Australia approves Pluto, Gorgon LNG projects

Oct. 22, 2007
Two LNG projects in Western Australia have passed through certain approval stages, moving them closer to reaching completion.

Two LNG projects in Western Australia have passed through certain approval stages, moving them closer to reaching completion.

The Australian government has granted environmental approval for Woodside Petroleum Ltd.’s Pluto LNG gas development in Western Australia. Separately, Australia’s Federal Environment Minister Malcolm Turnbull has given the official green light to the Chevron group’s Gorgon LNG project proposed for Barrow Island, also off Western Australia.

Pluto project

The approval for the Pluto project comes with strict environmental conditions, including the reduction of any impacts on threatened species, such as the Olive Python, sea turtles, and other marine mammals.

Woodside also will be required to establish management plans to protect the marine environment, including a dredging and spoil management plan prior to pipeline work, an oil spill contingency plan, and plans for offshore drilling operations, construction, installation, and operations management.

The $11.2 billion (Aus.) Pluto development includes installation of a production platform in 85 m of water at the offshore field about 190 km northwest of Karratha, a 180 km, 36-in. subsea gas pipeline to shore, and construction of a 4.3 million tonne/year LNG liquefaction plant, storage, and wharf facilities at two separate sites on the Burrup Peninsula.

The government said the Pluto development will inject $17.6 billion (Aus.) into the national economy. About 28% of the 3,000-person workforce will live locally. There will be an additional 3,200 jobs during later operations.

Gas reserves are estimated to be 5 tcf, including nearby Xena field, which will be added in later development.

Currently Woodside holds 100% interest, but the project is underpinned by a package of LNG sales agreements and equity with Tokyo Gas and Kansai Electric of Japan, each of which will take 5% equity in Pluto.

The field was found in 2005. Initial onshore site works began earlier this year, and first LNG production is expected in 2010.

Gorgon project

Approval of the two-train, 10-million-tonne/year Gorgon LNG development project is subject to strict environmental protection measures, which include:

  • Development and implementation of a quarantine management plan, overseen by an expert advisory panel, to protect threatened species on Barrow Island.
  • Development and implementation of a protection regime for the Flatback Turtle.
  • Environmental management plans for operation of the gas field and processing plant.
  • Annual environmental performance reports for the Federal Department of the Environment and Water Resources.

Chevron also will implement 36 environmental protection measures imposed by Western Australia, which gave its approval last month. Those measures include a $60 million (Aus.) commitment to conserve the Flatback Turtle and other endangered species and the mandatory inclusion of carbon sequestration facilities.

Sequestration plans are already under way for reinjecting about 3 million tonnes/year of carbon dioxide into a reservoir formation deep below Barrow Island.

Project operator Chevron said it will incorporate all the detailed environmental conditions into its work plan.

Originally budgeted at $11 billion (Aus.), the project likely will cost more than $15 billion (Aus.). Sequestration costs for the first decade alone are expected to be $850 million. Australia will provide $60 million from its low-emissions technology fund towards the geosequestration plan.

Australia expects Gorgon to contribute $20 billion (Aus.) to the country’s economy and generate about 6,000 jobs over the project’s life.

There is continued speculation that the Gorgon project at some point will move to double its currently approved design capacity of 10 million tonnes/year of LNG output, which would make it substantially larger than the existing North West Shelf gas project.

Gorgon has about 60 tcf of gas in proved, probable, and possible gas reserves to call on in the surrounding area.

Despite the environmental caveats imposed on the current project, Greg Bourne, head of the conservation group WWF-Australia, expressed disappointment at the decision to locate Gorgon facilities on Barrow Island rather than on the mainland.

Although Chevron has a 40-year track record managing the island’s environment during development and production from Barrow Island oil field, Bourne says there are no conditions that would ever make Barrow-one of Australia’s oldest and most important Class A nature reserves-an acceptable location for an LNG plant.

Gorgon project participants are Chevron 50% and ExxonMobil and Shell, 25% each.