The exit includes divestment and restoration of assets covering the 480km Pacific Trail Pipeline route and Bish Cove LNG facility
Woodside has announced plans to exit from the 50% non-operated participating interest in the proposed Kitimat LNG (KLNG) development, located in British Columbia, Canada.
The Kitimat LNG project is a 50/50 joint venture between Chevron Canada (Chevron) and Woodside Energy.
The project includes upstream resource assets in the Liard and Horn River Basins, 480km Pacific Trail Pipeline (PTP), and a natural gas liquefaction facility at Bish Cove near Kitimat.
Woodside acting CEO Meg O’Neill said: “Exiting KLNG will allow Woodside to focus on the successful delivery of higher value opportunities in Australia and Senegal.
“Following Chevron’s decision to exit KLNG and subsequent decision in March 2021 to cease funding further feasibility work, Woodside undertook a comprehensive review of our options for the project and our wider development portfolio.
“The Kitimat LNG proposal was designed to develop a new source of LNG to supply Asian markets in the latter part of this decade. However, we have decided to prioritise the allocation of capital to opportunities that will deliver nearer-term shareholder value.
The exit includes divestment and restoration of assets, leases and agreements covering the Pacific Trail Pipeline route and the proposed LNG facility site at Bish Cove.
The Australia-based petroleum exploration and production firm is expected to retain a position in the Liard Basin upstream gas resource.
Woodside is expected to work with Kitimat operator Chevron Canada to protect value during the exit.
In December 2019, Chevron has announced its plans to divest its 50% stake in KLNG, as part of its effort to optimise global portfolio, focused on improving returns and driving value.
The costs related to exit KLNG are expected to impact 2021 net profit after tax (NPAT) by nearly $40 to 60m, said the company.
O’Neill added: “Woodside is focused on working towards the targeted final investment decision for the Scarborough LNG development in Western Australia in the second half of 2021 and the continued successful execution of our Sangomar oil project offshore Senegal.
“Retaining an upstream position in the prolific Liard Basin provides Woodside a low-cost option to investigate potential future natural gas, ammonia and hydrogen opportunities in British Columbia,” she said.