FLNG still on the table for Woodside’s Browse project

Oil and gas producer Woodside Petroleum (ASX: WPL) is one step closer to its plans to develop a multibillion-dollar LNG processing plant for discoveries found in the Browse Basin this week.

Last week Woodside announced that the Commonwealth had signed off on variations requested on retention leases held on five exploration blocks in the Browse Basin Woodside that its joint venture partners are planning to develop.

The retention leases dictate the conditions and requirements that need to be met for the blocks to be developed and are valid until the end of 2014. Most importantly for Woodside is the omission of a previous requirement requiring the gas to be processed on land at James Price Point.

Woodside deemed this option to be uneconomical with estimated costs of up to $45 billion, instead evaluating plans for a floating liquefied natural gas (FLNG) processing plant

The news may be of interest to fellow Browse Basin explorer Santos (ASX: STO), which has made a number of discoveries and owns a 30% stake in an exploration permit in the area.

The next hurdle for Woodside to overcome will be WA Premier Colin Barnett, who has previously threatened to revoke Woodside’s state-based gas retention leases if plans for an FLNG processing plant are selected.

Foolish takeaway

The fresh start is positive news for investors and Woodside’s other joint venture partners and brings all stakeholders involved one step closer to a successful resolution.

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Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned in this article.

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