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    Woodside raises Scarborough cost estimate by 5%

Summary

The updated cost estimate is now US$12bn.

by: Shardul Sharma

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Woodside raises Scarborough cost estimate by 5%

Australia’s Woodside on August 4 announced it had raised the cost estimate for its Scarborough project by approximately 5% to US$12bn. The final investment decision on the project is expected later this year.

“Refreshed pricing from major contractors underpins the updated cost estimate, and reflects Woodside’s work with them since 2020 to maximise the value of the project by optimising design and execution planning, and increasing offshore processing capacity,” it said.

The updated cost estimate of US$12bn comprises US$5.7bn for the offshore component and US$6.3bn for the onshore component. Woodside in June warned that it was facing escalating steel prices for the project. Labour cost was also a challenge, it said. 

The company has estimated an approximately 3% cost increase in the onshore component, including modifications to Pluto Train 1 to enable the processing of Scarborough gas. It has also factored in an approximately 8% increase in the offshore component, including an increase in offshore production capacity from 6.5mn metric tons/year to 8mn mt/yr of LNG and an additional well.

Woodside’s acting CEO Meg O’Neill last month said that Woodside was reviewing updated cost estimates for Scarborough and Pluto Train 2.  The Scarborough field contains an estimated contingent resource (2C) of 11.1 trillion ft3 of dry gas. Anglo-Australian multinational BHP is the partner in the project.