Chevron is positioned to become a major LNG supplier by 2020. Its partners in the joint venture are Exxon Mobil Corp.
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“The long-term fundamentals for LNG are attractive, particularly in the Asia-Pacific region, and this is a significant milestone for all involved”, Mr Watson said in a statement.
“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”.
The venture will also supply gas to WA buyers through a pipeline to the mainland.
National LNG exports were expected to surge from 30 million tonnes past year to more than 85 million tonnes by 2020. At the same time, rapid growth in North American shale-gas production sparked fears of a global energy glut that is likely to take years to clear.
This wave of Australian and US supply comes just as demand slows in the core markets of Japan, South Korea, Taiwan and China, pulling Asia’s spot LNG prices LNG-AS down by 80 percent since 2014 to under $4.50 per million British thermal units. “The current price is more like $US5 a gigajoule”.
In addition, Gorgon’s checkered record since starting construction has undermined confidence in its returns.
Independent analyst Peter Strachan said with the improving LNG price, the company should be able to cover costs. It is described as the largest single resource development in Australia’s history.
“This is the result of the collaboration of hundreds of suppliers and contractors and many tens of thousands of people across the world during the project design and construction phases”.
Chevron Australia boss Roy Krzywosinski.
Barrow Island’s status as a government-protected nature reserve since 1910 also brought complications.
“It’s been a long and expensive process for Chevron and its partners”.
Chevron expects the project to add a little more than 200,000 barrels a day to its production when fully operational.
Chevron Corporation has begun production from its liquefied natural gas (LNG) and condensate at the Gorgon Project on Barrow Island off the northwest coast of Western Australia.
“Gorgon is expected to generate GDP growth of more than $440 billion over the next two decades of operations and additional federal revenue of around $69 billion”, Dr Roberts said.
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His comments were echoed by Chevron Australia managing director Roy Krzywosinski, who is preparing to hand over the local reins to his deputy Nigel Hearne now that Gorgon has started up.
