After construction delays, union woes, and multi-billion-dollar budget blow-outs, the Gorgon liquefied natural gas project is finally up and running off WA’s north-west coast.
Chevron Corporation has announced the first shipment is expected to leave next week from Barrow Island.
Gorgon is the largest single-resource development in Australia’s history, and has cost around $54 billion to build. It is built on a Class-A Nature Reserve.
Chevron Australia managing director Roy Krzywosinski said Gorgon was expected to produce 18 per cent of Australia’s future LNG.
“We are well-placed here in Australia to meet growing demand for energy in the Asia Pacific region,” he said.
“Gorgon is an inter-generational project set to deliver reliable cleaner-burning energy and generate substantial earnings over its expected economic life of 40 plus years.”
Independent analyst Peter Strachan said with the improving LNG price, the company should be able to cover costs.
“It’s been a long and expensive process for Chevron and its partners.
“Two years ago producers were getting anything from $US15-20 a gigajoule for LNG delivered to customers in Asia. The current price is more like $US5 a gigajoule.”
Mr Strachan said the lift in the oil price, perhaps up to $US47 a barrel, would help LNG.
“LNG should recover, and a $US7 a gigajoule the business would be at least cash-flow breaking even.”
The Gorgon Project is supplied from the Gorgon and Jansz-Io gas fields, between 130 km and 220km off the north-west coast of WA.
It includes a 15.6 million tonnes/year LNG plant on Barrow Island, a carbon dioxide injection project and a domestic gas plant with the capacity to supply 300 terajoules of gas per day to the state.
The Chevron-operated Gorgon Project is a joint venture between the Australian subsidiaries of Chevron (47.3 per cent), ExxonMobil (25 per cent), Shell (25 per cent), Osaka Gas (1.25 percent), Tokyo Gas (1 per cent) and Chubu Electric Power (0.417 per cent).