Royal Dutch Shell Plc  .com Rotating Header Image Chevron May Increase LNG Project Capacity

09.03.2007 12:39

Chevron Corp. and partners may increase the proposed Gorgon liquefied natural gas project’s capacity in Australia by 50 percent to lower production costs, two executives at the venture said, Bloomberg reported.

Chevron, Exxon Mobil Corp. and Royal Dutch Shell Plc may build two production lines each able to produce as much as 7.5 million metric tons a year, instead of 5 million, said the executives, asking not to be identified before a decision is made. The plants will chill gas to minus 161 degrees Celsius, turning it into liquid so that it can be loaded onto a ship.

The partners last year said they will miss the 2010 start date for LNG deliveries because of delays in environmental approvals and planning to increase profitability. Australia’s government estimates Gorgon, which will tap about 40 trillion cubic feet of gas in fields off the northwestern coast, may cost more than A$15 billion ($12 billion).

“There would be some scale economics” in building a larger plant, said Frank Harris, co-head of global LNG at Wood Mackenzie Consultants Ltd. in Edinburgh. “Assuming that the partners could get Gorgon up and running in 2012, marketing the extra gas shouldn’t be a problem.”

Global trade in LNG may more than double by 2015 to about 370 million metric tons, from about 145 million in 2005, Woodside Petroleum Ltd., operator of the North West Shelf LNG venture, said last month. LNG may supply 31 percent of global natural gas by 2010, PricewaterhouseCoopers LLP, the world’s biggest accounting firm, said in a report.

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