Michael Terry's  Instablog

Woodside Petroleum Ltd. (WPL.AU) said Friday that it is evaluating the cost and schedule of the A$13 billion foundation stage of its Pluto liquefied natural gas project after it discovered parts of the development might not be cyclone-proof.

Tapping fields containing 5 trillion cubic feet of natural gas offshore Western Australia state, Pluto is Woodside's most important development project.

Not only will related sales to Asian utilities boost Woodside's revenue considerably, it is one of few LNG developments to come on line globally in 2011.

A March, 2011 first LNG target date was notably absent from Woodside's third quarter update Friday. "A comprehensive periodic cost and schedule evaluation is underway; the results of which will be available in November," Woodside said.

It is not clear whether Woodside will be pushing back completion of the project it said was 94% finished as at the end of September. Externally sourced back-up LNG supplies are available to meet scheduled customer deliveries in the event of a delay, the company said earlier this year.

Construction of Pluto has been dogged by industrial action from construction workers over their accommodation arrangements and crane drivers over pay, as Australia's resource-driven economy continues to run hot. Woodside in November hiked its cost estimate for Pluto by 6%-10% after experiencing a shortage of skilled workers.

It said Friday that all key heavy lifts were completed at the onshore Pluto site in August and LNG storage tanks are complete.

But the Perth-based company said that the design of some onshore flare towers doesn't comply with its own wind loading specifications. "Some sections of the flare towers are being dismantled in preparation for the approaching cyclone season and corrective action," Woodside said.