Chevron's Gorgon Gets State Environment OK
Date: 10-Sep-07
Country: AUSTRALIA
Author: Fayen Wong
Confirming an earlier Reuters report, Chevron said the
approval came with stringent conditions, which the project
partners, Exxon Mobil and Royal Dutch Shell Plc
were reviewing as they finalise project
details.
Chevron, the third-largest US oil company by market
value, still needs Australian national government approval
before the project can start.
It also said its key Japanese customers, including Tokyo
Gas, Chubu Electric Power and Osaka Gas
could take minority equity in the Gorgon project.
"We are working with three Japanese customers and there are
provisions for equity participation as well as the purchase of
LNG (from Gorgon)," Jay Johnson, managing director of Chevron
Australia, told reporters on the sidelines of the Asia-Pacific
Economic Cooperation meeting in Sydney.
Johnson declined to comment when asked about the cost of
the project, saying that the joint venture partners were still
finalising details and it would be premature to give an
estimate.
Industry analysts have suggested that construction costs
for Gorgon, which contains 40 trillion cubic feet of gas
resources, could double to A$20 billion (US$17 billion) from
Chevron's estimate of A$11 billion three years ago.
Johnson reiterated that the partners remain committed to
the project.
"The final investment decision is one which each company
has to take. But I can say that we have a common set of
interests and we are well-aligned going forward," he said.
Chevron is the operator of the project and holds a 50
percent stake. Exxon Mobil and Shell each have 25 percent.
Shell has suggested that the joint venture partners could
increase the scale of the project to 15 million tonnes per
annum (mtpa) from an initial plan of 10 mtpa. But Chevron said
that optimisation studies were still continuing and the scope
of the project remains unchanged.
The project was first expected to deliver gas in 2010, but
analysts now say a 2015-2016 timeframe would be a more likely
should Chevron be able to make a final investment decision on
the project in the next one or two years.
Chevron had scrapped a 2006 deadline for approving the
Gorgon project after environmental groups protested against
plans for an LNG plant to handle the project's gas on Barrow
Island, a nature reserve off Western Australia which is home to
a rare species of turtle.
An industry source told Reuters that Chevron has already
made plans to build a construction camp on Barrow Island to
house over 2,000 workers and was expanding port facilities in
preparation.
"There is no doubt that the project is going ahead. They
have drilled a data well for carbon storage and have done
geotechnical work for the proposed pipeline route," the source
said.
Australia, which aims to be the world's second-largest LNG
exporter after Qatar, has six proposed LNG projects along its
northwest coast, led by companies including Woodside Petroleum
Ltd. Chevron and Japan's Inpex Holdings
(Additional reporting by Damon Evans in Singapore)
