Gorgon gas project

Gorgon Gas Project

Location of some of the Greater Gorgon gas fields in relation to Barrow Island and the adjacent coastline
Location
Gorgon Gas Project Location in Australia
Location	Barrow Island
State	Western Australia
Country	Australia
Coordinates	20°47′S 115°25′E / 20.79°S 115.41°E / -20.79; 115.41Coordinates: 20°47′S 115°25′E / 20.79°S 115.41°E / -20.79; 115.41
Production
Products	Liquid natural gas
Owner
Company	Chevron Corporation (47%)[1] ExxonMobil (25%) Royal Dutch Shell (25%) Osaka Gas (1.25%) Tokyo Gas (1%) Chubu Electric Power (0.417%)
Website	Gorgon Official Site

The Gorgon gas project is a natural gas project in Western Australia, involving the development of the Greater Gorgon gas fields, subsea gas-gathering infrastructure, and a liquefied natural gas (LNG) plant on Barrow Island.^[2][3] The project also includes a domestic gas component. It is currently under construction and once completed, will become Australia's fourth LNG export development.^[4]

Location

'Greater Gorgon' refers to a grouping of several gas fields, including Gorgon, Chandon, Geryon, Orthrus, Maenad, Eurytion, Urania, Chrysaor, Dionysus, Jansz/Io, and West Tryal Rocks, situated in the Barrow sub-basin of the Carnarvon Basin) The Gorgon field is centered about 130 kilometres (81 mi) off the north-west coast of Western Australia, where the water depth is approximately 200 metres (660 ft). Other fields in the group lie to the north, such as Jansz-Io, which covers an area of 2,000 square kilometres (770 sq mi), in a water depth of 1,300 metres (4,300 ft).

Barrow Island lies off the Pilbara coast, 85 kilometres (53 mi) north-north-east of Onslow and 140 kilometres (90 mi) west of Karratha. The largest of a group of islands which include the Montebello and Lowendal Islands, it is 25 kilometres (16 mi) long and 10 kilometres (6.2 mi) wide, covering 235 square kilometres (91 sq mi).^[2]

History

More than 200 exploration wells have been drilled in the Barrow sub-basin over the past 35 years, including West Tryal Rocks in 1972, and Spar in 1976 - both discovered by West Australian Petroleum (WAPET) which had been a pioneering company in the development of the Western Australian petroleum industry. WAPET was the operator on behalf of various joint ventures comprising Chevron, Texaco, Shell and Ampolex (the exploration division of Ampol). Chevron and Texaco merged in 2001, Mobil took over Ampolex, and later merged with Exxon to form ExxonMobil. In 2000, Chevron became the operator of all WAPET's petroleum assets.

WAPET discovered Gorgon in 1981 with the drilling of the Gorgon 1 well.^[5] Later discoveries included Chrysaor (1994) and Dionysus (1996). The Jansz-Io gas accumulation, discovered in January 2000, contains an estimated 566 billion cubic meters of recoverable reserves.^[5]

The project received preliminary environmental approvals from the West Australian government in September 2007 and from the Federal Minister for the Environment in the following month.^[6][7] The project developers then submitted revised plans to cover an expansion in the size of the project. Final environmental approval was received from the state government on 11 August 2009.^[8] On 26 August 2009, the Federal Environment Minister announced that the expanded project on Barrow Island had been given conditional environmental approval.^[9]

During the 2007 Australian federal election campaign, the Australian Labor Party announced that a future Labor government would set aside 25% of future Petroleum Resource Rent Tax from the Gorgon project to establish a Western Australian Infrastructure Fund.^[10]

Gas fields

The Gorgon and Jansz-Io gas fields, 200 kilometres (120 mi) from the coast are said to contain 35.3 trillion cubic feet (1,000×10^⁹ m³) of natural gas and may have a lifespan of 60 years.^[11]

Developers

The project is being developed by the Gorgon Joint Venture, which consists of Australian subsidiaries of three international energy companies:^[12]

• Chevron Australia (a subsidiary of Chevron) (47% share and project operator)
• Shell Development Australia (a subsidiary of Royal Dutch Shell) (25%)
• Mobil Australia Resources (a subsidiary of Exxon Mobil) (25%)
• Osaka Gas (1.25%)
• Tokyo Gas (1%)
• Chubu Electric Power (0.417%)

Scope

• 300 ha of land has been acquired on Barrow Island
• 3x5 MTPA LNG Trains
• 15 million tonnes of LNG per year
• 300 terajoules per day domestic gas plant
• Ground breaking occurred on 1 December 2009
• First LNG in 2016
• Production ends between 2054–2074 ^[13]

Using initially 18 wells, gas will be delivered via subsea gathering systems and pipelines to the north-west coast of Barrow Island, then via an underground pipeline system to gas treatment and liquefaction facilities on the island's south-east coast. The plant will consist of 3 liquefied natural gas (LNG) trains, each capable of producing a nominal capacity of five million tonnes per annum (MTPA).^[2]

Carbon dioxide (CO₂), which comprises around 15% of the raw gas stream, will be stripped out then injected into formations 2 kilometers^[14] below the island. This forms the world's largest carbon capture and storage project, with 3.4 to 4 million tonnes of CO₂ planned to be stored each year.^[15] Inclusion of the carbon capture project was required by Australian environmental regulators.^[14]

LNG and condensate, initially stored in onshore tanks, will be offloaded from a 2100m jetty onto LNG carriers and oil tankers, for delivery to overseas customers. Natural gas for domestic use will be exported by a 70 km subsea pipeline to the mainland, for transmission to local customers.^[2]

On the total investment of the Gorgon LNG project, media articles have reported analyst forecasts of estimated costs ranging from A$11 billion (in 2003), A$16 billion (2007),^[16] and A$50bn in March 2009 ^[17] to A$43bn in Sept 2009 and A$53bn in 2015.^[13][18] Chevron, however, mentioned in September 2011 that the foundation phase will cost about US$29bn and consists of two LNG processing trains with combined capacity of 8.9mtpa.^[19]

Economic Benefits

Economic modelling carried out in 2008 as part of the environmental impact assessment process, forecast the following macroeconomic impacts (based on a 30-year period):

• 6000 jobs in Western Australia at the peak of the construction phase
• more than 350 direct and indirect jobs sustaining throughout the life of the project
• an increase in national Gross Domestic Product (GDP) of A$64.3 billion (in net present value terms)
• A$33 billion of expenditure on locally purchased goods and services
• additional government revenue of about A$40 billion (in 2009 dollars)^[20]

Gas sales

LNG export agreements

LNG sales agreements have been reached between the joint venturers and customers in China, India, Japan and South Korea.

Chevron Australia has executed Sale and Purchase Agreements (SPAs) with Osaka Gas (1.375Mtpa for 25 years and 1.25 percent equity in the Gorgon Project), Tokyo Gas (1.1Mtpa for 25 years and 1 percent equity), Chubu Electric Power (1.44Mtpa for 25 years and 0.417 percent equity in the Gorgon Project) and GS Caltex of South Korea (0.5Mtpa for 20 years from Gorgon and Chevron system gas). Chevron Australia also has Heads of Agreements with Korea Gas Corporation (KOGAS) (1.5Mtpa for 15 years); Nippon Oil Corporation (0.3 Mtpa for 15 years) and Kyushu Electric ( 0.3 Mtpa for 15 years).

Shell has entered into long-term LNG sale and purchase agreements with PetroChina International Company Limited and BP Singapore Pte. Limited and also has secured capacity at LNG receiving terminals including the terminals at Energia Costa Azul LNG in Baja California, Mexico and Hazira in Gujarat, India.

An Australian subsidiary of ExxonMobil has signed long-term sales and purchase agreements with Petronet LNG Limited of India and PetroChina International Company Limited for the supply of LNG from the Gorgon Project. The agreement with Petronet LNG is for the supply of approximately 1.5 Mtpa of LNG over a 20-year term while the agreement with PetroChina is for the supply of approximately 2.25 Mtpa over a 20-year term. Together, these two sales and purchase agreements commit the ExxonMobil subsidiary's share of LNG from the 15 Mtpa Gorgon LNG Project.

Domestic gas

Under the provisions of the Barrow Island Act (2003), the joint venturers are required to reserve 2000 petajoules of gas for delivery into the domestic market. The Gorgon Joint Venture announced plans to establish a domestic gas project, including plans for progressive expansion to enable delivery of 300 terajoules of gas per day into the domestic transmission system.^[21][22] Chevron have indicated that deliveries of Gorgon domestic gas will commence around the time of start-up of the third LNG train.^[23]

Criticisms

The proposed project has attracted criticism from conservation groups in relation to the potential impact upon Barrow Island's ecology. The island is a Class A nature reserve, and home to the flatback turtle (classified as a vulnerable species^[24]) and numerous other animals not found on the Australian mainland.^[20][25] Other concerns are related to the adequacy of quarantine procedures on Barrow Island to protect against the introduction of non-endemic species,^[26] and risks associated with geological sequestration of CO₂. It was reported in November 2011 that native animals on Barrow Island had been accidentally killed daily with a known total of 1550 since construction began^[27]

See also

• Petroleum industry in Western Australia

References

External links

• Chevron Australia Barrow Island Project Progress
• Barrow Island Act 2003