Natural gas is an increasingly important part of Chevron Corp.'s business, and the company plans to make considerable and sustained investments -- even during recessions -- to ensure its worldwide projects' success, a company executive said last week.
George Kirkland, executive vice president of Global Upstream and Gas, takes over in 2010 as Chevron's vice chairman. He explained the growing importance of gas to Chevron during a keynote speech at the World Gas Conference in Buenos Aires, Argentina.
"The fact is, natural gas has come of age," Kirkland told the audience. "What was once second prize to oil is now a premium commodity."
However, to meet the growing demand for natural gas over the next 20 years, more than $5.5 trillion needs to be invested worldwide in energy development, he said. "Without continued investment, natural gas will simply not be available to meet demand and drive economic growth."
Chevron now has "an estimated 150 Tcf of unrisked gas resources located throughout the world," the Chevron executive said. "Natural gas will clearly have a larger role in our future."
High on the El Segundo, CA-based major's list of gas priorities are its global liquefied natural gas (LNG) projects.
"Let's imagine a natural gas project that could, over its lifetime, produce enough energy to power a city of one million people for the next 800 years -- a project of such scale, scope, ingenuity and commitment that it would expand the possibilities of what a natural gas project could be in the 21st century," Kirkland told the audience. "Not so long ago, we could have only imagined a project of this breadth and promise. Today, because of growth in market demand, particularly in Asia, it's a reality," he said of the Gorgon Project in Australia.
Chevron owns a half stake in Gorgon; the other stakes are owned jointly by Royal Dutch Shell plc and ExxonMobil Corp. (see related story). Gorgon was sanctioned last month (see NGI, Sept. 21).
Gorgon, the largest development in Chevron's history, "is a legacy project, a long-term growth engine with prime access to the entire Asia-Pacific market," said Kirkland. The project also is to include "the largest, most advanced carbon injection and sequestration project in the world. Approximately 120 million tons of CO2 [carbon dioxide] will be sequestered over the life of the asset. Through the injection and sequestration and the energy efficiency of the project's equipment, Gorgon will be one of the most carbon-efficient LNG projects in the world."
In addition to Gorgon, Chevron also is developing the Wheatstone LNG Project, which will be supplied with gas from the Wheatstone and Iago gas fields offshore northwest Australia. Wheatstone is to include two LNG processing trains, each with a total capacity of 4.3 million tons/year.
"I mention both Gorgon and Wheatstone because they reaffirm a point that's important to all of us," said Kirkland. "And that point is this: Going forward, natural gas will become a larger part of the world's energy equation."
Today the energy industry "is gripped by tough, complex challenges: sustaining long-term growth and the supply of new gas to market, while managing investments in the short term," the Chevron executive said. But "in recent years, the global gas business has achieved strong momentum. We've seen development of a global gas infrastructure through LNG, gas-to-liquids and long-distance pipeline projects.
"Now we are confronted by a recession that has weakened many of the world's economies. This is particularly evident in the United States, where gas prices are depressed." The recession "has adversely impacted financing and cash flows," and "project development costs remain high..." However, Chevron is working to balance the "challenges and the opportunities" he said.
Last year Chevron brought online nine major oil and gas projects around the world, including Blind Faith in the Gulf of Mexico (GOM). This year seven more start-ups are ramping up, including the Chevron-operated Tahiti in the GOM.
"I am confident that the importance of natural gas to the world's energy portfolio will continue to grow," Kirkland said. "I am confident that the global gas business that we are building will sustain its momentum. And I am confident that natural gas will redefine the world's energy equation in the 21st century."
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