In June this year, Chevron announced its intent to relinquish its one-sixth share of the Woodside operated North West Shelf (NWS) Joint Venture.
The NWS Project is Australia’s largest resource development project, accounting for more than one-third of Australia’s oil and gas production.
The project has been operating for 35 years and has seen a total investment of around $34 billion and more than 5000 LNG cargoes since 1989.
According to a House of Representatives Committee’s 1998 report into the North West Shelf, the project evolved from a 1963 hydrocarbon exploration joint venture between Woodside, Chevron, and Shell, with drilling commencing in 1967.
By 1971, gas and condensate reserves were discovered but considered to be uneconomic. However, a sharp rise of crude oil prices between 1972 and 1980 resulted in a ramp-up of exploration activities, with more discoveries following at the North Rankin, Goodwyn and Angel fields.
An agreement to develop North West Gas production was ratified in 1979 between the State of Western Australia and Woodside Petroleum Development, Woodside Oil, North West Shelf Project, BP Petroleum Development Australia, and California Asiatic Oil.
The report into the North West Shelf said there was a significant commercial risk to develop the project due to the fields’ distance from shore, the depth of water, cyclonic conditions and infrastructure and capital requirements.
However, with Woodside estimating the total of recoverable gas reserves to be 2.8 trillion cubic metres, the project commenced.
In 1984, the North West Shelf project commissioned the North Rankin A facility and delivered its first gas. According to Woodside, it is still one of the largest capacity gas production platforms in the world.
Five years later the first cargo of NWS LNG left the Karratha Gas Plant for delivery to Japan.
A $5 billion redevelopment project in 2009 to attach the North Rankin B platform to North Rankin A created the North Rankin Complex.
The two platforms, connected by two 100-metre bridges, have a daily production capacity of up to 66,000 tonnes of dry gas and 6000 tonnes of condensate from the North Rankin and Perseus fields.
Production began at the Goodwyn field in 1995 after the commissioning of the Goodwyn A platform, and between 2015 and 2018, eight more fields were connected with the platform using subsea tie-backs.
The Angel Platform, which is connected to the North Rankin A platform by a 50km subsea platform, began operations in 2008 and has a production value of up to 50,000 barrels of condensate a day.
The North West Shelf project currently has equal participating interest of 16.67 per cent each from six companies, including: Woodside, BHP Billiton Petroleum (North West Shelf), BP Developments Australia, Chevron Australia, Japan Australia LNG, and Shell Australia.
With Chevron’s planned exit from the North West Shelf, analysts consider Woodside to be a likely buyer with the intent to backfill production as the other fields reach the end of their reserves.
Looking ahead, the NWS Joint Venture will be entering a new phase of operations with the prospect of processing third-party gas at the Venture’s onshore gas plant near Karratha given the ongoing decline of NWS reserves.
By way of example, Woodside is planning for its Browse gas to be processed at the plant. Other NWS participants are also likely to show interest, such as Mitsui E&P Australia with gas from its Waitsia project potentially earmarked for processing at the plant.
Woodside Energy Ltd., Karratha Gas Plant, North West Shelf Project, photograph, accessed 07/08/2020, <https://brandguidelines.woodside.com.au/photography/image-photo-library/>.