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The Wall Street Journal: Chevron Makes Big Natural-Gas Find in Australia

November 11, 2006; Page A4

PERTH, Australia — Chevron Corp. unveiled one of Australia’s biggest natural-gas discoveries, with analysts expecting the oil company to link the Clio field to the A$11 billion (US$8.4 billion) Gorgon project that is targeting Asian and North American customers.

While offshore Western Australia is already rich with massive gas discoveries, Chevron said the Clio field ranks as “one of the top wells in Australia in terms of total net pay.” The drill sent down to explore the field passed through gas-bearing sands equivalent to the height of a 60-story building.

A Chevron spokesman said it is too soon to say if Clio is similar in size to the nearby Gorgon project, or other recent discoveries such as Woodside Petroleum Ltd.’s Pluto field, which holds 4.1 trillion cubic feet of gas. Pluto is being developed with the U.S. West Coast utilities market targeted as a top buyer, and is separate from the North West Shelf liquefied natural-gas project, which Woodside operates.

Clio may have significant greenhouse-gas benefits, compared with Gorgon, as “indications are that it is low in CO2,” the local Chevron spokesman said. Analysts said fewer problems with carbon dioxide and containment measures will be an added bonus if Clio proves big enough to justify its incorporation into the Gorgon project, which contains 40 trillion cubic feet of gas.

“While there is still work to be done to firm up the resources, there is no doubt that this is a big discovery,” said Richard Ellis, Western Australian director of industry lobby group the Australian Petroleum Production and Exploration Association.

Clio is outside the Gorgon joint venture in an exploration permit 67%-owned and operated by Chevron, with Royal Dutch Shell PLC holding 33%. Gorgon is 50%-owned and operated by Chevron, with Shell and Exxon Mobil Corp. sharing the remainder.

“It is important that Chevron is adding value to their asset base in the Gorgon region,” said UBS AG oil and gas analyst Gordon Ramsay. “But the more critical issue for them is getting approvals in place for the Gorgon development, and locking in customers,” he said.

The Gorgon partners had planned to make a final investment decision on their long-mooted LNG venture by mid-2006. But delays in securing environmental clearances, combined with cost pressures, have pushed the go-ahead out to early 2007.

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