BHP floats massive LNG plans

They don’t do things by halves in Texas. Everything across the dusty cowboy state comes bigger: big steaks, big companies and big ideas.  ExxonMobil  (NYSE: XOM), is no exception. The Texas-headquartered company is the biggest in the world by market capitalization, just ahead of fellow American icon Apple (NASDAQ: AAPL) (depending on the temperament of the market). So it’s no surprise the company has plans to develop the world’s largest floating LNG (FLNG) production facility off Western Australia in the Carnarvon Basin.

The project is reported to be a joint-venture with BHP Billiton (ASX: BHP) that could produce as much as 7 million tonnes of Liquid Natural Gas a year. The scale of this is immense. By way of comparison the world’s largest current floating offshore LNG facility – Royal Dutch Shell’s (NYSE: RDS.A) Prelude FLNG – is located in WA’s Browse basin and can process around 3.6 million tonnes of LNG per year; about enough to fill Hong Kong’s annual natural gas demands.

Although annual production will still not exceed that of the land-based APLNG joint-venture being conducted by a consortium including Origin Energy Limited (ASX: ORG), which at its peak will have two LNG processing trains capable of a combined maximum 9 million tonnes per year.

Natural gas from Australia last year represented 36% of BHPs global petroleum portfolio and is an area the company appears keen to develop further as demand — particularly from Asia — continues to grow and technological advances mean previously inaccessible sources of gas are now within grasp.

Foolish takeaway

Costs for the massive FLNG project have yet to be revealed; however Shell’s Prelude FLNG cost around $11.8 billion to conduct. According to the West Australian ExxonMobil could be days away from lodging documents with the required authorities to set the initial stages of the project rolling. Until a final decision is revealed though, investors are left to ponder just how big the potential price tag will be.

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More reading

The Motley Fool’s purpose is to help the world invest, better.  Click here now  for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Regan Pearson doesn’t own shares in any companies mentioned in this article.

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