Chevron ponders $10bn gas project
* Nigel Wilson, Energy writer
* February 05, 2007
theaustralian.news.com.au
OIL and gas major Chevron is conducting a feasibility study into a world-scale gas-to-liquids (GTL) plant that could help Australia overcome a looming transport energy deficit.
The project, estimated to cost as much as $10 billion, is in early stages of consideration but would be based on the 4 trillion cubic feet of gas estimated to be contained in the Wheatstone field northwest of Barrow Island.
"Chevron and Sasol Chevron are undertaking a feasibility study for a gas-to-liquids (clean diesel) project using gas from the Wheatstone field," a Chevron spokesman confirmed yesterday.
"Chevron will be leading the upstream gas field development while Sasol Chevron will be responsible for the downstream element."
Sasol is the South African synthetic oil operation spawned during the apartheid years to help overcome an international oil embargo.
The two companies have a 50-50 joint venture in Qatar which is expected to begin deliveries of clean diesel next month from a 34,000 barrels a day GTL plant representing an investment of more than $US6 billion ($7.7 billion).
It is understood the federal and West Australian governments have been briefed on the latest plan.
GTL technology can produce clean diesel and such products as methanol and dimethyl ether.
In 2001, Chevron and Sasol proposed a 30,000 barrels a day plant to be built on Barrow Island, using Gorgon gas reserves.
But in November the following year federal Resources Minister Ian Macfarlane effectively stopped the project by resisting a bid from Sasol Chevron for hundreds of millions of dollars in tax relief.
The current pitch to the governments is understood to be based on the need for Australia to overcome its energy imbalance. During several months last year, for the first time the costs of Australia's energy imports were higher than the value of energy exports.
This occurred in the two middle quarters because of high international crude oil and petroleum product prices combined with low domestic oil production which was not offset by the value of exporting LNG and coal.
Sasol Chevron is understood to be investigating a number of plant size options up to around 200,000 barrels a day which would allow GTL products to be used both to help meet domestic demand and earn export dollars.
Analysts said yesterday the new proposal was being promoted in a far different energy climate than that of 2002.
There was increasing awareness that Australia was facing energy security problems, particularly in liquid transport fuels.
The 2004 federal government energy white paper effectively said Australia would have to increase crude oil imports from the Middle East and rely on large volume LNG exports to pay the bill.
But in the past year or so, world gas prices have not followed the surge in oil prices while the international LNG market has not expanded as rapidly as expected.
Wheatstone was discovered in August 2004 in Chevron's 100 per cent owned retention lease, WA-17-R, about 180km from Dampier and about 70km southwest of the Goodwyn gas platform on the North West Shelf.
Chevron has indicated it will be conducting further appraisal drilling on the permit this year to obtain further technical information on the reservoir.
Chevron and Sasol have yet to complete an agreement covering development of the field but the GTL proposal dashes Woodside's hopes that the Wheatstone reservoir might be exploited as part of its Pluto LNG development. |
