Woodside Petroleum Ltd., operator of Australia’s oldest liquefied natural gas plant, is seeking inspiration from the U.S. Gulf Coast.
Bloomberg reports the North West Shelf venture in Dampier will allow third parties to pay a tolling fee to process their gas into LNG, says Woodside Managing Director Peter Coleman. The plant, operating since 1989, will have spare capacity by the mid-2020s to handle new production, he adds.
The new model is similar to U.S. plants, led by Cheniere Energy’s Louisiana terminal, which rent out liquefaction capabilities, leaving clients to handle buying the gas and selling the LNG. So-called “tolling agreements” are a break from the past in Australia, where companies traditionally combined exploration, pipelines and liquefaction into multibillion-dollar projects, with partners owning everything from the gas molecules to the export jetties.
Cheniere charges Royal Dutch Shell, Gas Natural SDG SA and Korea Gas Corp. between $2.25 to $3 per million British thermal units to liquefy shale gas and load it on tankers. The pricing structure, similar to pipeline tariffs, means the company isn’t exposed to commodity price swings.
“We believe the North West Shelf can be one of the most competitive tolling structures in the world,” Coleman says. “If you look at similar tolls in, for example, the Gulf of Mexico, which range anywhere from $2.75 to $3.75 for processing, we believe the North West Shelf can beat those numbers.”
