net profit after tax for the six months to June 30 was $US901 million ($A1.01 billion), up 39.5% from the first half of 2009, on a 45.4% jump in revenue to $US2.1 billion.
The company will pay a fully-franked interim dividend of 50 US cents per share, up from 46 US cents from the first half in 2009.
Woodside said contributions from two infill wells at its Enfield site and the restoration of a gas lift at its North West Shelf oil project should help offset the impact of natural field decline in the second half.
"Consequently, Woodside’s 2010 production target of 70 to 75 MMboe (million barrels of oil equivalent) is unchanged," the company said in a statement.
Underlying net profit, which strips out one-off transactions, was $US813 million, compared with $US646 million last year, the company said.
Production dipped 8.5% to 36.7 MMboe for the six months to June, which was due to the sale its Otway gas assets and natural field decline.
Sales were down 9.8% to 36.0 MMboe.
"The result was assisted by solid production, strong first-half commodity prices and a gain on sale of Woodside’s Otway assets," the company said in yesterday’s statement.
The shares rose 25c to $43.30.
