Woodside boss Peter Coleman hasn’t locked in a specific date for final investment decision (FID) or first gas from floating LNG (FLNG) at the Browse Project, but broadly hinted that the turn of the decade would be a champagne period to be exporting the gas to hungry Southeast Asian markets.

The Woodside CEO revealed at the Australian Petroleum Production & Exploration Association (Appea) Conference in Melbourne that Browse was expected to enter into the FEED in the middle of the year, potentially targeting FID by the end of 2016.

“We expect to recommend to the JV [joint venture] that we enter into FEED in the near future. I wouldn’t put a recommendation to the JV if we didn’t think they were aligned with it,” Coleman said on the sidelines of the conference.

He said the FEED phase of the project was expected to be significantly shorter than required for a stick build or a conventional land based option.

“It comes down to a design one build many concept. We already have well advanced engineering and have been out for tenders for costs. It is our view that costs will further reduce as we go through that phase,” Coleman said.

Coleman is set to give investors a clearer time line on Browse during an investor meeting on Thursday, but strongly hinted that production by the start of the next decade would be desirable during an expected upturn in the market.

“We are starting to see around 2020 gaps starting to open up in the supply-demand,” Coleman said.

“In that 2020-plus sort of period, that is where we sit for Browse. I think we are coming in at a nice point in the front end of that window. The next three to four years are going to be choppy, but that generally gets worked through. You kind of get that concertina effect as a whole bunch of production gets in. Then it just stretches out over time because there are no new projects coming on and then this substitution is having to occur because historic producers are redirecting,” Coleman explained.

Woodside regards the current downturn as a window of opportunity, specifically on the exploration front, for companies enjoying healthy cash flow as equity capital dries up, quality acreage becomes available and service rig rates decline 30% to 40%.

With Shell’s Prelude, the world’s first FLNG facility, currently under construction at Goje, South Korea - virtually the only shipbuilding yard in the world with the capacity to build such large structures - Coleman said it was difficult to predict when all three floaters for Browse might be ready for deployment.

“Shipyards are no different to anything else in that it has a limited footprint. So we are finalizing what the time is, but it’s too early to tell. We will just get focused on the first one and then the rest will follow fairly quickly and we will optimize as we go through because they are three discrete accumulations that we are going after.

“So we can do that, we can phase it, and we want to learn as we go as well, so there is some learning still to come through from Prelude in that now we have built in quite modest cost savings.”

Coleman said it was difficult to predict reducing construction costs from the first to the third facility, but said about 20% savings would be a good prize to aim for.

As Woodside steams towards greenlighting Browse, he said balancing shareholder returns with spending to stimulate long-term growth was a balancing act which investors expected to be delivered in a disciplined fashion.

“I would say investors are encouraging us to continue to stay disciplined and continue to stay focused. Stay on your strategy and continue to build. They are very, very supportive of the growth build we are putting into the portfolio. There are always those on the margins who love more dividends, but equally we are a resource company and so we are trying to balance that desire for more dividends vs. the need to invest in the future, so we can continue to grow and I think we are doing a reasonable job based on the feedback we are getting,” Coleman said.

Nevertheless, Coleman said overall the oil and gas industry did not have a solid record of return on investment to shareholders.

“I worry when we get to conferences and the rhetoric just gets out there that this is kind of like a long-term business and people don’t understand us. That is like saying, ‘I don’t know how I am going to make money, but generally in the long term, price will help me out and if it goes on for long enough, people will forget about the decisions I made’.

“The industry since post-GFC … from 2009 to 2013 the oil and gas industry on its investments on capital only returned 6% globally. That is a shocking number when you consider that was done in a high-price environment when commodity prices were going up and it was post-GFC.

“So you can’t even put 2008 in there and say it was all dragged down because it was a bad year. I would hate to see it with 2014 numbers in there because it is only going to get worse. You can look at it and say industry has been rewarded for growth in production. It’s been rewarded for work, not for quality of output.

“Industry has not been rewarded for the value that it’s been creating [for] its shareholders. It’s been rewarded for growth, but for growth at what cost? We need to reorientate this back and we need to create value for our shareholders, not through hope and promise, not for impairing assets after you have paid millions of dollars for them and after you decide it was a bad idea, which is what we’ve been doing.

“A 20-year horizon is an important one for many large companies, but the reality is we also need to be mindful that in the short- to mid-term our investors have needs and they have a need to see returns on their investment.”

Dale Granger can be reached on dgranger@hartenergy.com