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Chevron Expects Gorgon Decision in ‘Coming Months’

By Ben Sharples

June 2 (Bloomberg) — Chevron Corp. said a final investment decision on the Gorgon liquefied natural gas project off Western Australia state is likely within months, while a commitment to the Wheatstone venture may come as early as 2011.

“The Gorgon joint venture participants are poised to make a final investment decision in the coming months,” Roy Krzywosinski, managing director of the second-largest U.S. oil company’s Australian unit, said today. A similar stage for Wheatstone is expected in 2011, he said.

Gorgon, which the Western Australian government estimates will cost A$50 billion ($40 billion), will have an initial production capacity of 15 million metric tons a year, about 76 percent of Australia’s existing LNG capacity. Wheatstone and Gorgon are among about 10 LNG projects proposed in Australia and Papua New Guinea seeking to tap a forecast increase in demand in north Asia for cleaner-burning fuels to substitute for coal.

The LNG market, “softened” by the global recession, is expected to rebound before Gorgon’s first deliveries in 2014, he said at the Australian Petroleum Production & Exploration Association conference in Darwin.

State Premier Colin Barnett made the estimate of Gorgon’s construction costs in March, a figure that would make it the country’s biggest resources project. The venture has yet to release its own projection.

Flatback Turtles

Western Australia’s Environmental Protection Authority recommended in April the government approve the project for construction under “stringent” conditions.

California-based Chevron and its venture partners, which include Exxon Mobil Corp. and Royal Dutch Shell Plc should change the location of some equipment at the site to avoid harming flatback turtles that nest on a nearby beach and do real-time monitoring on the effects of dredging to avoid destroying coral, it said.

Wheatstone, discovered off Western Australia’s Pilbara coast in 2004, may support as many as five production units and Chevron is seeking agreements with companies to supply additional gas for processing at the venture, Krzywosinski said.

Chevron, which wholly owns Wheatstone, said in 2006 the field may cost $5 billion to bring into production around 2013 or 2014. An engineering and development plan for the project is expected to take between 20 months and two years to complete and cost about $500 million, Krzywosinski said today.

To contact the reporter on this story: Ben Sharples in Melbourne[email protected]


Last Updated: June 2, 2009 01:01 EDT 

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