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Australia: Chevron finds more Gorgon gas

NO SOONER had Chevron confirmed it wanted to expand its $37bn Gorgon liquefied natural gas (LNG) project off Western Australia if it could find sufficient reserves, when a discovery promised to help deliver them.

The company said last month that the Achilles-1 exploration well, 160 km off the northwest Australian coast had been drilled to a total depth of 4,500 metres and encountered around 100 metres of net gas pay. The well falls within the WA-374-P permit area of the Greater Gorgon area's Carnarvon basin, in which Chevron Australia, as operator, has a 50% stake, while Shell and ExxonMobil each hold 25%. Chevron said it is spudding another exploration well, Satyr-1, in the permit area.

Together with other discoveries off Western Australia announced earlier in the year, the find underpins plans to develop the Gorgon project and also the development of Wheatstone, another Chevron-led LNG-export plant lined up for construction in the state. Chevron and its main partners, Shell and ExxonMobil, recently decided to proceed with the 15m tonnes a year (t/y), three-train, first phase of the Gorgon LNG project, situated on Barrow Island, after receiving government environmental clearance and sealing a number of sales agreements with Asian buyers (PE 10/09 p27).

George Kirkland, Chevron's executive vice-president, global upstream and gas, told reporters at the World Gas Conference in Buenos Aires last month, that the company's plan for Barrow Island had always envisaged an expansion from three trains to five, depending on the emergence of further gas reserves.

The new discovery makes that look more possible, as does a recent statement from former Chevron chief executive David O'Reilly that the firm expects to sign a series of new sales agreements for Gorgon and Wheatstone LNG over the coming months. A decision on whether to go ahead with the expansion of the Gorgon LNG project is likely to be taken within the next 18 months.

Gorgon LNG is scheduled to be shipping by 2014, while Wheatstone could be operational by 2016, if it receives the go-ahead – a final investment decision is expected in 2011. However, the outlook for that project could be complicated by the efforts of Woodside Petroleum to bring gas from the area to its rival Pluto project instead.

Woodside is building the first 4.3m t/y train at Pluto, which is expected to be operational in 2010, and it wants to build at least two more, if it can secure enough investment and acquire enough gas to supply the expansion.

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