Chevron’s $11bn LNG project gets govt’s approval
Published: Wednesday, 13 December, 2006, 11:10 AM Doha Time
gulf-times.com
SYDNEY: Chevron Corp won a government green light yesterday for its multi-billion dollar Gorgon gas development in Australia, switching attention to the rising environmental protection costs that could yet kill it off.
Gorgon has been beset by environmental concerns – including worries about the impact on turtle populations. These have pushed back first liquefied natural gas deliveries until after the originally planned date of 2010.
Yesterday, the government of Western Australia nodded the project through, but with costly conditions attached.
Analysts said that while the preliminary government approval has cleared a big hurdle, costs are now likely be higher than the $11bn figure estimated three years ago.
“Government approval is one green light but there are a few more green lights to go. There is still a final investment decision by the joint venturers and we can’t be certain if that will definitely go ahead with the costs likely to go higher,” said Stuart Baker, an analyst at Morgan Stanley. Western Australia Environment Minister Mark McGowan outlined some of those extra costs.
Conditions he set for the project to go ahead include an extra A$60mn ($47.1mn) commitment by the Gorgon participants to conserve the flatback turtle population and protect other endangered wildlife, as well as funding a program to relocate threatened species.
The new conditions come on top of an existing commitment to pay A$40mn to the state government for conservation projects.
Chevron and its partners would also be required to build a geo-sequestration facility to reinject carbon dioxide from the processing of gas on the island.
Colin Beckett, general manager of the Greater Gorgon project, told Reuters that construction and operation of the sequestration plant was estimated at A$850mn for the first 10 years.
Back in June, Western Australia’s Environmental Protection Authority advised the government to reject the Gorgon project.
It said the impact on flatback turtles nesting on Barrow Island, the introduction of non-indigenous species, and damage inflicted by seabed dredging were too great to allow the project to proceed, even though Chevron already operates an oil extraction and processing facility on the island.
Chevron, the project operator, holds a 50% stake in the Gorgon project while ExxonMobil and Royal Dutch Shell Plc each have a 25% stake.
Beckett said first gas production was expected to be five years after work begins at Barrow Island.
Western Australia, rich in natural gas, is home to many major LNG developments, including the North West Shelf gas field operated by Woodside Petroleum Ltd.
The greater Gorgon area project has an estimated gas reserve of about 40tn cu ft – a quarter of Australia’s known gas reserves.
Chevron said the Gorgon offshore project, which has a total liquefaction capacity of 10mn tonnes a year, includes a two-train liquefied natural gas (LNG) loading facility and gas processing plant on Barrow Island, located off Australia’s northwest coast. – Reuters |
