Chevron Announces Two Major Discoveries in Northwest Australia

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Researched by Industrial Info Resources (Sugar Land, Texas)--Chevron Australia (NYSE:CVX) (Perth) continues to build on its successes in Australia's northwest with the recent announcement of two more natural gas discoveries that could underpin a future expansion of its already-massive Gorgon and Wheatstone projects.

The two new discoveries, in previously unexplored waters, are located further from the coast than the fields already being developed for Gorgon and Wheatstone, but could be incorporated at some point in the future. The downside to these new discoveries is that because of their distance from the shore and the existing infrastructure, they will be more expensive to develop.

The first site, Pinhoe-1, is located in water more than 1,200 metres deep (3,960 feet), 200 kilometres (124 miles) north of Exmouth and encountered about 60 metres (197 feet) of net gas pay from a total depth of 4,083 metres (13,396 feet).

The second site, Arnhem-1, has been confirmed to be about 45.5 metres (149 feet) of net gas pay from a well of 2,913 metres (9,557 feet). The well was drilled in 1,208 metres (3,963 feet) of water, approximately 290 kilometres (180 miles) north of Exmouth.

Chevron Corporation Vice President George Kirkland said in the official Chevron release: "Chevron Australia's ongoing success offshore of Western Australia is a result of our long-term commitment to exploring and developing the region. The Carnarvon Basin is a world-class hydrocarbon basin, and these discoveries underscore the quality of our Australian portfolio and our technical competence."

These two discoveries bring the total number of Chevron's significant discoveries in Australia to 19 since mid-2009.

The Gorgon plant being built on Barrow Island is the most expensive resources project in Australian history, with a price tag that has blown out to $52 billion. It includes the construction of a 15 million-tonne-per-annum liquefied natural gas (LNG) plant on Barrow Island and a domestic gas plant with the capacity to provide 300 terajoules per day to supply gas to Western Australia. Gorgon LNG will be off loaded via a 4-kilometre-long loading jetty for transport to international markets. The domestic gas will be piped to the Western Australian mainland.

The Wheatstone project will include an onshore facility located at Ashburton North Strategic Industrial Area, 12 kilometres west of Onslow in Western Australia's Pilbara region. The foundation project includes two LNG trains with a combined capacity of 8.9 million tonnes per annum, and a domestic gas plant.

Some $200 billion in LNG projects are slated for Australia, representing more than half the earmarked investment in the resources sector, but cost overruns and competition from shale gas in the U.S. and Africa have raised questions over their viability.

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