Woodside’s $17.5B Louisiana LNG Bet: Strong Returns Amid Emissions and Market Risks
Woodside Energy has approved the final investment decision for its Louisiana LNG development, a major three-train project targeting first LNG in 2029 with strong returns and emissions targets intact. This move positions Woodside as a global LNG powerhouse with a diversified portfolio and significant cash flow potential.
- Final investment decision approved for 16.5 Mtpa Louisiana LNG project
- Total project cost estimated at US$17.5 billion with Stonepeak investing $5.7 billion
- Expected internal rate of return above 13% and seven-year payback period
- Project designed with lower emissions intensity, supporting Woodside’s climate targets
- Largest single foreign direct investment in Louisiana, creating over 15,000 construction jobs
Woodside’s Strategic Leap into US LNG
Woodside Energy Ltd has taken a decisive step in expanding its global footprint by approving the final investment decision (FID) for the Louisiana LNG development. This three-train liquefied natural gas (LNG) project, with a capacity of 16.5 million tonnes per annum (Mtpa), is set to deliver its first LNG cargo by 2029. The project is fully permitted and leverages best-in-class technology, marking a significant milestone in Woodside’s ambition to become a global LNG powerhouse.
The Louisiana LNG project is not only a major capital commitment, with a forecasted total expenditure of US$17.5 billion, but also a carefully de-risked investment. Woodside has partnered with Stonepeak Infrastructure LLC, which will contribute $5.7 billion and cover 75% of the capital expenditure in 2025 and 2026, effectively reducing Woodside’s upfront capital burden. This partnership reflects Woodside’s disciplined approach to capital allocation and risk management.
Robust Financials and Long-Term Value Creation
The project is expected to generate approximately $2 billion in net operating cash annually during the 2030s, underpinning Woodside’s growth strategy. With an internal rate of return exceeding 13% and a payback period of seven years, Louisiana LNG surpasses Woodside’s capital allocation targets, promising strong shareholder returns. The development will expand Woodside’s global LNG portfolio to around 24 Mtpa by 2030, representing about 5% of the global LNG market.
Woodside’s CEO, Meg O’Neill, described the investment as a “game-changer” that will enable the company to deliver enduring value and returns. The project’s scale and strategic location in the US Gulf Coast provide a premium geographical advantage, complementing Woodside’s existing Australian LNG assets and enhancing portfolio diversification across Atlantic and Pacific basins.
Environmental Commitment and Emissions Profile
Importantly, Woodside’s greenhouse gas emissions reduction targets remain unchanged despite the new investment. The Louisiana LNG trains are designed with advanced emissions-reducing technologies, including flareless restart systems, methane leakage minimization, and electric-driven pipeline compressors, resulting in a lower emissions intensity than industry averages. This aligns with Woodside’s broader climate strategy and net zero aspirations, reinforcing the company’s commitment to sustainable LNG production.
Economic and Social Impact in Louisiana
The Louisiana LNG development represents the largest single foreign direct investment in the state’s history and the first greenfield US LNG project to reach FID since 2023. It is expected to create over 15,000 national jobs during construction and sustain more than 4,000 jobs during operations, contributing significantly to local economic prosperity. The project benefits from a designated foreign trade zone, which offers tariff advantages and supports cost competitiveness.
Execution and Future Growth Potential
Execution is well underway with Bechtel contracted for engineering, procurement, and construction (EPC), and over 90% of high-value orders placed, locking in price and schedule certainty. The project site has completed foundational work, including pilings and LNG tank bases, with first LNG targeted for 2029. The fully permitted site also allows for expansion up to 27.6 Mtpa, with potential future trains to further enhance returns and lower unit costs.
Woodside’s marketing portfolio will integrate approximately 8 Mtpa of Louisiana LNG volumes, leveraging the company’s established global marketing capabilities to optimize value across diverse markets. The project’s flexibility and strategic positioning enable Woodside to capture value amid volatile LNG markets and evolving global demand, particularly in Asia and Europe.
Capital Discipline and Shareholder Returns
Woodside maintains a strong balance sheet with liquidity of $7.3 billion as of Q1 2025, supporting ongoing investments and shareholder distributions. The company’s dividend policy remains unchanged, targeting a payout ratio of 50-80% of net profit after tax, supported by the significant cash flows expected from Louisiana LNG and other assets. Additional sell-downs of project equity are anticipated to further reduce Woodside’s capital exposure and accelerate returns.
Overall, the Louisiana LNG project embodies Woodside’s strategic vision of building a balanced, resilient portfolio of long-life LNG assets complemented by high-return oil assets, positioning the company for sustained growth and value creation in the decades ahead.
Bottom Line?
Woodside’s Louisiana LNG project sets a new benchmark for scale, returns, and sustainability in US LNG, signaling a transformative chapter for the company and the global market.
Questions in the middle?
- How will Woodside manage future equity sell-downs to optimize capital and risk?
- What are the implications of evolving LNG market dynamics on Louisiana LNG’s long-term pricing and contracts?
- How will Woodside’s climate strategy adapt if regulatory or market pressures on emissions intensify?
