The Woodside Petroleum Limited (ASX: WPL) share price is climbing today after a positive update from the energy giant on its gas processing agreements (GPA).
At the time of writing, the Woodside share price is trading up 2.31% to $23.16.
What's pushing the Woodside share price higher?
In today's release, Woodside advised that members of the North West Shelf (NWS) project have begun to implement their gas processing agreements.
Including Woodside, the NWS project participants are BHP Group Ltd (ASX: BHP), BP Developments Australia, Chevron Australia, Japan Australia LNG (MIMI), and Shell Australia.
The agreement will see gas processed from Woodside subsidiary, Woodside Burrup, along with Mitsui & Co Ltd and Beach Energy Ltd (ASX: BPT) subsidiaries.
Woodside described the GPA execution as a major achievement in transforming the Karratha Gas Plant into a third-party gas tolling facility which can now run at capacity.
Under tolling, a customer (natural gas supplier) pays a toll to run gas through a liquefaction plant owned by another company. The owner of that facility merely provides the asset and its services, to collect a fee.
Woodside Burrup is expected to process around 3 million tonnes of LNG, and roughly 24.7 petajoules (unit for energy) of domestic gas at Karratha from 2022 to 2025. To put that into perspective, one petajoule is 1015 joules (1 million billion) or 278 gigawatt hours. That's enough energy to power 19,000 homes for a year, or in Woodside's case, almost half a million homes for a year.
In addition, Mitsui and Beach will provide gas processing services from its onshore Waitsia Gas Project Stage 2. It is estimated that about 7.5 million tonnes of LNG will run through the plant between the second half of 2023 to the end of 2028.
To further cement the strength of the GPA, the parties in the NSW project have financially committed to building infrastructure to receive the gas. The development will start from the Pluto-Karratha Gas Plant interconnector to the Burrup extension pipeline. Construction is projected to begin early in the new year.
Management commentary
Commenting on the progress, Woodside CEO Peter Coleman said:
The processing of third-party gas resources will unlock further value for the NWS Project. It will provide new revenue and LNG exports from the NWS Project, add to Western Australia's domestic gas supplies from Pluto and help underpin Australia's economic recovery.
