Woodside will be required to achieve net-zero emissions at its ageing Karratha gas plant in Western Australia by 2050 as a condition of a long-term project extension.
WA's Environmental Protection Authority on Thursday said it had recommended the North West Shelf extension project for approval.
Woodside and its joint venture partners are proposing to extend the life of the 30-year-old Karratha plant to enable the continued processing of third-party oil and gas from fields off the northwest coast of WA until 2070.
The extension is centred around existing infrastructure, but would allow for plant replacements and upgrades, maintenance dredging and continued greenhouse gas emissions.
EPA chair Matthew Tonts said Woodside would be required to meet strict conditions regarding the avoidance or offset of emissions that exceeded those proposed by the joint venture.
"If unabated, the extension proposal would have emitted a total of 385 million tonnes of (carbon dioxide equivalent) over its life," Professor Tonts said in a statement.
"But through this assessment, we have been able to insist on a reduction of more than 250 million tonnes."
Woodside, which has faced significant opposition and legal challenges from climate activists over its proposed $16 billion Scarborough gas project, is aiming to achieve net zero direct emissions by 2050 or sooner.
It has set targets of 15 per cent reduction by 2025 and 30 per cent by 2030.
Woodside operations executive Fiona Hick said the joint venture would carefully consider the EPA's conditions.
"At a time of heightened concern around energy security, the NWS Project has an important role to play in delivering natural gas to local and international customers, providing energy that can support their decarbonisation commitments," she said.
The Conservation Council of WA questioned how Woodside would achieve net-zero at "one of the oldest and least efficient gas processing plants in Australia".
"The only environmentally responsible way to get the North West Shelf emissions to net-zero is by reducing production," executive director Maggie Wood said.
"Offsetting projects simply doesn't deliver what we need - a large scale reduction in the carbon emissions entering the atmosphere."
The EPA also addressed concerns about the impact Woodside's operations on the Burrup Peninsula were having on ancient rock art.
It acknowledged "there may be a threat of serious or irreversible damage to rock art from industrial air emissions ... accelerating the natural weathering", but argued there was a lack of scientific consensus.
The watchdog said the joint venture should ensure the Murujuga rock art was not further deteriorated by air emissions from the North West Shelf extension.
Initial data from a program monitoring the impact of industrial emissions on the culturally significant art is expected next year. Woodside and its joint-venture partners will be required to abide by the standards outlined by the program.
The EPA's report to Environment Minister Reece Whitby, who will make the final decision on the proposal, will be open for public appeal until July 21.
