However, oil price falls further forward have now prompted fresh concerns over weaker oil price sentiment over a longer timeframe when they may see the light of day.
As analysts debate Woodside's growth options with Browse now canned for the time being, question marks have been raised as to why Woodside pushed the proposal as far as it did given Chevron Corporation and BHP Billiton sold out earlier this decade.
Chevron sold its stake in the Browse project to Shell in 2012 for cash and assets, for a value commensurate with the consideration agreed to be paid by Japan Australia LNG (MIMI Browse) to acquire an interest in the Browse joint ventures from Woodside announced earlier that year.
This gave Shell a 35% stake in the west Browse titles and 25% in the east Browse titles, in an agreement which Shell at the time said was a "good deal" because it simplified the ownership of the Browse gas fields.
Japan's Mitsubishi Corporation and Mitsui & Co bought combined a 14.7% stake in the project through their Perth-based joint venture company.
BHP Billiton, meanwhile, completed the sale of interest in the east (8.3%) and west (20%) Browse JVs to PetroChina International Investment for $US1.63 billion.
Energy News understands that doubts persisted among some inside Woodside's former partners that the development was never going to work as an onshore project, not only because Browse didn't have a social license to operate at James price Point, but they partners never thought the engineering costs would render Browse uneconomic.
Some analysts and bankers fear that the reason Woodside pushed Browse so far despite partners' doubts was because it had few other growth options.
While Woodside has been lauded for its discipline - CEO Peter Coleman said recently that "this is not the time to be reckless with respect to capital deployment" - there's no doubt the Perth oiler has been on some wild adventures.
Having bailed out on the Leviathan project in Israel, Woodside had an ill-fated crack at Oil Search that the Papua New Guinea midcap called "opportunistic", and its growth now appears focused on North America, which may or may not be a good idea.
This is particularly the case with the interest in the Chevron-operated Kitimat project it bought off Apache where one oil industry banker told Energy News "… it's hard to see how it could be more competitive than the Australian projects".
Yet Citigroup's Dale Koenders said it's definitely worthwhile holding onto Browse - the DomGas Alliance's protests aside, and its Canadian growth option could be a winner if they can pull it off, with floating LNG.
"You need to hold onto gas resources for growth, and Woodside has a number of benefits in participating in FLNG as a technology because you've got Sunrise as well; they've spoken about new field technologies for Kitimat to reduce cost development for LNG … so I think strategically they want to be involved in FLNG development," Koenders told Energy News.
Other options
UBS analyst Nik Burns said the deferral has ironically opened up new options for Woodside, whose North West Shelf has enough gas volumes to keep the facility at full capacity until about 2025, leaving open the option to pipe gas from the Browse Basin.
"The indefinite deferral of Browse FLNG may re-open discussions around bringing Browse gas back to the NWS, given the time advantage of standalone has been diminished," Burns said.
Koenders said that while LNG markets were not supporting new projects to be sanctioned today that might change in 12 months, which bodes well for its other projects such as those in Canada over which some pundits have doubts.
"We think that the Wheatstone acquisition was largely premised on the Wheatstone asset; while Kimitat was more of an option value than anything else. So if the asset proves to be highly commercial longer-term, then it was probably a good option," Koenders said.
"It's still early days in the Liard Basin, however Apache spoke about it being the best shale gas resource in all of North America before selling it, premised on initial production flow rates of greater than 100 million standard cubic feet a day, and estimated ultimate recoveries per well of about 40Bcf, which is world-class."
While Woodside has communicated very little about the project, the Perth major has said how it has been pleasantly surprised by results and that perhaps Apache had it right with its grand claims for the basin.
While time will tell, Koenders believes the fact that global LNG markets will be oversupplied until 2022 means that "… if you have a very large material resource that could potentially come into the market at that time, then maybe there's an opportunity for it to be developed".
However, he conceded that while Woodside has a very strong balance sheet, "some of their growth projects are cost-challenged in low commodity prices".
Future uncertain
While both Morgans Financial's Adrian Prendergast and Koenders said last week they believed Browse would get up once the glut eases in the 2020s, McKinsey Solutions' latest Oil Field Services & Equipment Quarterly warned that while oil prices have plummeted this year, perhaps the biggest price impact has come from falls further forward.
"Although forward prices still remain firmly above prompt, the flattening of the forward curve seen in the third quarter 2015 accelerated in the fourth, reflecting weaker sentiment over a longer timeframe," McKinsey said this month.
While front month Brent lost just over $10/bbl, 2020 prices dropped to $49/bbl from $62.3/bbl - almost $14/bbl.
"Another reason for the longer term falls could be growing signs of a fundamental rift in OPEC between Saudi/GCC and Iran/Iraq, with the latest ceiling agreement of 31.5MMbpd not including the two Shia-majority states, which appear set on increasing their market share," McKinsey said.
"Little more is expected from the recent agreement between Russia, Saudi, Qatar and Venezuela, although it provided the first sign of cooperation outside OPEC since the price falls began."
This echoes something of an about-face from the International Energy Agency, whose executive director Fatih Birol had initially praised the February deal to freeze production at January levels.
This week the head of the IEA's oil industry and markets division Neil Atkinson dismissed the deal as a facade.
"Amongst the group of countries [participating in the meeting] that we're aware of, only Saudi Arabia has any ability to increase its production," Atkinson said.
"So a freeze on production is perhaps rather meaningless. It's more some kind of gesture which perhaps is aimed ... to build confidence that there will be stability in oil prices."
McKinsey said the forward price falls also appear to reflect the market pricing in the longer term implications of the resistance of US shale output to lower prices, which means that any move above $50-60/barrel would be likely to result in rising output once more.
US onshore supply has declined only slowly since May last year, although the latest figures show some acceleration.
