Woodside Petroleum Ltd. (WPL.AU) has signed a preliminary agreement with the government of Western Australia state for the development of a liquefied natural gas processing precinct at James Price Point in the state's north west.

The government said Monday the agreement will accelerate key studies and planning into the project and will see Woodside appointed as the foundation commercial proponent for the precinct.

"This agreement is an important step in securing a development which could bring hundreds of long-term jobs, millions of investment dollars and long-term economic diversification," Western Australian Premier Colin Barnett said in a statement.

Woodside plans to pipe gas from the giant Browse gas field to James Price Point in the Kimberley region for processing.

However, its partners at Browse, including Chevron Corp. (CVX) and BHP Billiton PLC (BHP.AU), are not convinced this is the best option and instead favor piping gas to the North West Shelf processing facilities in the Pilbara region to the south.

-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094; alex.wilson@dowjones.com