PRIME Minister Julia Gillard insists the investment phase of Australia's resources boom is yet to peak despite the dumping of a $45 billion liquefied natural gas project.

While shareholders have applauded Woodside Petroleum's dumping of a costly onshore liquefied natural gas plant by sending its stock soaring, Ms Gillard says the company's decision to shelve the massive project does not relate to federal or state regulatory issues.

Woodside Petroleum says a major review of the proposed Browse LNG processing plant, at James Price Point in Western Australia, found it would not deliver the returns needed.

Read environmentalists' and workers' reactions

"It's an issue for the company, so it's for them to deal with,'' she told reporters in Sydney a short time ago.

Ms Gillard said the resources boom would be at work in the economy for a long time to come.

"We haven't seen the peak of the investment phase into resources yet and we are yet to see the peak of the production phase,'' she said.peOver ``decades and decades and decades'' Australia would sell resources and make money from investment decisions being made now, she said.

Resources Minister Gary Gray remains confident the Browse gas resources will be developed.

"The gas and condensate fields in the Browse Basin were discovered in the early 1970s and the road to developing them has been a long one,'' he said.

Shares soar as Woodside dumps $45b James Point project

Woodside Petroleum confirmed rumours today that it was scrapping plans for its $45 billion LNG project at James Price Point in WA's north.

The stock was $1.21, or 3.4 per cent, higher at $36.49 at 9am Perth time.

IG Markets market strategist Evan Lucas said the market was responding to the fact that Woodside's capital expenditure would drop away substantially in the short term.

"There would have been a considerable construction period before it even started production with more overhang,'' he told AAP.

Until now shareholders would have been concerned about possibly share-diluting actions such as capital raisings to keep up with the costs.

Now they will expect share buybacks or capital returns, Mr Lucas said.

The company's flagship $15 billion Pluto LNG project is generating strong earnings since it started a year ago but was hit by delays and cost blowouts during construction in WA's expensive labour and equipment market.

The Browse Basin field itself is still expected to be developed, with joint venture partner Royal Dutch Shell to push for a cheaper floating LNG plant, which it is developing for its Prelude project in the same region as Browse.

Woodside said in a statement that it will review alternative ideas with its joint venture partners in the Browse project.

It said a major review of the proposed LNG processing plant, near Broome, had found it would not deliver the returns the company needed.

"Woodside will immediately engage with the Browse joint venture to recommend evaluation of other development concepts to commercialise the Browse resources, which could include floating technologies, a pipeline to existing LNG facilities in the Pilbara or a smaller onshore option at the proposed Browse LNG precinct near James Price Point,'' it said.

Missed opportunity tragic, says Barnett

It would be a tragedy and a missed opportunity if the Woodside-led Browse gas project didn't wind up onshore at James Price Point - but that seems likely, Premier Colin Barnett says.

Woodside announced early today it had abandoned its concept for a large, multiple-user gas processing hub onshore at James Price Point north of Broome in the Kimberley region as it was "not commercially viable''.

The oil and gas giant said it was reviewing "alternative concepts'' for commercialising Browse Basin gas, including a floating processing vessel, a smaller onshore plant at James Price Point and piping the gas hundred of kilometres south to its existing facilities at Karratha.

Woodside said its decision was not based on environmental, red tape or public policy issues.

Mr Barnett has long been adamant the gas should be processed onshore as this would ensure local jobs.

But he softened his tone on Friday, saying an offshore project would still bring benefits to WA.

"If the project goes ahead offshore ... it would still bring some benefits to WA,'' Mr Barnett said.

"It would be a tragedy and a missed opportunity if that gas did not come onshore.''

He said he preferred the smaller onshore option over a floating development, which he believed had significant safety risks including cyclones.

The piping option was unlikely as it required the consent of a different joint venture, he said.

The premier has also been a major advocate of the now indefinitely shelved Oakajee port proposal for the state's Mid West region and this week said the state government was still working to bring in Chinese investors to revive the project.

Green groups welcome decision

Australian Conservation Foundation chief executive Don Henry said the project would have done untold damage to the region's coastline.

Wilderness Society director Lyndon Schneiders said Woodside's decision should serve as a warning to both governments and businesses which wanted to force unwanted and unsustainable developments on communities

Meanwhile, resources Minister Gary Gray remains confident the offshore Browse gas resource will be developed.

"The gas and condensate fields in the Browse Basin were discovered in the early 1970s and the road to developing them has been a long one,'' he said.

The energy giant says it will review alternative ideas with its joint venture partners in the Browse project.

Woodside said a major review of the proposed LNG processing plant, near Broome, had found it would not deliver the returns the company needed.

"Woodside will immediately engage with the Browse joint venture to recommend evaluation of other development concepts to commercialise the Browse resources, which could include floating technologies, a pipeline to existing LNG facilities in the Pilbara or a smaller onshore option at the proposed Browse LNG precinct near James Price Point,'' it said today.

Speculation mounted late yesterday that Woodside would scrap the project.

Woodside received conditional planning approval from the WA government last week to build a $120 million camp to house more than 850 fly-in fly-out workers at the proposed gas hub.

The company recently said it was sticking to its June schedule for a final decision on building the onshore processing plant.

But analysts believe the proposal was not economically viable due to spiralling costs and challenges securing labour.

Joint venture partner Royal Dutch Shell prefers a floating liquefied natural gas facility.

Yesterday

WA Premier Colin Barnett yesterday said that he had not been informed of the decision.

Asked by Opposition leader Mark McGowan if he had been advised by Woodside that the project had been rejected by the consortium, Mr Barnett today told Parliament it was not for him to divulge market-sensitive information.

The Sunday Times revealed in January that the proposed LNG hub in the Kimberley was unlikely to proceed because of escalating costs that threatened its profitability.

The Woodside joint venture, which had been due to announce a decision before June, has decided against proceeding with the onshore hub at James Price Point, which has attracted fierce opposition from environmentalists and many locals.

The decision has torpedoed a $1.5 billion benefits package negotiated with native title claimants, the Goolarabooloo Jabirr Jabirr, although some compensation may be negotiated.

PerthNow understands the final decision not to proceed came after a meeting on Monday night.

Greens MP Robin Chapple called on the state government to rescind the Browse Land Agreement Act.

"If it doesn't, the sword of Damocles will hang over the Kimberley for the next 10 years,'' he said in a statement.

"It is a clear victory that Woodside and their partners have seen sense, but the state government continues to hold the Kimberley to ransom while this Act continues to operate.''

The project has been hotly debated in WA, with Mr Barnett arguing the LNG must be processed onshore to maximise benefits to WA and particularly local Aboriginals.

Broome is a town divided over the project - while there is support for it, some believe the LNG should be processed offshore, while others do not want it to go ahead at all.

Just yesterday, Royal Dutch Shell's Ann Pickard restated the organisation's preference for floating LNG - arguing it would put WA at the forefront of innovation in the industry.

Mr Barnett is bitterly opposed to the floating LNG option, saying WA would miss out on thousands of construction jobs and royalties.

Recently-appointed Federal Resources Minister Gary Gray has previously voiced his support for the floating technology.

Broome Chamber of Commerce executive officer Maryanne Peterson said several contractors had been told not to proceed with work, such as ground clearing.

"(Woodside) have decided not to proceed with some activities that they were going to undertake prior to FID (final investment decision)," she said.

"We don't know whether this work is just being postponed or whether they already had enough information collected to make a decision - we don't know what it really means."