The déjà vu sensation was triggered by a feeling that the concept of floating and Scarborough were not new – though it took a few minutes to remember why.
Back in time, some 27 years ago Scarborough was the site of Australia’s first offshore exploration project using a dynamically positioned drillship.
To be talking now of a floating production vessel is both historically interesting, and a perfectly logical step, assuming the technology has been developed that far.
As for the thought about Australian governments, imagine the ruckus when government wraps its mind around the concept of no onshore development for an LNG project, with all the consequences that has for local employment, local content and local tax collection.
History first. It was a lifetime ago that The Slug first encountered Scarborough, which ExxonMobil and BHP hoped would be a major oil discovery. Even back then, in the late 1970s and early 80s, the waters off Western Australia were described as excessively gas-prone, at a time when oil was very much the primary target.
Back then, to explore in waters close to 1000 metres deep some 300 kilometres off the WA coast was to work at the extreme edge of technology. Working at that location was considered such a challenge that the drillship operator even set up its own weather forecasting service to complement that provided by the Australian Government.
In keeping with the reputation of the region, it was gas, rather than oil, which greeted the explorers, an estimated eight trillion cubic feet of the stuff, and perhaps a lot more should exploration step out to other areas on the Exmouth Plateau.
Now for the more interesting bit. If ExxonMobil really is serious about a floating LNG development, a totally new set of circumstances will be created not only for the oil and gas industry, but also for government.
Jurisdiction, for starters, will quite clearly be a Commonwealth matter as Scarborough is way outside the traditional measure of State v Commonwealth waters. In itself, this is nothing new because the Bayu Undan project is as equally remote – though it is connected to Australian via a pipeline.
But a floating LNG production barge, and its associated service vessels, in waters which are awfully close to being declared international, will be a new concept for government and will give state governments no scope to impose taxes, let alone gas reservations.
While some of the work might make it ashore there is probably no reason why it should. Ports on the west coast of Australia are about as far from Scarborough as Singapore or the dirt-cheap islands of Indonesia.
It is actually possible to imagine Scarborough being developed, sucked dry, and no one in Australia ever seeing a service or production vessel.
It is this thought of a resource development project happening in Australian waters, but by virtual remote control, which will stir emotions locally, if it is a serious proposition.
And, if it is, why would anyone stop at Scarborough? If it’s good enough for a remote gas field, why not other fields closer to shore which are being dogged by environmental protests, and the bizarre proposition that there is nowhere on 20,000km of the WA coast to build a new LNG processing centre.
Technology, tax law, and environmental protests are melding to produce a fascinating situation in the Australian LNG industry because if Scarborough is developed as a floating production system – why not elsewhere?
Volumes on a floating system might not be as big as onshore, but the potential for hassle-free projects is quite alluring.
