The massive Gorgon gas project off Western Australia will go ahead after the joint venture partners agreed to develop the project.
Chevron Australia announced yesterday from the US that it and its joint venture partners Exxon Mobil and Shell had approved final investment in the project.
It is the first of an estimated 10 or so projects in WA and Queensland mostly looking to exploit natural gas and coal seam gas reserves and export the LNG into the markets of emerging and developed Asia.
The Gorgon gas fields, off the north west coast of WA, contain about 40 trillion cubic feet of liquified natural gas (LNG), and are our largest known gas resource.
The project is expected to boost Australian exports for decades, with long term supply deals already signed with companies in China, India, Japan and South Korea worth billions.
Chevron holds a 50% of the project and will be its operator. ExxonMobil and Shell hold 25% each.
All three companies decided to proceed with the project after production licenses were granted and development approval was given by the WA government in the past fortnight.
"With a total resource base of more than 40 trillion cubic feet of gas and an estimated economic life of at least 40 years, Gorgon will be a major contributor to our company’s future growth," said Chevron Chairman Dave O’Reilly.
"Gorgon adds significant long-term reserves and production for Chevron, bolstering our strong resource replacement and underscoring the importance of Australia to our growing natural gas business," said George Kirkland, executive vice president, Global Upstream and Gas, Chevron Corporation.
"The project will create about 10,000 jobs during the peak construction phase with more than 3500 direct and indirect jobs sustained throughout the life of the project,” WA Premier Colin Barnett said in a statement
The project’s first phase of development is estimated to cost about $43 billion and the first gas is expected to be delivered in 2014.
Tenders have already been let for the site works on Barrow Island and a huge accommodation centre for the estimated 10,000 people who will work on the project. The accommodation and other facilities will cost the best part of half a billion dollars alone.
Chevron Australia managing director Roy Krzywosinski said the project would provide an economic boost over the next 40 years.
"We anticipate $33 billion will be spent on Australian goods and services with flow-on effects cascading through the Western Australian economy,” he said.
The Gorgon development will consist of gas fields connected to Barrow Island by underseas pipelines.
A gas processing facility will be located on Barrow Island, which will consist of shipping facilities, a domestic gas plant and a pipeline to deliver gas to the mainland.
The project includes a three-train, 15 million-tonne-per-year liquefied natural gas (LNG) facility and a domestic gas plant.
Chevron said the project will see a dramatic enhancement of engineering practices, with work to be carried out in up to 1300 metres of deepwater.
The project will also include a carbon dioxide injection project that will cut greenhouse emissions by 40% or 3.4 million tonnes each year.
Carbon dioxide from the natural gas will be reinjected into a reservoir more than two kilometres below Barrow Island.
The company said the Greater Gorgon Area’s projected natural gas resources are equivalent to 6.7 billion barrels of oil.
Chevron said its stake will change from 50% to 47.75% once relevant approvals have been obtained on equity agreements with Osaka Gas and Tokyo Gas.
"As stated in a Chevron news release dated September 9, 2009, Chevron will supply Osaka Gas 1.375 million tonnes per annum (MTPA) of LNG for 25 years. Osaka Gas will purchase 1.25% equity in the Gorgon Project. Tokyo Gas will be supplied 1.1 MTPA over 25 years and will purchase a 1% equity stake. Supply from both agreements is expected to commence in the second half of 2014."
Chervon is also developing the wholly owned Wheatstone Project as an LNG and domestic gas operation near Onslow on the mainland of Western Australia.
"Chevron has a 40-year history producing oil at Barrow Island and Thevenard Island oil fields. Along with our partners in the North West Shelf Venture, Chevron has exported LNG to Asian customers since 1989.
"We’re investing in the Browse Basin through the Browse Joint Venture, another LNG project off the coast of Western Australia," the company said in information on its website.
Shell is involved with Woodside and the North West Shelf, plus coal seam gas with Arrow Energy in Queensland. Exxon owns half of Bass Street with BHP Billion and is the lead company on the huge Hides LNG project in Papua New Guinea in which Oil Search has a stake.
Chevron has 50% of Caltex Australia, the leading oil refining and marketing company. It refines, distributes and sells fuels and lubricants, including petrol, jet and diesel fuel, liquefied petroleum gas, and industrial and aviation lubricants.
