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Chevron Finds, Sells More Australian Gas

December 21, 2009
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Chevron Corp.'s Chevron Australia Pty. Ltd. last week said it found more gas in the Carnarvon Basin offshore Western Australia. The company also announced that it struck a long-term sales and purchase agreement (SPA) with Japan's Chubu Electric Power Co. Inc. for a portion of its liquefied natural gas (LNG) to be produced from the Gorgon Project off Australia's coast.

The company said the exploration well, Satyr-1, located 100 miles offshore in the Greater Gorgon Area in 3,510 feet of water, was drilled to a total depth of 14,960 feet. The well discovered 425 feet of net gas pay. "Our offshore drilling campaign in northwestern Australia continues to deliver results and is expected to provide additional natural gas supplies to underpin the Chevron-operated Gorgon natural gas project," said George Kirkland, Chevron's executive vice president for Global Upstream and Gas.

Satyr-1 is in the WA-374-P permit area. Chevron Australia is the operator with a 50% interest. Shell Development (Australia) Pty. Ltd. and Mobil Australia Resources Company each hold a 25% interest. "The success of Satyr-1, following closely on the Achilles-1 discovery, highlights the quality of Chevron's exploration capability in the region and the significance of Australia to Chevron's energy portfolio," said Jim Blackwell, president of Chevron Asia Pacific Exploration and Production.

The initial Gorgon Project development in northwestern Australia will include a three-train, 15 million-metric-tons-per-year liquefied natural gas liquefaction facility (see NGI, Sept. 21) and a domestic gas plant. Royal Dutch Shell plc and ExxonMobil Corp. are partners with Chevron in the LNG project; Chevron is to be the operator.

"The Gorgon project will provide important supplies of energy to the fast-growing economies of the Asia-Pacific region and will have a domestic gas supply component, which we anticipate will be jointly marketed to gas customers in Western Australia," said Jon Chadwick, Shell executive vice president for upstream activities in Australia, earlier this year.

Chevron also said it has agreed to supply Chubu Electric with 1.44 million metric tons per year of LNG for 25 years. Also, Chubu Electric intends to purchase 0.417% equity from Chevron's stake in the Gorgon Project.

"The SPA with Chubu Electric continues to build momentum toward commercializing our equity natural gas in the project," Blackwell said.

The agreement follows the recent signing of three binding long-term SPAs with Osaka Gas, Tokyo Gas and GS Caltex, a 50%-owned Chevron equity affiliate, for delivery of nearly 3 million metric tons per year, as well as an agreement with the Korea Gas Corp. (KOGAS) for 1.5 million metric tons per year.

"The foundation customers in Gorgon are leading energy companies in the world's largest LNG markets. Our agreements position Chevron to deliver supplies to meet long-term demand in the growing Asia-Pacific region," said John Gass, president of Chevron Global Gas.

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