14/09/2009 - 14:08

Chevron eyes more LNG trains for Gorgon

14/09/2009 - 14:08

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Fresh from approving the massive Gorgon gas development, US energy giant Chevron said today that adding two more LNG production trains on environmentally sensitive Barrow Island remained part of the company's long term vision.

Chevron eyes more LNG trains for Gorgon

Fresh from approving the massive Gorgon gas development, US energy giant Chevron said today that adding two more LNG production trains on environmentally sensitive Barrow Island remained part of the company's long term vision.

Chevron and partners Shell and ExxonMobil this morning formally approved the $43 billion Gorgon project - Australia's biggest ever single resources development - paving the way for site works to begin shortly and full scale construction to start early next year.

The project has environmental approval for three production trains, each with a capacity to produce 5 million tones of LNG annually, to be built at the plant site on Barrow Island in time for production to begin in 2014.

Originally only two LNG trains were approved for the island, before rising costs led Chevron to seek approval for a third train in 2006 to capture better economies of scale.

Because Barrow Island is an A Class nature reserve and home to numerous rare and endangered species, the project is subject to extremely stringent environmental regulation and all development is restricted to a small 300 hectare envelope, representing just 1.3 per cent of the island's total land mass.

Today, the head of Chevron's global upstream gas division George Kirkland, said building a fourth and fifth LNG train at the Barrow Island site was still part of the company's long term plans given the size of the resource, which currently totals over 40 trillion cubic feet of gas.

"If you go back to the first environmental documents we prepared ... in 2003, they truly envisioned four to five trains on Barrow Island, all of it required to fit inside the 300 hectares," Mr Kirkland told reporters in Perth.

"That view back then ... was predicated on the amount of resource we saw, and we feel very good about the resource. I don't want to spend a lot of time talking about trains 4 and 5 until we move a little further along ... with trains 1, 2 and 3. But the vision of five trains has been there, and has been the vision of the partnership (based) on the amount of gas that's there, for a long time."

Mr Kirkland said further expansion would obviously need the support of all three partners, and would also be influenced by the results of ongoing exploration within the project area. Any expansion would also be required to fit within the existing 300 hectare envelope.

Speaking to WA Business News later, Chevron Australia managing director Roy Krzywosinski said that exploration and appraisal work would be pivotal to the timing and shape of any potential expansion.

"It all starts with the resource and the reserves that come out of the resource drilling," he said. "As those become firmed up, you can really start to think about what an expansion looks like, and what the timing looks like."

Mr Krzywosinski said the benefit of keeping a construction workforce on hand would also be an important factor in the timing of any expansion. Gorgon is one of a slew of LNG projects planned in WA over the next five to 10 years, sparking renewed fears of a looming shortage of skilled labour.

"We don't necessarily have to make a decision for expansion at this point, but over the course of say the next couple of years, if you want to capture the opportunity of keeping the construction crews on the site and just keep rolling, we'll have to make that decision," he said.

While the Gorgon partners and the state and federal governments remain confident that the project can be developed with minimal risk to the fragile ecology of Barrow Island, any move to expand the project further is likely to draw renewed fire from environmentalists.

Mr Krzywosinski said he expected any expansion proposal would be subject to normal "incremental licensing and permitting associated with an expansion".

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