Tuesday, 18 August 2009

Gorgon Moves Closer to Approval

CANBERRA -- Australia's government moved a step closer to approving the multibillion-dollar Gorgon liquefied natural gas project in Western Australia state, agreeing with the state government to assume joint responsibility for any future claims arising from plans to capture and store the venture's greenhouse-gas emissions deep underground.
Prime Minister Kevin Rudd told lawmakers that with the regulatory approvals process now nearing completion, he expects the Gorgon partners -- international energy companies Chevron Corp., Exxon Mobil Corp. and Royal Dutch Shell PLC -- to be in a position to make a final investment decision "shortly."
The project, which the joint-venture partners estimate would contribute around 65 billion Australian dollars (US$54 billion) to Australia's gross domestic product in net present value terms over the next three decades, shows ambitious projects are still progressing in the resource-rich country despite the global economic downturn, Mr. Rudd said.
The Gorgon partners plan to develop the Greater Gorgon gas fields, located about 200 kilometers off the northwest coast of Western Australia.
If it goes ahead, the A$50 billion Gorgon scheme would be the largest-ever resources project in Australia, Mr. Rudd said, dwarfing the A$12 billion Pluto LNG project being developed by Woodside Petroleum Ltd.
At the peak of construction, the project will employ around 6,000 workers. It will provide a significant boost to Australia's export income, with contracts to sell around A$300 billion worth of LNG to customers in the Asian-Pacific region over the next 20 years, Mr. Rudd said.
It would also be the world's biggest geological storage operation, as the project operators inject carbon dioxide gases emitted during the LNG extraction process two kilometers underground in a bid to reduce the environmental impact of the venture.
The deal Mr. Rudd unveiled Monday, in which the federal government assumed joint responsibility, means the Gorgon partners will have no future responsibility for any third-party claims after the gas storage site has been closed.
The Western Australia government approved the Gorgon project last Monday.
Federal Energy Minister Martin Ferguson has indicated it could clear the last of the regulatory approvals, including environmental conditions and production licenses and retention leases, this month.
Write to Rachel Pannett at rachel.pannett@dowjones.com