Project operator Chevron, along with

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A Monster                                                                                               An artist’s impression of an overview of the Gorgon plant.

       roject operator Chevron, along with          resources project in Australia’s history and make         to give greater certainty to the public and the
       joint venture participants ExxonMobil        a significant contribution towards Western                proponent about what will be required for this
       and Shell, has announced it will             Australia’s prosperity over the next 30 years.            project to comply with both state and federal
proceed with the Gorgon gas development                                                                       requirements.”
off the northwest coast of Western Australia.       “Preliminary works on the three-train 15 MMt/y
                                                    LNG facility and the 300 TJ/d domestic gas                The conditions placed on the project require
Chevron stated initial work will begin              plant will begin this year with full construction         Chevron to prepare for approval a range of
immediately on Barrow Island, with first gas        commencing in February next year.”                        plans relating to the protection, management
slated for 2014.                                                                                              and monitoring of nationally protected
                                                    Amid debate over the suitability of Barrow                terrestrial fauna, including the spectacled
At a signing ceremony attended by Western           Island for the development, Federal                       hare-wallaby, burrowing bettong and golden
Australian Premier Colin Barnett and Federal        Environment Minister Peter Garrett had paved              bandicoot.
Resources and Energy Minister Martin Ferguson,      the way for its go ahead, in the weeks prior to
Chevron Australia Managing Director Roy             the final investment decision giving the Gorgon           “Ongoing monitoring of these species must
Krzywosinski thanked the state and federal          expansion environmental approval.                         be carried out to ensure any changes to these
governments for their support.                                                                                populations are detected, measured and, where
                                                    Garrett said his decision followed the                    necessary, remedial action is taken”, Garrett said.
“Gorgon will be an important pillar of the          assessment and the approval of the Western
Australian economy for the next 40 years. We        Australian Government.                                    “Chevron must also meet a number of
anticipate $33 B will be spent on Australian                                                                  requirements to address potential impacts on
goods and services with flow-on effects             “I am satisfied that, with the conditions placed          the flatback turtle. These include setting up a
cascading through the Western Australian            on this project by the WA Government and the              monitoring programme to measure and detect
economy”, Krzywosinski said.                        strengthened conditions I have imposed, the               changes to the turtle population, and to outline
                                                    expansion can proceed without unacceptable                the measures and controls in place to manage
“Gorgon is a long-term, technically complex         impacts on the matters covered by                         and avoid impacts, particularly in relation to
project that will mark a step-change and            Commonwealth jurisdiction in relation to this             reducing light and noise emissions.”
dramatic advancement of engineering,                project, namely listed threatened and migratory
developing new frontiers in up to 1,300 m of        species”, Garrett said.                                   The Australian Greens, however, condemned
deep water, and best practices in environmental                                                               the decision.
management”, he added.                              “While the economic benefits of this project
                                                    clearly cannot be overlooked, and legally must            “There is no way that the environment of
“Gorgon will be a global leader in the              be a factor in my consideration, my key focus             Barrow Island can be protected from this
application of underground carbon dioxide           has been whether or not this expansion could              development—no environmental conditions
injection technology. The decision to invest        adequately mitigate and manage any additional             can protect the environment of this island, and
approximately $2 B to inject naturally-occurring,   potential impacts on the protected species,               it is a nonsense for Minister Garrett to hide
reservoir carbon dioxide into a deep reservoir      such as the flatback turtle and the terrestrial           behind such conditions. It is inevitable that the
more than 2,000 m beneath Barrow Island is a        fauna.                                                    island will be degraded”, said Greens Senator
clear demonstration of Chevron’s commitment                                                                   Rachel Siewert.
to reducing greenhouse gas emissions.”              “I have also agreed to vary the conditions of
                                                    the original 2007 approval to ensure that the             “Barrow Island is an A-Class nature reserve. It
“In today’s dollars, the project is estimated to    strict protection I am applying to the expansion          has been dubbed ‘Australia’s Ark’ for its unique
cost $43 B”, Barnett commented. “With total         proposal will now apply to the entire operation.          range of endangered species, with 24 species
gas resources of 40 Tcf, this will be the largest   The conditions are now more clearly prescribed            and sub-species preserved on the island,

56   | PESA News | October/November 2009
                                                                                                                                  australian news

Chevron Australia Managing Director Roy Krzywosinski   Western Australian Premier Colin Barnett            Federal Resources and Energy Minister Martin Ferguson

many of which are extinct or endangered on             ... however it is still hugely disappointing that   the long-term supply of LNG, encompassing
mainland Australia. This proposal will have            the Minister has failed to do his job and protect   approximately 1.5 MMt/y over a 20-year term.
unacceptable environmental impacts on the              this island”, she said.
terrestrial and the marine environment. It                                                                 Chevron subsequently signed binding LNG
simply should not be going ahead on Barrow             Prior to Garrett’s approval, the long-touted        SPAs with Osaka Gas and Tokyo Gas, set to
Island.                                                project had gathered further momentum,              commence in the second half of 2014 for 25
                                                       with ExxonMobil signing a sales and purchase        years. Chevron will supply Osaka Gas with
“The federal government is once again putting          agreement (SPA) worth an estimated $50 B with       1.375 MMt/y and Tokyo Gas with 1.1 MMt/y.
resource development ahead of environmental            PetroChina for the long-term supply of LNG. The     Both companies are also purchasing an
protection. I must admit I didn’t really expect        20-year agreement encompasses the supply of         equity share in Gorgon—Osaka Gas 1.25%
the Minister for the Environment to make any           approximately 2.25 MMt/y.                           and Tokyo Gas 1%—subject to Australian
other decision, but to give this project the tick,                                                         Foreign Investment Review Board approval.
as he was clearly given his riding instructions        The deal came on the back of Exxon and Indian
when the Prime Minister announced it [recently]        energy company Petronet signing an SPA for          Chevron has also signed SPAs with South
                                                                                                           Korean energy company GS Caltex for the
                                                                                                           supply of 0.5 MMt/y for up to 20 years and
                                                                                                           an heads of agreement (HoA) with Korea Gas
                                                                                                           Company (KOGAS) for 1.5 MMt/y for 15 years.
                                                                                                           GS Caltex, which is 50%-owned by Chevron, will
                                                                                                           be supplied with LNG from the Gorgon project
                                                                                                           and from other system gas within Chevron’s
                                                                                                           global portfolio.

                                                                                                           Previously, in 2007 PetroChina signed a long-term
                                                                                                           deal with the other project partner, Shell.

                                                                                                           Ferguson has referred to Gorgon as an
                                                                                                           ‘economic stimulus package’ in its own right. In
                                                                                                           total, Gorgon has contracts to sell around $300
                                                                                                           B worth of LNG to customers in the Asia Pacific
                                                                                                           over the next 20 years. Chevron estimates the
                                                                                                           project will result in 6,000 jobs during peak
                                                                                                           construction, with more than 3,500 direct and
                                                                                                           indirect jobs sustained throughout its lifespan.
                                                                                                           Chevron anticipates government revenue of
                                                                                                           around $39.8 B; locally purchased goods and
                                                                                                           services are expected to total around $33 B.

                                                                                                           Chevron has a 50% interest in the project; Shell
                                                                                                           and Exxon each hold a 25% interest. ■
Gorgon project map.

                                                                                                                     October/November 2009 | PESA News |    57

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