Gorgon Project: Chevron Strikes More Gas in Australia, and Sells Some Too

Last Updated Jan 26, 2010 12:41 PM EST

Chevron's downstream business may be lagging, but its massive Gorgon liquefied natural gas project in Western Australia continues to offer up positive news. The second-largest U.S. oil company reported Tuesday another natural gas find off Western Australia.

The Yellowglen-1 discovery well is located in the greater Gorgon Area in the Carnarvon Basin offshore Western Australia. This is the third discovery in the same area. And with increased attention on exploration of the area in 2010, there could be more.

"This discovery adds to the growth of our natural gas business in Australia," said Jim Blackwell, president of Chevron Asia Pacific Exploration and Production Co. in a statement Tuesday. "We plan a robust program of exploration, appraisal and seismic programs in Australia in 2010."
Chevron also announced Tuesday an agreement with Kyushu Electric Power Co. for 0.3 million tons per year of LNG from the Gorgon project for 15 years. The company will also buy 0.7 mtpa of LNG from Chevron's Wheatstone project for up to 20 years.

As with other recent LNG deals, Kyushu will buy a small stake in Chevron's natural gas project. Kyushu will acquire 1.83 percent of Chevron's equity share in the Wheatstone field licenses and 1.37 percent in the Wheatstone natural gas processing facilities to be developed onshore in northwestern Australia.

Last month Chevron signed an agreement to supply Japan's Chubu Electric with 1.44 million metric tons per year of LNG from the Gorgon project for 25 years. Take all of Chevron's long-term LNG sales from the Gorgon project including the 0.3 mtpa from Kyushu Electric and the company has sold nearly 90 percent of its share of gas.

ExxonMobil and Royal Dutch Shell, both hold 25 percent stakes in the Gorgon project.

See additional BNET Energy coverage of the Gorgon project: