Browse, North West Shelf back on the shelf - implications for other possible white elephants

Australia's hopes of the resources boom continuing have well and truly faded.  There was further bleak news with the announcement by Woodside and its energy giant partners, last week that they would put the $40 billion Browse back on the shelf, indefinitely.  Pardon the pun! Its no joke.

The North West Shelf is an extensive oil and gas region off the coast of Western Australia, in the Indian Ocean.  The region has estimated hydrocarbon reserves of 33 trillion cubic feet (930 km3).  It is Australia’s largest resource development project and has a considerable number of oil and gas wells, pipelines, production areas and support facilities.  It involves the extraction of petroleum at offshore production platforms, onshore processing and production and export of liquefied natural gas. This was the largest engineering project in the world in the early 1980’s with investments so far of around $A 25 billion.  Only about one third of the reserve is estimated to have been produced to date. Woodside is the project operator, along with five other partners: BHP Billiton; BP; Chevron; Royal Dutch Schell (which also owns 24% of Woodside through Shell Australia); Japan Australian LNG (a venture between Mitsubishi and Mitsui).  There's a nice map on Wikipedia.

The main reason given for this delay is the current low oil price and the LNG price in a similar slump, combined with the large volumes of LNG currently coming onto the market from other Australian projects.  Large volumes are also expected from the US in the coming years.  The circumstances have conspired to create a situation of over-supply and weak demand.

A recent report in the International NY Times (INYT) suggests that similar shelving could be on the cards for other 'potential white elephant' projects in Canada and Mozambique, for example.  The INYT also reports that Australia's woes have been exacerbated by an LNG price war with Qatar, and predicts that demand for LNG will not improve until after 2023.

Those following this blog would know of my preoccupation with the development of the Greater Sunrise area.  My recent prediction that the joint development between Australia and Timor L'Este is likely to languish in the ‘too hard’ basket, or the 'white elephant' basket, might just come true.  I said in my previous post, some commentators are projecting that thirty years from now there will be a huge amount of oil available – but no buyers. Maybe we won't have to wait that long for that to be a reality.

It was a Super Tuesday!

Hillary Clinton strengthened her momentum, with a  sweep of the Southern states on Super Tuesday.  Democratic delegate count for Hillary = 1,121 compared to 481 for Sanders. 

Republican delegate count for Trump = 382, putting him ahead of his rivals making him the favourite for the nomination.  

You wouldn't really know how Super the result was for Clinton from most media headlines. That's why I like to look at the impeccably accurate Washington Post and the Guardian.

Who would make the best President for the energy industry?

Hillary Clinton has been cited as being against offshore oil drilling, against the Keystone XL pipeline, and against drilling in the Arctic. 
Should Clinton become president, she may be inclined towards new regulations that may harm utilities, conventional energy companies, and would support environmental policies and support alternative energy - solar and wind power companies.  
This suggests a negative impact on conventional energy firms and boosting prospects for investors in the alternative energy sector.

Donald Trump is on record as wanting to confront OPEC and making the U.S. energy independent. He is a vocal advocate for oil and its importance to the U.S. economy. A Trump presidency would boost prospects for investors in most conventional energy companies, with a negative impact on the alternative energy sector.

Oilprice.com also discusses the implications of other candidates policies.