Chevron, Partners Charge Ahead with Gorgon LNG Project

Chevron Australia Pty Ltd will proceed with the development of the Gorgon natural gas project offshore Western Australia. Development proposals for the project were approved today by the Western Australian State Premier the Hon. Colin Barnett, MLA, and production licenses were granted by the Australian Minister for Resources and Energy the Hon. Martin Ferguson AM, MP.

The Gorgon Project, operated by the Australian subsidiary of Chevron (50 percent1) in joint venture with Australian subsidiaries of ExxonMobil (25 percent) and Shell (25 percent), is currently estimated to cost AU$43 billion (US $37 billion) for the first phase of development. First gas is planned for 2014.

The project will include construction of a liquefied natural gas facility with an annual capacity of around 15 million tonnes per year on Barrow Island, off Western Australia's coast. The project plan incorporates stringent environmental standards designed to protect the island's natural heritage.

Plans call for development of the Greater Gorgon gas fields, beginning with the Gorgon and Jansz-Io gas fields -- the largest gas discoveries to date in Australia -- with development facilities installed directly on the ocean floor, in water up to 1,300 meters deep. Two subsea pipelines with a combined length of 240 kilometers will carry the gas to facilities on Barrow Island.

"With a total resource base of more than 40 trillion cubic feet of gas and an estimated economic life of at least 40 years, Gorgon will be a major contributor to our company's future growth," said Chevron Chairman Dave O'Reilly.

"Gorgon adds significant long-term reserves and production for Chevron, bolstering our strong resource replacement and underscoring the importance of Australia to our growing natural gas business," said George Kirkland, executive vice president, Global Upstream and Gas, Chevron Corporation.

The decision also follows recent execution of LNG sales and purchase agreements with PetroChina International Company Limited and Petronet LNG Limited of India for ExxonMobil's equity share of LNG in the Gorgon Project.

"With global demand for LNG forecast to triple by 2030, the Gorgon Project will be a critical supply source in meeting this future demand, particularly for the economies in the fast growing Asia-Pacific region," said Neil Duffin, president of ExxonMobil Development Company. "The supply of cleaner-burning natural gas will also be critical in helping minimize global emissions."

Duffin said the final investment decision on Gorgon is a significant milestone. "With our commitment to the Gorgon Project along with the ongoing development of Australia's world class oil and gas fields in Bass Strait, ExxonMobil continues to be a strong contributor to Australia's energy development and economic progress," he said.

"ExxonMobil is proud to be a participant in the Gorgon Project with our co-venturers, Chevron and Shell. Together, with support from the Australian and Western Australian Governments, we are committed to the successful development of the Gorgon resources, which includes a large scale carbon capture and storage project."

The Greater Gorgon Area's projected natural gas resources are equivalent to 6.7 billion barrels of oil.

The project underwent a rigorous and thorough environmental assessment that culminated with some of the most stringent conditions imposed on a major project anywhere in the world. The project is expected to have the world's largest carbon dioxide injection system and be a global leader in underground carbon dioxide injection technology.