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Chevron pulls trigger on $29bn Western Australia LNG project
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26th September 2011
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PERTH ( − US energy major Chevron on Monday announced the development of one of Australia’s largest-ever resources projects, as it gave the green light for a $29-billion liquefied natural gas (LNG) investment in Western Australia.

This project, which would create 6 500 jobs at peak construction, would help position Western Australia as the world’s second-biggest supplier of LNG, state Premier Colin Barnett said.

The foundation phase of the Wheatstone project is estimated to cost A$29-billion and consists of two LNG processing trains with a combined capacity of 8.9-million tons a year, a domestic gas plant and associated offshore infrastructure including the processing platform, subsea equipment, drilling and an export trunkline.

Site works are due to begin before the end of this year, and the first delivery of LNG is expected by 2016.

Last week, the federal government approved a 25-million-ton-a-year LNG development, paving the way for future expansion opportunities.

Chevron CEO John Watson described the Wheatstone project as a “legacy, value-creating investment”. It would provide Chevron with significant reserves and production growth, he said.

“This project, along with Gorgon LNG, is well-positioned to provide a large, secure energy supply to meet the growing demand in the Asia-Pacific region, and to place Chevron as one of the world’s leading LNG suppliers.”

Wheatstone, along with other committed LNG projects and the North West Shelf, will produce a combined 45-million tons a year of LNG within the next few years, which will account for 25% of current world production levels.

Currently, the North West Shelf produces 17-million tons a year, which represents 9% of the world’s LNG. LNG production from Western Australia is set to reach more than 60-million tons a year by 2020.

Barnett said that Chevron would build a domestic gas plant to feed 15% of the gas from the Wheatstone petroleum fields into the state’s energy market, ensuring a safe, secure and reliable supply of electricity for Western Australia.

“The project will deliver significant benefits for the local community, with Chevron and its partners, and the state government investing more than A$250-million on community and public infrastructure in Onslow, including the upgrade of the town’s water and electricity supplies.”

The Wheatstone onshore foundation project is a joint venture between the Australian subsidiaries of Chevron, Apache, Kuwait Foreign Petroleum Exploration Company (KUFPEC) and Shell.

The project will be fed with natural gas from the Wheatstone and Iago fields, which are operated by an Australian subsidiary of Chevron in a joint venture with Shell and represent 80% of the plant's foundation capacity.

The unique Wheatstone hub concept was developed to provide foundation infrastructure for the commercialisation of Chevron's natural gas resources as well as a destination for third-party gas.

Under the hub concept, Apache and KUFPEC will provide the remaining 20% of the natural gas from their Julimar and Brunello fields. Development of the two third-party fields is not included in the estimated project cost.

About 60% of Chevron's equity LNG offtake is presently covered under binding long-term agreements. Discussions were continuing with potential customers to increase long-term offtake to more than 80% and to sell down equity.

Edited by: Mariaan Webb


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John Watson
Picture by: Bloomberg
John Watson
Picture by: Bloomberg
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