"The development is expected to deliver significant cash flow and enduring value to shareholders," Woodside said today. 

 

The company received a legal letter from the Conservation Council of Western Australia last week, suggesting the development cannot proceed  due to lack of key federal approvals under the EPBC Act and that emissions would fall under matters of national environmental significance. 

 

It has also taken the company to the Western Australian Supreme Court. 

 

However Woodside has long been adamant none of the claims would prevent sanction. 

 

"Scarborough gas processed through Pluto Train 2 will be one of the lowest carbon intensity sources of LNG delivered to customers in north Asia, with first LNG cargo targeted for 2026," the company said. 

 

The field has an estimated CO2 concentration of 0.1%. The undeveloped Browse field stands at 10% while Santos' Barossa might be as high as 16%-20%. 

 

On Monday last week, the Perth company announced it had farmed down a 49% share of the second planned LNG train to Global Infrastructure Partners. 

 

With this done Woodside estimates an internal rate of return of above 13.5% and an "all in" cost of LNG delivery to its traditional north Asian markets of US$5.80 per million British thermal units, and a payback of six years.

 

It said with sanction of the field, delayed several times through joint venture disagreements and the pandemic from a 2019 date, has increased overall corporate 2P total reserves by 158% to 2.342 billion barrels of oil equivalent.

 

 The company had revised down 1P and 2P reserves at its share of the Wheatstone LNG and Pluto LNG projects in the past month, causing market speculation on whether BHP had known and was still getting the best deal. BHP management later dismissed concerns as immaterial at the AGM of mid-November. 

 

"Today's decisions set Woodside on a transformative path. Scarborough will be a significant contributor to Woodside's cash flows, the funding of future developments and new energy products, and shareholder returns," CEO Meg O'Neill said. 

 

"The final investment decision is underpinned by quality customer support with approximately 60% of Scarborough capacity contracted, including domestic gas for the proposed Perdaman urea project. 

 

"Developing Scarborough delivers value for Woodside shareholders and significant long-term benefits locally and nationally, including thousands of jobs, taxation revenue and the supply of gas to export and domestic markets for decades to come," she said.

 

The company submitted one of four environmental plans that still need to be ticked off by the offshore regulator, for well drilling and completions. 

 

Last week NOPSEMA told Energy News that the project had received ‘in principle approval' and clearance to commence specific operations has not been granted. 

 

The Scarborough and Pluto Train 2 members have executed a full term processing and services agreement to send gas to the Pluto facilities, with volumes of up to 8 million tonnes per annum and up to 225 terajoules per day of domestic gas for an initial period of 20 years, with options to extend.

 

BHP retains a 26.5% interest in Scarborough, which will revert to Woodside on completion of the merger. There had been a provision in the initial agreement that could have seen Woodside pay the company $1 billion if FID did not occur before December 15. 

 

The two companies have signed a binding share sale agreement giving Woodside the company's oil and gas assets across the world. In return, Woodside will issue new shares to BHP shareholders, with the latter to hold 48% of the enlarged company. Woodside will double its number of shares on issue to the ASX, creating a global top 10 independent oil company in the process. 

 

The terms are the same as those first put to market when the deal was announced in August, although there is a US$160 million break fee,which will be in play for various reasons including if the Woodside board changes its recommendation shareholders vote yes to the deal. 

 

That vote is due in the second quarter of next year. Independent experts must still provide a report stating the deal is favourable for Woodside shareholders.  

 

BHP may terminate upon "certain changes to Woodside's credit rating".

 

"Woodside and BHP's respective oil and gas portfolios and experienced teams are better together," O'Neill said. 

 

"The combination will deliver the increased scale, diversity and resilience to better navigate the energy transition. 

 

"We will have the balance sheet, cash flow and financial strength to help fund planned developments in the near-term, invest in future energy opportunities and return value to our shareholders through the cycle."

 

She said the company's net-zero by 2050 target would apply to all new assets as well as existing Woodside assets. 

 

She has earlier said Woodside possesses enough offsets already to keep its near term 2025 emissions reductions targets, even after doubling its production via the acquisition. 

 

"The combined company will have a high margin oil portfolio, long life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition," Woodside said today. 

 

The last sanction the company announced was January 2020 when it greenlit the Sangomar oil development offshore Senegal.

 

This is its first LNG sanction as operator in a decade.