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The Wall Street Journal: Australia Approves Gorgon Gas Project

October 11, 2007; Page A14

CANBERRA, Australia — The government gave a long-awaited green light to the Gorgon gas project off the coast of northwestern Australia, clearing the way for the country’s biggest-ever resources project.

The approval allows oil giants Chevron Corp., Exxon Mobil Corp. and Royal Dutch Shell PLC to develop a liquefied-natural-gas plant on Barrow Island off the coast of Western Australia state, but it comes with strict conditions to protect the environment.

The plant will produce 10 million metric tons of LNG a year.

“Strict environmental-protection measures will be required to protect Commonwealth environment matters, including listed threatened and migratory species and rare vegetation on Barrow Island,” Environment Minister Malcolm Turnbull said.

Mr. Turnbull said Gorgon will inject about 20 billion Australian dollars (US$18 billion) into the Australian economy and create 6,000 jobs over the life of the project.

Project operator Chevron holds a 50% stake in the gas field, which is estimated to contain more than 40 trillion cubic feet of gas and has a nominal development life of about 60 years. Exxon Mobil and Royal Dutch Shell each hold a 25% stake.

Gorgon will take 45 months to construct, and LNG shipments won’t begin until well into the next decade.

Colin Beckett, Chevron’s Australia general manager, said the minister’s decision was welcome after four years of “rigorous state and federal assessment.”

Among federal-government conditions, the project must include a quarantine-management plan to protect threatened species and environmental-management plans for the operation of the gas field and refining plant. In addition, annual environmental-performance reports must be submitted to the Department of the Environment and Water Resources.

There are also 36 conditions set by the Western Australia state government.

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