17/08/2004 - 22:00

Gorgon not under threat, Government

17/08/2004 - 22:00

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Gorgon not under threat, Government

The Federal Government is playing down a potential stand-off brewing with the Western Australian Government that could threaten the development of the $11 billion Gorgon gas project.

A spokeswoman for Federal Resources minister Ian Macfarlane told WA Business News it was “stretching the point to say [the issue] would make or break the project” after it was revealed last week that WA and Canberra could not agree who would be responsible for the environmental maintenance of the Gorgon processing site.

WA is hoping to use the issue to position itself for a greater share of the billions in royalties the Gorgon joint venturers will pay the Federal Government.

Because of the position of the gas fields the Federal Government is entitled to the royalties.

This is an argument that was raging even before the WA Government gave the project its in principle support last year.

While the Gorgon gas fields are situated in Federal waters, the long-term environmental maintenance argument centers around Barrow Island, which is State territory and where the gas will be turned into LNG.

On Barrow the joint venture, led by operator Chevron Texaco will use state-of-the-art technology to separate carbon dioxide from the gas and inject it under Barrow Island into saline aquifers.

This process, known as carbon dioxide sequestration, is new to Australia and is a way of reducing greenhouse gas emissions that would normally be vented to the atmosphere. 

Given that Gorgon will be the first to use CO2 sequestration in Australia there is some uncertainty as to how it will be regulated, however, the Ministerial Council on Minerals and Petroleum Resources is considering options for its legislation and regulation to ensure a consistent framework is set.

State Development Minister Clive Brown, meanwhile, is standing firm on the argument that his government would take as much responsibility for the Gorgon site as it got royalties from the project.

A spokesman for Mr Brown said the minister had discussed the issue with Mr Macfarlane at a recent Ministerial Council for Mineral and Petroleum Resources meeting.

He said Mr Macfarlane had appeared reluctant to commit the Federal Government to  the long-term environmental responsibility.

Mr Macfarlane’s spokeswoman said it was too early to comment on the issue.

She said the working party would examine all the issues and report back to the next quarterly Ministerial Council for Mineral and Petroleum Resources meeting to be held before the end of the year.

Gorgon external affairs manager Peter Coghlan would say little about the specific issue.

He said there were a raft of approvals the joint venture was working through before a final investment decision was made late next year.

However, he did say the joint venture partners were confident the governments would come to an agreement over the issue of long-term environmental responsibility before the final decision was due.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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