That observation has proved to be alarmingly accurate, albeit not necessarily for the right reasons.
At the time, August 26 to be precise, Slugcatcher lumped Scarborough into a category of “silly season” projects, the ones dusted off when oil prices soar and anything with a whiff of energy to it is dragged out of the crypt.
The favourite proposals for rubbishing were those based on shale oil, a product likened to another blast from the past, whale oil.
Scarborough was described as too remote, too small, and too difficult – no matter what its chief proponent, BHP Billiton cared to say.
A few days after those unkind comments, BHP Billiton struck back – Slugcatcher would like to think (wrongly, of course) that its boss, Phil Aiken, had been spurred into retaliation – by announcing that it had chosen a preferred onshore LNG processing site near the cyclone-battered town of Onslow.
For a few hours it looked like Phil had trumped the Slug – that was until BHP Billiton’s own partner in Scarborough came out and said (and Slugcatcher interprets here) “what on earth are you talking about Phil. We’ve never agreed to Onslow, or anything to do with developing Scarborough”.
In fact, the exact words were: “If Scarborough is to be developed, ExxonMobil will have to be convinced that it is commercially viable. At this moment we are not convinced.”
To say that was the equivalent of a bucket of cold water is a gross under-statement. ExxonMobil is more than a 50% owner of Scarborough, it is BHP Billiton’s long-term partner in the Bass Strait oil and gasfields, and has forgotten more about the oil business than the entire staff at BHP Billiton Petroleum has ever known.
The exchange of views from the co-owners of Scarborough is so staggering that even Slugcatcher is prepared to accept that perhaps (just perhaps) ExxonMobil is not acting on the comment made in this column on August 26.
It is, grudgingly acknowledged, that a much bigger game is being played here, and it probably has everything to do with sequencing the development of stranded gas reserves, and maximising the negotiating power of the different players.
BHP Billiton, for example, owns a slice of the North West Shelf, but that is its biggest involvement in LNG, and there’s not much else on the drawing board despite LNG being the flavour of the month with Asian and U.S. gas buyers.
ExxonMobil, on the other hand, has a variety of LNG options. It has a slice of Gorgon, and is operator of the giant Io/Jansz gasfield. Both of these potential developments are much closer to the mainland, and despite problems with carbon dioxide, Gorgon is getting awfully close to a green light.
Slugcatcher reckons that BHP Billiton, suddenly awake to the fact that it is becoming a very small player in the global LNG game, did exactly what was suggested on August 26. It reached into the crypt, dusted off a set of plans, said it was launching a pre-feasibility study, that it had chosen an onshore gas processing site and was all set to develop Scarborough as a stand-alone LNG project.
But, as Homer Simpson so famously says, “dohh”, what about the other owner? What about Exxon Mobil? What if they say no? What if they say they will not even participate in the pre-feasibility study – which they have.
What now, Phil?