Chevron Consortium to Make Final Investment Decision on Gorgon LNG Project Next Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--Chevron Corporation (NYSE:CVX) (San Ramon, California) with joint venture partners ExxonMobil Corporation (NYSE:XOM) (Irving, Texas) and Royal Dutch Shell (NYSE:RDS-A) (The Hague, Netherlands) are expected to make a final investment decision on their massive Gorgon liquefied natural gas (LNG) project to be located in the waters off the northwest shelf of Australia and on Barrow Island. The mega-project will entail the construction of an initial 3 LNG production trains, each producing 5 million metrics tons of LNG per year. Two more LNG production trains could be added in the future, bringing annual LNG production from the Gorgon facility to 25 million metric tons per year. The initial production of 15 million metric tons represents 19% of the total of 78.3 million metric tons of LNG production currently in development in Australia and 18% of the $101.70 billion of proposed LNG projects in Australia.

The Gorgon Project partners plan to develop the Greater Gorgon natural gas fields located approximately 130 kilometers off the Northwest coast of Australia. The Greater Gorgon field holds an estimated 40 trillion cubic feet of gas and is Australia's largest known gas reserve. The project facilities will include the development of the Greater Gorgon gas field involving subsea pipelines to Barrow Island, a gas-processing facility on Barrow Island consisting of the LNG liquefaction facilities and a domestic gas plant with condensate production, LNG shipping facilities and carbon dioxide injection facilities. In addition to these facilities, the project also includes the construction of a new power plant that will utilize 5 MS9001 turbines that will generate 113 megawatts each to provide power to the processing facilities. Three shipments of LNG per week are expected to leave Barrow Island. While awaiting shipment, the LNG will be stored in three 180,000-cubic-meter tanks, and the condensate will be stored in four 35,000-cubic-meter tanks.

The economic effects for Australia will be very positive. During the first 30 years of operation it is expected that over $20.9 billion will flow to Australian businesses and that over 6,000 jobs will be created during peak construction. More than 3,500 direct and indirect jobs will be created during the project's operational life. The Gorgon LNG project could add as much as $40.5 billion to Australia's gross domestic product. As an example, the fabrication for this modularization approach will involve more than 50 modules weighing more than 180,000 metric tons and 270 pre-assembled units & pre-assembled racks weighing a further 60,000 metric tons. The largest module will weigh 7,000 metric tons and will be 72 meters long.

The Gorgon Project joint venture lead by Chevron has selected a Kellogg joint venture group to provide engineering, procurement and project management services. Upon a positive final investment decision in March of 2009, the construction phase is expected to begin in June of the same year. Following the planned schedule, the first shipment of LNG would leave Barrow Island sometime in late 2013.

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