Woodside hits record output in 2023 amid growth pursuits

Australia's Woodside Energy said Feb. 27 it reached a record production of 187.2 million barrels of oil equivalent, or 513 Mboe/d, in 2023, underpinned by its LNG-operated assets, while it continued to advance its Sangomar, Scarborough and Trion projects and considered inorganic growth opportunities.

The 2023 production results come in as the first full year following the completion of Woodside's merger with BHP's petroleum business.

"In the inorganic space, our focus is on LNG, deepwater oil and new energy, and the opportunities we are pursuing are really consistent with that strategic framework of thriving through the energy transition, ensuring we're meeting customers' energy needs today and into the future, and creating and delivering value to our shareholders," Woodside CEO Meg O'Neill said in a webcast during the company's 2023 results briefing.

Last year, Woodside said it started discussions with Australian oil and gas exploration and production company Santos for a potential merger.

"Bringing Woodside and Santos together would have created a very significant Pacific Basin LNG position. So, that was the strategic underpinning for the conversation," O'Neill said.

"As we communicated to the market, we got to a point where it was no longer in either party's best interest to continue to progress," she added.

Woodside's full-year 2024 production guidance is 185-195 MMboe, with LNG set to hold a 45% share, pipeline gas a 20% share, crude and condensate about 30% while natural gas liquids the remainder 5%, it said in its results presentation.

In terms of Woodside's key projects, the Scarborough Energy Project received four key environmental approvals in December 2023 and was 55% completed at the end of 2023, the company said. The project is targeting its first LNG cargo in 2026.

"Since the start of 2024, we've completed the initial drydock of the hull for the Scarborough floating production unit and the first modules for Pluto Train 2 have arrived and been installed on site in Western Australia," O'Neill said in a statement.

The floating production storage and offloading facility arrived at the Sangomar oil field off Senegal in February and 17 wells have been drilled and completed while six are partially completed, Woodside said, noting that it expected to achieve first production at the project in mid-2024, with a ramp up through the year.

In 2023, Woodside also took a final investment decision on Trion, Mexico's first deepwater oil development, where it expects first oil in 2028, it said.

LNG market dynamics

Last year, Woodside announced the sale of a 10% equity in the Scarborough Joint Venture to LNG Japan. In 2024, it announced the sale of 15.1% equity to JERA, reflecting the ongoing demand for new gas supplies to support regional energy security.

"[The stake sale to JERA] is a fantastic deal with a tier 1 buyer and a fully priced transaction. We are getting wonderful value and [have] de-risked the project from the point in time when we had the LNG Japan transaction," O'Neill said.

Over the years, Woodside also changed its approach to LNG marketing.

"So, if you went back in time to NWS [North West Shelf project] for example, we had everything contracted on a project basis and actually even in Pluto, we had a lot of LNG offtake contracted on a project basis and that was to give some certainty to the banks largely that the venture would be able to repay its capital," O'Neill said.

"Now over the last decade, we've been moving towards portfolio marketing; so, we're not doing point-to-point marketing anymore. That's something that both sellers and buyers value," she added.

Compared to earlier, the oil and gas markets are diverging, with gas being increasingly considered and traded separately from oil, O'Neill said.

"The other important point to note is that gas has and will continue to have more volatility than oil...So, we've been quite deliberate around our strategy to ensure that we have the ability to capture that volatility."

Looking at the deals concluded by Woodside in the past few years with buyers like RWE, Uniper and more recently with LNG Japan and JERA, indicated that Woodside will continue to maintain an "appropriate balance" between long term contracted volumes and those available for sale on the shorter-term market where the upside potential can be captured because of market volatility, O'Neill said.

O'Neill stayed unfazed by the new LNG supply hitting the global markets from the US and Qatar in the coming years as the "key thing that differentiates Woodside from the others is our competitive cost of supply."

"The Qataris obviously are incredibly cost competitive, they have a giant resource that they develop [it] at a very low unit cost," O'Neill said.

However, "on a delivered cost of supply to our North Asian customers, we beat the US projects and by continuing to have that sharp focus on cost efficiency, we'll ensure that we're better positioned than many others to compete for those attractive customers and those attractive contracts over the long term," she added.

Trimming emissions

The climate is integral to Woodside's strategy, and the company is on track to meet net equity Scope 1 and 2 emissions reduction targets, O'Neill said.

"Across our business in 2023, Woodside achieved a reduction in net equity Scope 1 and 2 emissions of 12.5% below the starting base, against our target of 15% by 2025," O'Neill shared.

"The company's focus on the near term is very much on the asset decarbonization planned, which provides a roadmap and a list of existing opportunities for each of our assets to try to reduce their emissions," she said, adding that "probably the biggest low hanging fruit is to bring solar power, low emissions power into the Pluto LNG facility."

In the company's Climate Transition Action Plan report, also released Feb. 27, Woodside announced a new target to take FID on new energy products and lower carbon services with a total GHG emissions abatement capacity of 5 million mt/year by 2030. This comes as the company aims to achieve a 30% net emissions reduction target by 2030 and has a net zero aspiration by 2050 or sooner.

Among its new energy opportunities, the company progressed the H2OK to technical readiness for FID and commenced concept selectionfor Angel carbon capture and storage, which has the potential to address Woodside Scope 1 emissions and customer emissions, it said.