BHP Group PLC (LSE:BHP) said it has approved US$1.5bn in spending to develop the Scarborough upstream project in the North Carnarvon Basin, Western Australia, and also revealed the signing of an agreement with Woodside Petroleum to merge their oil and gas portfolios.
The approved capital expenditure represents BHP's 26.5% interest in Phase 1 of the upstream development. Woodside holds the remaining 73.5% interest and is the operator of the project.
The Scarborough field is located about 375 kilometres (km) off the coast of Western Australia and is estimated to contain 11.1 trillion cubic feet of dry gas.
The Scarborough field development comprises 13 subsea wells, a semi-submersible Floating Production Unit and a 430km subsea export pipeline to the Woodside-operated Pluto LNG facility in Karratha in Western Australia.
Field development will be completed in two phases with eight wells drilled in Phase 1. The upstream production facilities will be installed to supply 8 million tonnes per annum (Mtpa) of liquefied natural gas and 180 terajoules (TJ) per day of domestic gas, with first cargo expected in the 2026 calendar year.
LNG and domestic gas will be processed onshore under a Processing and Services Agreement (PSA) executed today by the Scarborough and Pluto Train 2 joint venture participants, which provides long-term access to existing and planned Pluto LNG processing facilities operated by Woodside.
Scarborough via Pluto will be one of the lowest carbon emissions intensity global LNG projects projected to be in production in 2030 and will have the lowest carbon emissions intensity of an Australian-originated LNG project, BHP said.
Merger
Woodside will acquire BHP’s petroleum business in exchange for new Woodside shares under a merger announced back in August that is set to create one of the world’s top 10 independent energy companies by production.
READ: BHP unveils oil and gas merger with Woodside Petroleum
BHP said today that it had considered a demerger, which would have given its investors shares in a newly listed entity, but decided that a merger was the best alternative for its shareholders.