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Chevron Corporation's Gorgon Train 3 and Wheatstone, Inpex's Ichthys and Shell's Prelude floating LNG project are all targeting start-up this year, which will conclude the wave of eight LNG megaprojects sanctioned in Australia since 2008, catapulting Australia to becoming the world's largest LNG exporter.
However, given the recent history of cost blow-outs and the continuing LNG glut putting pressure on projects globally despite the recent slight uptick in Asian spot prices, Saul Kavonic said it was "inevitable that some will suffer further schedule slippages, so I highly doubt we will see them all manage to start up this year".
Like the rest of Australia's recent LNG projects, Inpex's Ichthys project and Shell's pioneering Prelude FLNG project, both in the remote Browse Basin, have suffered cost and schedule setbacks.
Construction challenges, competition for resources between the two projects in the Korean yards and financial challenges facing the yard contractor have all contributed to the delays.
"Especially for these pioneering megaprojects [the world's first large scale FLNG and the largest central processing facility], schedule delay is par for the course," Kavonic said.
"On average, global energy megaprojects are delivered around 30% over schedules initially expected at final investment decision."
Yet, once they're up and running, Kavonic believes that both Prelude and Ichthys present significant upside value to their owners.
Prelude, where Wood Mackenzie forecasts ullage by about 2025, can be utilised to develop other gas fields nearby, or moved to other locations, "albeit at a cost", Kavonic added, as Prelude is "not a very large field".
Immediate development options beyond Prelude includes the adjacent Concerto discovery, which adds to the 2-3Tcf underpinning the FLNG development, and then potentially Shell's nearby Crux gas-liquids field, which has long been considered a source for late-life gas for Prelude or as a new FLNG hub in the eastern Browse Basin.
Kavonic said the Ichthys infrastructure is also well-placed to facilitate development of other fields in the Browse Basin, such as Woodside's trio of undeveloped fields, for processing at both the Darwin LNG plant, which will have spare capacity in the early 2020s, or for expansions of capacity at the Ichthys plant.
"Opening up the Ichthys infrastructure to other gas resources in the basin could unlock additional value for the Ichthys JV partners," Kavonic said.
While it is understand the Browse JV is considering a number of options, Wood Mackenzie believes the likelihood of a new FLNG development across any of the fields appears remote.
"The most compelling development options for Browse appears to be through the Ichthys infrastructure, or alternatively possibly to NWS, if it is not to remain stranded," Kavonic said.
"But it is unlikely any timeline for those Browse development options through existing infrastructure will be progressed towards anywhere near FID until well after Ichthys is up and running, and complex commercial discussions have been sufficiently advanced which could take several years."
ConocoPhillips is understood to be keen to develop its Greater Poseidon resources via Darwin, rather than any Western Australian option.
The commentary is particularly prescient given Energy News understands that a number of LNG players in Western Australia have started giving serious consideration to the call from collaboration by none other than the operator of two of the state's biggest projects, Gorgon and Wheatstone.
Chevron Australia general manager, asset development Gerry Flaherty called for an "interconnected basin", albeit referring to the Carnarvon Basin, to ensure the NWS stays competitive beyond 2023 at the Society of Petroleum Engineers' Asia Pacific Oil & Gas Conference in Perth last October.
It all comes down to the future of the NWS, as Energy News understands a line of sight to a solution is being sought as decisions need to be made to secure the future of Australia's oldest LNG plant soon.
Gas market changing
Extra impetus for cost-cutting collaboration could be given by Wood Mackenzie's expectation that global gas markets will become progressively oversupplied through the course of 2017.
LNG prices are likely to stay low, despite Wood Mackenzie's belief that oil prices will be stronger this year.
Kavonic believes US gas, which has been all the rage over the new year as Japan received its first US LNG cargo from Sabine Pass could become the global price setter in 2017.
US LNG exports will increase from four million tonnes in 2016 to around 11MMtpa in 2017, right at the time when new LNG supply from Australia and Malaysia is hitting the market.
Kavonic believes that with little room for more LNG in Asia, European countries may have to absorb more than twice as much LNG volume this year, and that some US LNG export capacity could simply be shut in on an economic basis.
"With US LNG capacity lying idle, Asian spot LNG prices may begin being driven by Henry Hub prices in 2017," Kavonic said.
"This would create a direct link between US gas prices and Australian projects profitability."
