The firm's report Browse JV maintains investment discipline in declining FID said Browse's cancellation had opened up the possibility of its development through the North West Shelf facilities in the future, where demand is tipped to exceed supply from the early 2020s.

This, Wood Mackenzie believes, should be a lower unit cost development, more readily able to compete on cost with other projects worldwide, and will keep the NWS running at capacity through into the next decade.

The firm believes that Browse could even be developed through the facilities of Royal Dutch Shell-operated Prelude FLNG or Inpex's Ichthys, which present possible lower cost future options.

Browse was the last pre-FID greenfield LNG project in Australia, which has not had a new LNG project approved since 2012, with Australia losing the race with the US, which has sanctioned some 65 million tonnes per annum since.

Despite this, Wood Mackenzie's WA lead analyst Saul Kavonic said he expects to see additional new cost competitive LNG volumes coming from Australia over the next decade, through project debottlenecking and backfill of existing plants.

This is particularly the case given the development risk that still surrounds FLNG, with Prelude not targeting start-up until next year.

Kavonic told Energy News that the recent Browse announcement marked a "dark day" for large scale FLNG, particularly considering it coincided with news that the Indonesian government prefers an onshore development to FLNG for Abadi.

"With the Abadi and Browse set-backs, Shell's plans for following up its pioneering Prelude project with further FLNG vessels - thereby realising economies of scale - looks in doubt," Kavonic said.

With the ramp-up of LNG exports from the US and Australia, there will be a lot of LNG sloshing around over the next few years.

Chevron's Gorgon LNG, whose three trains have a combined capacity of 2.1 billion cubic feet per day, was the first of the four new projects off the northern coast of Western Australia to be partially commissioned.

Three other projects in the northwest —Prelude, Wheatstone and Ichthys — are still under construction, with a combined capacity of 2.8Bcfpd and are expected to come online in 2016-18.

The cancellation of Browse reinforced the view that with numerous projects competing to secure limited market, only those at the lower end of the cost curve will move to sanction - and the Woodside-led development didn't make the cut.

"While there has been sector cost deflation and Woodside has targeted aggressive cost reductions through the front end engineering and design process, Browse was still at the high end of the global cost curve," Kavonic told Energy News.

"There was also the additional development and cost risk associated with large scale FLNG which is still yet to be proven operationally."

The good news for Woodside is that the Browse joint venturers' decision does demonstrate capital discipline in an uncertain environment, after large amounts of money were spent on two greenfield FEED studies.

Yet what can't be ignored, Kavonic said, was that it left a large gap in Woodside's long-term growth options. The company now has a strategic challenge to renew the portfolio, he added.

Historic lessons

To be fair to Woodside, history has shown that no LNG projects can claim to have delivered their schedule in line with early promises made to investors, as Citi Research pointed out in its latest major equity report focused on the LNG landscape, issued just before the Browse decision.

"All [LNG projects] have incurred delays to varying degrees; many before FID, and some after FID," Citi said.

"Pluto-1 incurred no delays before making FID, but the haste to get to FID resulted in a poor project definition, impacting execution, resulting in a project that incurred 26% capex overrun and a 15 month schedule delay."

Browse was targeting first LNG from an onshore James Price Point development by 2011-2014 in 2006, but it has been subject to numerous delays and was targeting FID in the second half of this year from a FLNG development.

Australian projects have not been the only ones subject to delays.

Citi noted that in 2012, 154MMtpa of North American export capacity was proposed to be sanctioned by end-CY14, but as of last month only 49MMtpa (or about 30%) has succeeded, with a 1-4 year delay common.