Australian Government Gives Green Light for $42 Billion Gorgon LNG Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Australian government has given final environmental approval to what will be the largest industrial project in Australia. The $42 billion (USD) Gorgon LNG project, headed by Chevron Corporation (NYSE:CVX) (San Ramon, California), received environmental approval on August 25 to construct a 15 million-ton-per-year liquefied natural gas (LNG) production facility on Barrow Island, a nature reserve located off the northern coast of Western Australia. Minister for the Environment, Heritage and the Arts Peter Garrett imposed 28 conditions on the project to protect the wildlife reserve, but said he saw no reason to block the Gorgon LNG project, thus allowing the project to clear the final regulatory hurdle.

Chevron had originally received government approvals for the project in late 2007, but faced with rising construction costs, Chevron and partners Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) and Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) increased the scope of Gorgon from a dual train, 10 million-ton- per-year configuration to a three train 15 million-ton- per-year configuration, which includes a gas plant and pipeline for domestic use. The facility will also include a 565-megawatt power plant, condensate production and storage facilities, and a monoethylene glycol production plant.

The Chevron-led consortium had previously awarded a $200 million front-end engineering and design (FEED) contract for the Gorgon project to the Kellogg Joint Venture Group (KJVG). KJVG was formed in January 2005 and is a partnership between KBR Incorporated (NYSE:KBR) (Houston, Texas), Clough Limited (ASX:CLO) (Perth, Australia), JGC Corporation (TYO:1963) (Tokyo, Japan), and Hatch Associates Pty Limited Group (Brisbane, Australia). In July 2009, Chevron awarded a $392 million site-preparation contract to Thiess Engineering (Southend, Australia). The Gorgon joint venture partners have already signed a record $41 billion (USD) contract with Chinese petroleum giant PetroChina Company Limited (NYSE:PTR) (Beijing) and another contract worth $21 billion (USD) with India's Petronet LNG Limited (BSE:532522) (New Delhi) for LNG deliveries.

During construction, the Gorgon LNG project will create more than 11,000 direct and indirect jobs. The facility will have a productive lifespan of 40 years and is scheduled to begin operating in 2014. The Gorgon field is thought to contain more than 40 trillion cubic feet of natural gas and, throughout the lifetime of the project, will pump billions of dollars into the Australian economy. The Gorgon project is among 27 LNG-related projects valued at more than $215 billion that Industrial Info is current tracking as part of our International Industrial Database.

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