Australia approves Gorgon LNG project

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Oct. 11 -- 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 off Western Australia.

Approval of the two-train, 10-million-tonne/year 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 geosequestration facilities.

Geosequestration 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.

Costs soar
Originally budgeted at $11 billion (Aus.), the project likely will cost more than $15 billion (Aus.). Geosequestration 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.