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Financial Times: Chevron in Australian LNG boost

By Sheila McNulty in Houston
Published: December 21 2007 22:00 | Last updated: December 21 2007 22:00

Chevron is planning to step up its investment in the huge Gorgon liquefied natural gas project off the coast of western Australia. The US’s second biggest oil and gas company is seeking approval from the Australian authorities to build an additional liquefaction plant, the company has told the Financial Times.

It has endorsed a change in project scope from two plants – with capacity of 5m metric tonnes per annum – to three in an effort to improve project economics amid mounting industry cost pressures.

Three developed together gives us significant economies of scale, more efficient use of the available workforce, and it generates more revenue earlier in a strong LNG market,’’ pointed out Chevron.

The group already has approval to build a two-plant facility on Australia’s Barrow Island, and it expects little change to any environmental impact as a result of the extra plant, as it will still be built within the approved 300 hectares limit.

During the next 12 months, Chevron’s Gorgon team will work with the Australian government to pursue approval for the additional plant, begin engineering and design work on the project, reconfirm supply tenders and contracts and expand the capacity of the project team.

Final investment decisions should follow on the project, which should take about five years to build.

The Gorgon project is at the centre of Chevron’s investments in Australia. With an estimated resource base of more than 40,000bn cubic feet of gas, which is located up to 200 kilometres offshore and in water depths of up to 1,300 metres, the project has a nominal development life of 60 years.

Gorgon is being operated by Chevron in a joint venture with the Australian subsidiaries of ExxonMobil and Royal Dutch Shell.

Copyright The Financial Times Limited 2007

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