Woodside will press ahead with the biggest oil and gas development to be built in Australia in a decade, after sanctioning its $16.5 billion Scarborough project off Western Australia.

The decision comes despite a furious, last-ditch bid by environmentalists to stymie the project after the Conservation Council of WA last week launched legal action, claiming the project required assessment under federal law.

That decision also coincided with news that the boards of Woodside and BHP had agreed to merge their petroleum businesses in a $40 billion deal, which will create one of the world’s biggest fossil fuel players.

With a price tag of $US12 billion ($16.5 billion), Scarborough is set to be the biggest oil and gas development undertaken in Australia since the end of a $US200 billion ($275 billion) investment splurge 10 years ago.

The project will involve the construction of a 430-kilometre pipeline, linking the Scarborough gas field to the mainland, as well as a second production train at the Pluto LNG processing plant.

At the peak of construction, as many as 3,200 jobs are expected to be created, with first production slated for 2026.

Woodside’s chief executive, Meg O’Neill, alluded to the project’s importance to the company’s future by noting it would provide cashflow and fund future developments for decades.

“Scarborough will be a significant contributor to Woodside’s cashflows, the funding of future developments and new energy products, and shareholder returns.

“This capital-efficient development leverages Woodside’s existing infrastructure and our proven expertise in project execution.”