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WOODSIDE PETROLEUM has halted its proposed US$41bn Browse Basin LNG project offshore Western Australia as it seeks a profitable alternative to building an onshore processing facility at a troubled site in James Price Point.

Rumours have circulated for weeks that Woodside wants to explore other options as skills shortages, the strong Australian dollar, and public opposition to building the processing plant at James Price Point close to aboriginal sacred sites have led to escalating costs and delays.

Woodside released a statement today saying that an evaluation of the project has “showed that the development would not deliver the required commercial returns”. It will now immediately consult with its project partners and recommend other development concepts.

“One of the alternative solutions is floating LNG technology,” says Woodside CEO Peter Coleman. Other options could include a pipeline to existing LNG facilities and a smaller onshore option near James Price Point.

Last week ExxonMobil and BHP Billiton submitted plans to build a massive floating LNG processing facility for its Scarborough gas field – also in offshore Western Australia. Shell was the first to commit to the idea of processing gas on board ship and expects its Prelude project to come onstream in 2016.

Whether the authorities will allow Woodside to develop Browse as a floating project remains to be seen after Western Australia state premier Colin Barnett said the government would have to be “nuts” to allow onshore domestic construction jobs to be lost to Asian shipbuilding yards.

Processing at sea has obvious benefits for operators as they can sail the ship to smaller and more distant fields that would be too expensive to develop by running pipes to onshore facilities, which themselves can get stuck in lengthy regulatory processes to secure environmental and planning approval.