Premier Says Gorgon to Take Western Australia to New Heights

Today's historic agreement to proceed with the Gorgon project will boost the Australian economy and provide jobs for thousands of Western Australians.

Premier Colin Barnett warmly welcomed the agreement of all parties at a signing ceremony held in Perth this morning.

At the ceremony:

  • The Gorgon Joint Venture participants, Chevron, ExxonMobil and Shell, announced their final investment decisions.
  • Premier Colin Barnett signed the final development approval required under the Barrow Island Act 2003 and the Gorgon Gas Processing and Infrastructure Project Agreement and
  • The Joint Authority, Mines and Petroleum Minister Norman Moore and Federal Resources, Energy and Tourism Minister Martin Ferguson, granted production licenses for the Gorgon and Jansz/Io gas fields.

Barnett said he was delighted that the Liberal-National Government had been able to achieve this outcome.

"In the past 12 months, the Liberal-National Government has worked tirelessly to facilitate major developments, particularly the massive Gorgon project," he said.

"In today's dollars, the project is estimated to cost AU$43billion. With total gas resources of 40 trillion cubic feet, this will be the largest resources project in Australia's history and make a significant contribution towards Western Australia's prosperity over the next 30 years.

"Preliminary works on the three-train 15 million tonnes per annum LNG facility and the 300 terajoules per day domestic gas plant will begin this year with full construction commencing in February next year.

"The project will create about 10,000 jobs during the peak construction phase with more than 3,500 direct and indirect jobs sustained throughout the life of the project.

"Already about 1,400 people have jobs with Chevron and with contractors awarded work relating to the project," the Premier said.

"Contracts valued at approximately $2 billion have been let with a further $10 billion of contracts to be awarded in the next three months.

"The State Government has a local content policy in place and has been working with the Chamber of Commerce and Industry through the Industry Capability Network to ensure local businesses can be involved and benefit from the Gorgon project."

Economic modelling by analysts ACIL Tasman has indicated the Gorgon project will boost Australia's gross domestic product by $65 billion, with about $33 billion flowing to goods and services purchased in Australia.

While the majority of revenues from the project will flow to the Commonwealth, Barnett welcomed the Federal Government's commitment that 25 percent of expected Petroleum Resource Rent Tax from the project, worth up to $100 million a year, will be spent on Western Australian infrastructure projects.

Barnett said the project also marks a high point for environmental approvals in Australia.

"This project has faced what is possibly the most stringent environmental assessment ever applied in Australia," he said.

"Barrow Island has been an A class reserve since 1910 and supports at least 24 unique plant and animal species. Oil production has occurred on the island since 1964 and it is a compliment to the Gorgon Joint Venture participants that they have been allowed to proceed with this project."

The environmental conditions that have been imposed will ensure:

  • Coral lost due to dredging is minimised to three per cent of the total coral off the east coast of Barrow Island
  • Artificial light and noise emissions are minimised to protect the local population of northwest shelf flatback turtles
  • A turtle conservation plan is in place for the life of the project
  • Monitoring of other unique and endangered fauna.

The Gorgon project will also include the world's biggest carbon dioxide injection project. This will reduce greenhouse emissions by 40 percent or 3.4 million tonnes per annum through reinjection of carbon dioxide from the natural gas into a reservoir more than two kilometers below Barrow Island.

"It is totally appropriate that the State and Federal governments have put in place such strong measures to protect the environment and we will retain a strong commitment to ensuring the highest environmental standards are met throughout the life of the project," Barnett said.

The first LNG is due in 2014 and domestic gas is planned by the end of 2015. The Gorgon Joint Venture participants have already entered into long term LNG sales and purchase agreements with customers in Japan, China, India, South Korea and North America.

In WA, expressions of interest have been sought for the first 150 tj/d of domestic gas.

"In the current economic climate, enabling this project to progress will be a great boon for Western Australia," Barnett said.

"As has been shown with other projects progressed by this Government in recent months, economic development can progress in partnership with industry while adhering to the highest possible environmental standards."

The Gorgon project includes:

  • Development of the Gorgon and Jansz/Io gas fields in Commonwealth waters with subsea pipelines linked to Barrow Island (an A Class Nature Reserve)
  • A gas processing facility on Barrow Island consisting of three 5 Mt/a LNG trains and LNG shipping facilities
  • A 300tj/d domestic gas plant and pipeline to deliver gas to the mainland
  • Greenhouse gas management via injection of carbon dioxide into deep formations beneath Barrow Island.