The project is based on the company’s Pluto and Xena gas fields, about 190km northwest of Karratha.

The initial phase will involve a single LNG production train producing about 4.3 million tonnes per annum connected by a 180km, 36-inch offshore pipeline to a platform in 85m of water.

The platform will be connected to five subsea wells on the Pluto field, with first gas expected in late 2010.

“To date approximately $796 million has been spent on all phases of the Pluto field and LNG project,” Woodside said.

“The board approved additional funding of up to $11.2 billion for project on a 100 per cent basis.

“Later works, requiring additional funding approval, will include compression and the tie-in of the Xena field.”

Woodside has previously suggested the project would cost between $6 -$10 billion to develop.

“Reservoir studies have concluded the combined dry gas volume estimate for the Pluto and Xena fields has increased from 4.5 trillion cubic feet to five trillion cubic feet,” Woodside said.

Woodside chief executive Don Voelte said the decision to proceed with the Pluto project was the most significant step in Western Australia's gas industry since the initial development of the North West Shelf Venture in the 1980s.

Woodside operates, and is a one sixth owner, of the North West Shelf Venture.

“The Pluto LNG project will join the North West Shelf Venture in underpinning Woodside for decades into the future, and showcases the unique position Woodside enjoys among its oil and gas peers,” Voelte said.

Voelte said the Pluto project would provide an important new supply of LNG to the Asia-Pacific region, where demand is expected to outstrip supply into the next decade.

“Pluto will play a critical role in meeting Asia-Pacific demand and will make a substantial contribution to Australia’s export income,” he said.

Woodside has already approved commitments of about $1.4 billion for Pluto to provide funding for long lead items and site preparation for the processing plant on the Burrup peninsula.

The Pluto development, initially expected to produce about 5-6 million tonnes of LNG a year, is scheduled to deliver its first gas to Japanese customers by the end of 2010.

Sales contracts have been signed with Kansai Electric and Tokyo Gas.

Woodside is Australia's largest independent oil and gas producer.

The project will be funded with free cash flow from Woodside's Australian operations, a fully underwritten dividend reinvestment plan and the issuance of corporate debt.

Preliminary site works for the onshore facilities began in January 2007.

In addition to the LNG production train, the onshore facilities will include storage tanks and a loading terminal.

Woodside received provisional environmental approval for the project last month, despite it failing marine standards set by the state’s Environmental Protection Authority.

The EPA said the project could go ahead if Woodside agreed to a more substantial offset package and other conditions.